Brazilian Oil Workers' Strike Threatens to Disrupt Global Energy Markets

Strategic Insights -

The ongoing strike threat from unionized Brazilian oil workers against Petroleo Brasileiro S.A. (Petrobras) has created uncertainty in the global energy market, leading to increased crude oil and oil product prices. The July crude oil contract on the New York Mercantile Exchange (Nymex) settled up 6 cents at $18.86 per barrel, while the July gasoline contract increased by 0.35 cents to 61.15 cents per gallon. Analysts believe that the threat of another strike is lending uncertainty to the market, but prices are unlikely to drop significantly.

Key Takeaways:

  • The July crude oil contract on Nymex settled up 6 cents at $18.86 per barrel, driven by the threat of a strike by Brazilian oil workers.
  • The July gasoline contract increased by 0.35 cents to 61.15 cents per gallon, as buyers moved into the market in response to the strike threat.
  • Gasoline prices are expected to test 58.90 cents per gallon, with traders shifting their positions from gasoline to heating oil.
  • The differential between cash reformulated gasoline (RFG) prices at New York Harbor and the July Nymex contract softened 0.5 cents, with cash trades 2.75 cents over the Nymex contract.
  • The July crude/gasoline crack spread on Nymex widened by almost 10 cents from Friday's spread to $6.82 per barrel.
  • West Coast cash gasoline prices strengthened, trading 0.75 cents-1 cents higher than Friday at 56.75 cents-57.75 cents per gallon.
  • Analysts believe that the upcoming OPEC and U.N. meetings will have little impact on crude oil prices, which will likely hover near $19 per barrel.

Statistics:

  • July crude contract on Nymex settled up 6 cents at $18.86 per barrel.
  • July gasoline contract increased by 0.35 cents to 61.15 cents per gallon.
  • July Brent cargoes are expected to total 48-50, up from 43 in June.
  • Forties, Oseberg, Stratfjord, and Flotta loadings will gain three to six shipments each, according to sources.
  • Prices will hover near $19 per barrel, with little reason to go lower, said Adam E. Sieminski of Natwest Washington Analysis.
  • 14 cargoes of gasoline are due to arrive by early next week on the East Coast from Europe, the Caribbean, and the Mediterranean.

Sources:

  • Ric Navy, analyst with New York-based Paribas Futures Inc.
  • Adam E. Sieminski, analyst with Washington, D.C.-based Natwest Washington Analysis
  • Randall L. Donney, analyst with New York-based Pegasus Econometric Group