Market Watch, May 18
Crude prices declined in mixed trading on three international markets Wednesday in apparent corrections of recently 'overheated' trading.
Crude prices declined in mixed trading on three international markets Wednesday in apparent corrections of recently "overheated" trading.
The June contract for benchmark US sweet light crudes dropped 41� to $29.32/bbl on the New York Mercantile Exchange (NYMEX), while the July contracts lost 21� to $29.44/bbl. However, those contracts inched back up in after-hours electronic trading to $29.42/bbl on the June contract and $29.48/bbl for July.
In London, North Sea Brent closed at $27.89/bbl, down 21� for the day, after trading in ranges of $27.62-28.12 on the International Petroleum Exchange. Brokers predicted Brent prices will soon stabilize above $27/bbl.
On the Singapore Exchange, the July contract for North Sea Brent settled at $27.92/bbl, down 28� from the June contract that expired Tuesday.
That decline resulted from the combination of a widely expected technical adjustment and reports of slow growth in Thailand's economy, which is dampening demand for oil, traders said. A correction was "inevitable" since even strong market fundamentals do not justify oil prices in the range of $29/bbl, they said.
OPEC's average basket price for 7 crudes dipped 25� to $27.92/bbl Wednesday. The OPEC Secretariat also reported that basket price fell $3.78 to an average $22.93/bbl in April from March levels.
OPEC officials estimated world demand for crude at 76.1 million b/d, down by 40,000 b/d from their previous estimate. They said OPEC supply is down slightly to 27.4 million b/d, while non-OPEC supply is up 70,000 b/d to a total 45.8 million b/d.
Meanwhile, the June contract for natural gas jumped 24.1� to $3.69/Mcf on the Nymex.
That helped boost the June contract for home heating oil by 0.52� to 77.36�/bbl. Heating oil is always affected by big moves in gas prices since utilities rely on it as an alternative fuel, traders said.
The June contract for unleaded gas dipped 0.33� to 97.98�.