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Petroleum

Crude Oil Prices Plummet Amid Low Demand Season

Strategic Insights

— 1 min read

Rising inventories and concerns about global supply glut have triggered a sharp decline in crude oil prices, with the New York Mercantile Exchange's (Nymex) August crude contract closing at $17.33 per barrel on July 19, down 2 cents from the previous day. Meanwhile, gasoline futures prices also dropped, closing at 52.69 cents per gallon, down 0.89 cents from the previous day. The market's reaction was largely driven by fears of a surplus of crude oil in the world market, with many refiners delaying purchases to avoid paying high prices.

Key Takeaways:

  • The New York Mercantile Exchange's (Nymex) August crude contract closed at $17.33 per barrel on July 19, down 2 cents from the previous day.
  • Gasoline futures prices also dropped, closing at 52.69 cents per gallon, down 0.89 cents from the previous day.
  • Refiners are delaying purchases of crude oil to avoid paying high prices, exacerbating the surplus of crude in the world market.
  • A contango in outer-month Brent IPE prices has raised concerns that a similar situation could occur in U.S. markets, despite a current pattern of backwardation in Nymex crude contracts.
  • A surplus of North Sea Brent cargoes has depressed Brent prices on London's International Petroleum Exchange (IPE) to levels of $15.83 per barrel.
  • West African grades are losing ground on oversupply, with indicators of market weakness prompting concerns about a similar situation in U.S. markets.
  • Refiners are keeping stocks sparse and delaying crude purchases during the low-demand season to avoid paying more for crude that may drop in value.
  • The U.S. cash market remains firm, with West Texas Intermediate (WTI) crude at Cushing, Oklahoma, remaining at $17.25-$17.35 per barrel.
  • Gulf Coast cash prices are decaying, with trades as low as 46.75 cents per gallon, 0.25-1 cents lower than Tuesday's trades.

Statistics:

  • Nymex August crude contract: $17.33 per barrel (down 2 cents from previous day)
  • Gasoline futures prices: 52.69 cents per gallon (down 0.89 cents from previous day)
  • Brent prices on IPE: $15.83 per barrel
  • West Texas Intermediate (WTI) crude at Cushing, Oklahoma: $17.25-$17.35 per barrel
  • Gulf Coast cash prices: as low as 46.75 cents per gallon

Sources:

  • Bloomberg, July 19, 1995
  • Reuters, July 19, 1995
  • Wall Street Journal, July 20, 1995

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