MARKET WATCH: Oil prices supported by API inventory, US-Iran tensions
Light, sweet crude oil prices for September gained modestly to close above $68/bbl on the New York market on a report of dropping US oil supplies and uncertainty about US-Iran relations. Brent crude for September also rose modestly to settle above $73/bbl in London.
The American Petroleum Institute released its weekly inventory data late July 24, estimating US oil supplies dropped by 3.2 million bbl for the week ended July 20. Traders and analysts closely watch the US weekly government report scheduled to be released July 25 from the US Energy Information Administration.
Although recent oil prices have been volatile, analysts say crude prices have gained because of escalating US-Iran tensions. Unilateral US sanctions against Iran are expected to reduce Iran’s oil exports and curtail its production levels. US oil sanctions on Iran are expected Nov. 4.
Helima Croft, RBC Capital Markets LLC global head of commodity strategy, said, “A war of words has been heating up between Washington and Tehran as the snapback of US sanctions approaches. Iran has made threats to close maritime chokepoints and prevent rivals from exporting oil while [US President Donald] Trump has warned of dire consequences.”
She expects 600,000-700,000 b/d of Iranian supply likely will roll off world markets by the fourth quarter, climbing to 1 million b/d in early 2019.
“Importantly, additional economic sanctions snap back on Aug. 6 and could be a key inflection point,” Croft said. She said Iran could “resume confrontational skirmishes with US vessels and intensify attacks on oil tankers through proxy groups such as the Houthis in Yemen.”
Energy prices
The light, sweet crude contract for September delivery on the New York Mercantile Exchange rose 63¢ to close at $68.52/bbl on July 24. The October contract gained 44¢ to settle at $67.19/bbl.
The NYMEX natural gas price for August gained 1¢ to a rounded $2.73/MMbtu. The Henry Hub cash gas price added 2¢ to $2.72/MMbtu.
Ultralow-sulfur diesel for August rose by nearly 1.5¢ to $2.13/gal. The NYMEX reformulated gasoline blendstock for August edged up by less than a penny to nearly $2.10/gal.
Brent crude oil for September gained 38¢ to $73.44/bbl on London’s International Commodity Exchange. The October contract added 42¢ to settle at $73.80/bbl. The gas oil contract for August was $655.75/tonne, up $5.
The Organization of Petroleum Exporting Countries’ basket of crudes average price for July 24 was $72.01/bbl, up 16¢.
Contact Paula Dittrick at [email protected].
About the Author
Paula Dittrick
Senior Staff Writer
Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.
Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.