Brent crude oil contracts for October and November dropped by more than $1/bbl for a second consecutive day on the London market Aug. 15 after slowing economic reports from Germany and China.
The negative indicators caused oil investors to worry about softening world oil demand.
Germany’s economy for the second quarter shrank by 0.1% after first-quarter growth of 0.4%. Economists blamed Germany’s economic declines on falling exports and car production. Analysts believe Germany’s third-quarter results could show continued decline.
In an Aug. 14 note, ING Germany Chief Economist Carsten Brzeski said recent reports indicate “the resilience of the [German] domestic economy to external shocks is crumbling.”
China also reported unexpectedly weak economic data for July. Bloomberg news said China posted its weakest industrial output growth in a single recorded month since 2002.
“The economy is facing strong headwinds and decelerating,” Gene Ma, chief China economist at the Institute of International Finance in Washington, DC, told Bloomberg. “More targeted monetary and credit easing are needed. We expect some sort of interest rate cut in the fall.”
Light, sweet crude prices on the New York market also fell, which analysts attributed to a second consecutive week of gains in US oil supply.
US crude oil inventories for the week ended Aug. 9, excluding the Strategic Petroleum Reserve, increased by 1.6 million bbl from the previous week to 440.5 million bbl, the US Energy Information Administration reported (OGJ Online, Aug. 14, 2019).
Analysts surveyed by the Wall Street Journal had expected inventories to drop 2.1 million bbl.
US oil production for the week ended Aug. 9 held unchanged from the previous week at 12.3 million b/d, EIA’s Petroleum Status Report said.
Energy prices
Light, sweet crude oil on the New York Mercantile Exchange for September delivery dropped 76¢ to $54.47/bbl on Aug. 15 while the October contract declined 83¢ to $54.42/bbl.
The NYMEX natural gas price for September gained nearly 9¢ to a rounded $2.32/MMbtu.
Ultralow-sulfur diesel for September fell 3¢ to $1.81/gal. The NYMEX reformulated gasoline blendstock for September decreased nearly 4¢ to a rounded $1.63/gal.
Brent crude for October fell $1.25 to $58.23/bbl. The November contract dropped $1.28 to settle at $57.79/bbl.
Gas oil for September declined $1 to $560/tonne on Aug. 15.
The average for the Organization of Petroleum Exporting Countries’ basket of crudes for Aug. 15 was $58.87/bbl, down $1.12.
Contact Paula Dittrick at [email protected].
