Crude Oil Futures Prices Plummet Amid Bearish Fundamentals

Strategic Insights -

Crude oil futures prices crashed on the New York Mercantile Exchange (Nymex) on Friday, August 26, 1994, in response to bearish fundamentals. The price of West Texas Intermediate (WTI) for October 1994 delivery plummeted to $17.14/bbl, with analysts predicting further decreases to $16.75/bbl, the lowest price in four months. Export projections remain high due to increased production from new Norwegian wells in the North Sea and resumed deliveries from Nigeria.

Key Takeaways:

  • Crude oil futures prices fell 38* to $17.14/bbl on the Nymex, with analysts predicting further decreases to $16.75/bbl, the lowest price in four months.
  • The path of least resistance is down, according to William Brown III, president of W.H. Brown & Co. Inc.
  • Near-month contracts are priced lower than forward months, a situation known as contango.
  • November and December contracts fell 33* and 31* to $17.27/bbl and $17.36/bbl, respectively.
  • North Sea production is expected to rise by 750,000 b/d in September due to the return of Norwegian crude production.
  • The market will be sensitive to higher imports as refineries approach their seasonal downturn.
  • October Brent fell 32* to close at $16.04/bbl on London's International Petroleum Exchange (IPE).

Statistics:

  • Crude oil futures prices fell 38* to $17.14/bbl on the Nymex.
  • Analysts predict a further decrease to $16.75/bbl, the lowest price in four months.
  • November and December contracts fell 33* and 31* to $17.27/bbl and $17.36/bbl, respectively.
  • North Sea production is expected to rise by 750,000 b/d in September.
  • October Brent fell 32* to close at $16.04/bbl on London's International Petroleum Exchange (IPE).
  • September No. 2 heating oil fell 0.59* to close at 48.18*/gallon.
  • Gasoline was the only product to rally, with September unleaded gasoline rising 0.59* to close at 50.17*/gallon.

Sources:

  • "Crude futures plunge amid expectations of high imports," The Oil Daily in cooperation with Computer Petroleum Corp.
  • "Oil falls on bearish fundamentals," published on the New York Mercantile Exchange (Nymex).