MARKET WATCH: NYMEX, Brent crude oil futures dive on ample world oil supply

Crude oil futures prices slumped on both the New York and London markets on Sept. 2, with Brent reaching its lowest level in 16 months while front-month US light, sweet crude prices dripped to their lowest since January.

Crude oil futures prices slumped on both the New York and London markets on Sept. 2, with Brent reaching its lowest level in 16 months while front-month US light, sweet crude prices dripped to their lowest since January.

Ole Hansen of SaxoBank Research noted ample crude oil supplies worldwide continue “to keep prices on either side of the Atlantic on the defensive with Brent crude oil once again approaching the important $100/bbl level.”

Meanwhile, Libya’s National Oil Corp. reported Libya has ramped up oil production to 700,000 b/d.

Oil prices have declined steadily for weeks with the easing of supply disruption concerns despite ongoing global tensions.

Hansen noted the end of summer means lower US gasoline demand and also the period when refineries typically slow for routine maintenance.

“The US Labor Day Monday signaled the end of the US driving season and the beginning of the seasonal slowdown in demand for gasoline as refineries cut production as they go into maintenance,” Hansen said.

The Energy Information Administration is scheduled to release its weekly US petroleum inventory report on Sept. 4, a day later than normal because of the Sept. 1 holiday.

Energy prices

The New York Mercantile Exchange October crude oil contract slumped $3.08 to $92.88/bbl for the Sept. 2 settlement as trading resumed after US markets were closed on Sept. 1 for the Labor Day holiday. The November contract dropped $2.92 to $92.10/bbl. The October settlement was the lowest front-month closing since Jan. 14.

The natural gas contract for October fell by 17.5¢ to a rounded $3.89/MMbtu. On the US cash market, gas at Henry Hub, La., was $4.01/MMbtu, which was down slightly from last week but still higher than a year ago. The cash gas price was $3.64/MMbtu for Sept. 2, 2013.

Heating oil for October delivery dropped by nearly 6¢ to a rounded $2.80/gal. Reformulated gasoline stock for oxygenate blending for October delivery dropped nearly 8¢ to a rounded $2.54/gal.

The October ICE contract for Brent crude delivery fell by $2.45 to $100.34/bbl, marking its lowest since May 1, 2013. The November Brent contract fell $2.33 to $109.96/bbl. The ICE gas oil contract for September dropped $9 to $854.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes on Sept. 2 was $98.24/bbl, down $1.84.

Contact Paula Dittrick at paulad@ogjonline.com.

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