MARKET WATCH: Oil prices slumped ahead of holiday
Oil prices continued to slump May 24 going into the extended Memorial Day weekend that marked the start of the US summer driving season. The front-month crude contract was down 2.6% for the week in the New York market, and the SIG Oil Exploration & Production Index and the Oil Service Index were down 1.8% and 2.7%, respectively.
“It was a better week for natural gas, though, which was up 3.6%,” said analysts in the Houston office of Raymond James & Associates Inc.
May 27 “was a quiet day across commodities, with the UK and US markets closed for public holidays,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. “Thin trading and a lack of conviction kept prices in rather tight trading ranges for most of the day.”
However, both West Texas Intermediate and North Sea Brent rallied strongly in early trading May 28—“ostensibly off the back of concerns that the Syrian civil conflict might escalate after it was announced that an European Union embargo on selling arms to Syrian rebels has been lifted,” Ground said. “While this geopolitical risk premium cannot be ignored, unless there is a substantial escalation of Middle East tensions whereby significant oil producers are drawn into a conflict, this premium should fade in due course as the uncertainty subsides.”
Energy prices
The July contract for benchmark US sweet, light crudes slipped 10¢ to $94.15/bbl May 24 on the New York Mercantile Exchange. The August contract dipped 8¢ to $94.34/bbl. On the US spot market, WTI at Cushing, Okla., was down 10¢ to $94.15/bbl.
Heating oil for June delivery declined 0.31¢ but closed essentially unchanged at a rounded $2.86/gal on NYMEX. Reformulated stock for oxygenate blending for the same month increased 1.09¢ to $2.84/gal.
The June natural gas contract lost 2.4¢ to $4.24/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., gained 3¢ to $4.16/MMbtu.
In London, the July IPE contract for Brent rose 20¢ to $102.64/bbl. Gas oil for June regained $4.75 to $854.25/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was up 41¢ to $99.56/bbl May 27. So far this year, OPEC’s basket price has averaged $106.14/bbl.
Contact Sam Fletcher at [email protected].
About the Author
Sam Fletcher
Senior Writer
I'm third-generation blue-collar oil field worker, born in the great East Texas Field and completed high school in the Permian Basin of West Texas where I spent a couple of summers hustling jugs and loading shot holes on seismic crews. My family was oil field trash back when it was an insult instead of a brag on a bumper sticker. I enlisted in the US Army in 1961-1964 looking for a way out of a life of stoop-labor in the oil patch. I didn't succeed then, but a few years later when they passed a new GI Bill for Vietnam veterans, they backdated it to cover my period of enlistment and finally gave me the means to attend college. I'd wanted a career in journalism since my junior year in high school when I was editor of the school newspaper. I financed my college education with the GI bill, parttime work, and a few scholarships and earned a bachelor's degree and later a master's degree in mass communication at Texas Tech University. I worked some years on Texas daily newspapers and even taught journalism a couple of semesters at a junior college in San Antonio before joining the metropolitan Houston Post in 1973. In 1977 I became the energy reporter for the paper, primarily because I was the only writer who'd ever broke a sweat in sight of an oil rig. I covered the oil patch through its biggest boom in the 1970s, its worst depression in the 1980s, and its subsequent rise from the ashes as the industry reinvented itself yet again. When the Post folded in 1995, I made the switch to oil industry publications. At the start of the new century, I joined the Oil & Gas Journal, long the "Bible" of the oil industry. I've been writing about the oil and gas industry's successes and setbacks for a long time, and I've loved every minute of it.