Oil Prices Plummet Amid Nigerian Strike Misconception

Strategic Insights -

Washington -- Oil prices retreated across the board Tuesday due to traders' mistaken belief that the Nigerian oil strike was ending, while in reality, the strike is accelerating. Contrary to futures markets, U.S. wholesale refined products prices rose significantly. The strike, which is gaining momentum, involves 3.5 million workers and is aimed at forcing the Nigerian military rulers to hand over power to Moshood Abiola, the apparent winner of the annulled presidential elections.

Key Takeaways:

  • Oil prices fell across the board, with West Texas Intermediate (WTI) crude oil futures for September delivery dropping 41 cents to $20.14/bbl on the New York Mercantile Exchange.
  • The strike in Nigeria, which is intended to force the military rulers to hand over power to Moshood Abiola, is accelerating, with a general strike by 3.5 million workers scheduled to start on Aug 3.
  • In contrast to futures markets, U.S. wholesale refined products prices rose sharply, with unleaded regular gasoline for September delivery to New York Harbor increasing by 0.04 cents to 59.93 cents/gallon.
  • Leading buyers of U.S. crudes raised posted prices 25 cents/bbl, boosting WTI to $19.25.
  • Louisiana Light Sweet at St. James, La., fell from a premium of 25 cents/bbl over WTI at Cushing, Okla., to just 5 cents.
  • September No. 2 heating oil tumbled 1.24 cents to 53.02 cents/gallon.
  • The 3-2-1 crack spread rose above the crucial $4 level to $4.06/bbl.
  • Wholesale unleaded regular jumped 2.36 cents to 65.91 cents/gallon, low-sulfur diesel soared 2.68 cents to 57.51 cents/gallon, and No. 2 climbed 2.52 cents to 56.37 cents/gallon.

Statistics:

  • Oil prices dropped by 41 cents to $20.14/bbl for WTI crude oil futures for September delivery on the New York Mercantile Exchange.
  • Wholesale unleaded regular gasoline for September delivery to New York Harbor increased by 0.04 cents to 59.93 cents/gallon.
  • Leading buyers of U.S. crudes raised posted prices 25 cents/bbl.
  • September North Sea Brent futures declined 39 cents to $18.51/bbl on London's International Petroleum Exchange.
  • The WTI-Brent spread trims to $1.63/bbl.
  • Damage from the fire in the catalytic cracker at Chevron Corp.'s Philadelphia-area refinery is expected to reduce gasoline supplies in the Northeast the next one to two weeks.

Sources:

  • The Wall Street Journal (no date provided)
  • The Oil Daily (no date provided)
  • Computer Petroleum Corp. (no date provided)