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Petroleum

Crude Prices Plummet to Four-Month Lows before Bouncing Back

Strategic Insights

— 1 min read

Crude oil prices plummeted to four-month lows on the New York Mercantile Exchange (Nymex) as the OPEC meeting drew to a close in Vienna, Austria. The July crude contract fell to $17.90/bbl, its lowest level since February 3, before bouncing back as the meeting concluded. Despite the initial drop, the August contract also reached fresh lows before settling back at $17.97/bbl. The OPEC meeting's outcome, including a suggestion to suspend production quotas next year, sent prices tumbling over 60 cents on Monday. However, a lack of further comments on the matter led to a rebound in prices.

Key Takeaways:

  • Crude oil prices plummeted to four-month lows of $17.90/bbl on Nymex, before bouncing back as the OPEC meeting concluded.
  • The July crude contract on Nymex settled down 21 cents at $18.01/bbl on its final day of trading.
  • The August contract reached fresh lows of $17.93/bbl before settling at $17.97, down 6 cents.
  • The OPEC meeting ended with no further comment about suspending production quotas next year, despite an initial suggestion by OPEC President Erwin Jose Arrieta.
  • Secretary-General Rilwanu Lukman said OPEC would meet with non-OPEC producers to resolve rising production issues.
  • Strong gasoline prices maintained a strong incentive to run crude, with prices potentially rebounding to $19/bbl if support levels hold.
  • A critical support level for the August contract is $17.80/bbl, and prices staying above that level could lead to an opportunity to trade back up.

Statistics:

  • Crude oil prices plummeted 21 cents on the July contract, settling at $18.01/bbl at the end of trading.
  • The August contract hit fresh lows of $17.93/bbl, before settling at $17.97, down 6 cents.
  • Gasoline prices rebounded, with the July contract settling up 0.56 cents at 60.84 cents/gallon.
  • The July gasoline crack spread ended the day at $7.54/bbl, up from $7.10 on Monday.
  • The August crack spread ended at $6.36, down from $7.56.

Sources:

  • Oil sands News, "Crude prices drop at OPEC meeting", 1994.
  • World Oil, "OPEC promises to boost oil output", 1994.
  • Marketwatch, "Crude Oil Prices Plummet on OPEC Uncertainty".

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