MARKET WATCH: NYMEX oil prices for December drop nearly $2/bbl

Crude oil prices dropped nearly $2/bbl for December delivery on the New York market Oct. 22 after a weekly US government report showed a larger-than-expected increase in crude oil inventories.

The US Energy Information Administration estimated commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased 7.1 million bbl for the week ended Oct. 17 to a total of 377.7 million bbl.

EIA’s petroleum status report said that level was near the upper limit of the average range for this time of year.

Regarding natural gas in underground storage across the Lower 48, the EIA estimated the working gas level at a rounded 3.4 tcf as of Oct. 17, representing a net increase of 94 bcf from the previous week. Stocks were 336 bcf less than last year at this time and 338 bcf below the 5-year average of 3,731 bcf, EIA said in its weekly gas storage report.

More positive economic news from China also failed to offset falling crude oil prices in London as well as New York on Oct. 22. Earlier this week, industrial production numbers indicated stabilizing economics in China (OGJ Online, Oct. 22, 2014).

A preliminary HSBC China Manufacturing Purchasing Managers Index rose to 50.4 in October compared with a final 50.2 in September.

Meanwhile, worldwide oil prices rose in early Oct. 23 trading upon reports that Saudi Arabia supplied less oil to the market in September, even as the country’s overall production grew.

An industry official told the Wall Street Journal that Saudi Arabia supplied the international and domestic market with 9.36 million b/d of crude oil in September, down from 9.688 million b/d in August.

But Saudi Arabia’s overall production grew from 9.597 million b/d in August to 9.7 million b/d in September, the WSJ reported.

Energy prices

The New York Mercantile Exchange December crude oil contract dropped $1.97/bbl on Oct. 22, closing at $80.52/bbl. The January 2015 contract declined by $1.83 to $80.13/bbl.

The natural gas contract for November dropped by 5¢ to a rounded $3.66/MMbtu. The cash gas price at Henry Hub, La., was up 6¢, closing at $3.68/MMbtu.

Heating oil for November delivery was down by nearly 4¢ to a rounded $2.47/gal. Reformulated gasoline stock for oxygenate blending for November delivery dropped 5.7¢ to a rounded $2.16/gal.

The December ICE contract for Brent crude oil was down $1.51 to close at $84.71/bbl. The January 2015 contract dropped $1.50 to $85.08/bbl. The ICE gas oil contract for November gained $6, settling at $741.75/tonne.

The average price for OPEC’s basket of 12 benchmark crudes was $81.94/bbl on Oct. 22, down 15¢.

Contact Paula Dittrick at paulad@ogjonline.com.