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Commodity futures

Crude Futures Prices Plummet Amid Easing Supply Worries

Strategic Insights

— 2 min read

Crude futures on the New York Mercantile Exchange (Nymex) traded lower on Tuesday due to an easing of supply concerns, as Saudi Arabia cut official selling prices and the Nymex caught up with Monday's losses on London's International Petroleum Exchange (IPE). The Nymex crude futures for October delivery rallied in the second half of the day to close at $43.31 per barrel, down 68 cents. The November contract settled at the same price, with funds reportedly moving their long positions to the November contract. In London, Brent crude closed at $40.76 per barrel, up 14 cents, after rebounding on short-covering following a session low of $42.73 per barrel. The market also found support on expectations of a possible crude inventory withdrawal and the possibility that Hurricane Ivan could shut production in the Gulf of Mexico.

Key Takeaways:

  • Nymex crude futures for October delivery closed at $43.31 per barrel, down 68 cents.
  • Funds reportedly moved their long positions to the November contract.
  • Brent crude closed at $40.76 per barrel, up 14 cents, after rebounding on short-covering.
  • The market showed support for a possible crude inventory withdrawal and the possibility that Hurricane Ivan could shut production in the Gulf of Mexico.
  • Saudi Arabia cut official selling prices, especially for heavier grades, which negatively impacted the market.
  • The lower prices are not necessarily an indication of less demand, but rather a way to perk interest in selling the less-desirable heavy grade, according to a trader.

Statistics:

  • Nymex crude futures for October delivery closed at $43.31 per barrel, down 68 cents.
  • Brent crude closed at $40.76 per barrel, up 14 cents.
  • The November contract settled at $43.31 per barrel (same price as the October contract).
  • Funds with long positions reportedly moved their positions to the November contract.
  • Hurricane Ivan was nearing Grenada and heading toward Cuba and the oil and natural gas fields in the Gulf of Mexico with winds of 120 miles per hour.
  • The Energy Information Administration's weekly inventory report will be delayed until Thursday due to the Labor Day Holiday.

Sources:

  • "Crude futures on the New York Mercantile Exchange (Nymex) traded lower Tuesday on an easing of supply worries, as Saudi Arabia cut official selling prices and the Nymex caught up with Monday's losses on London's International Petroleum Exchange (IPE)." (Original source: not specified)
  • "The weekly inventory report from the Energy Information Administration will be delayed until Thursday due to the Labor Day Holiday." (Original source: not specified)
  • "Market sources expect a withdrawal in light of ongoing strong demand and a slight cut in production thanks to Hurricane Frances." (Original source: not specified)
  • "Saudi Arabia, in an attempt to flood the market, slashed export prices, especially for heavier grades (see page 1)." (Original source: not specified)

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