Oil Prices Plummet as WTI Crude Oil Futures Slide and Natural Gas Falls Below $1.90/MMBtu

Strategic Insights -

The front-month contract for West Texas Intermediate (WTI) crude oil futures for July delivery traded at 86 cents per barrel lower than Friday's expiring June contract on its first day of trading. Meanwhile, natural gas futures fell to $1.851 per million British thermal units (MMBtu), a significant decline from the previous levels. This significant downturn in oil prices has sparked debate among traders, with some predicting a further decrease in crude oil prices due to a depressed crack spread, while others believe that low U.S. crude oil stocks will lead to an upward momentum transfer to July WTI. The Louisiana Offshore Oil Port (LOOP) reported a decrease in imported crude oil nominations for June, while Occidental Petroleum Corp. expects to resume normal pumping on the Cano Limon crude oil export pipeline in Colombia by May 30.

Key Takeaways:

  • WTI crude oil futures for July delivery traded 86 cents per barrel lower than Friday's expiring June contract.
  • Natural gas futures fell to $1.851/MMBtu, a decline from the previous levels.
  • The crack spread, which measures the relationship between gasoline prices and crude oil costs, was severely depressed, potentially forcing refiners to reduce runs and putting downward pressure on crude oil prices.
  • The WTI-Brent spread decreased to $1.65/bbl, down from the $2.35/bbl spread on the June contracts Friday.
  • The Louisiana Offshore Oil Port (LOOP) reported a decrease in imported crude oil nominations for June, totaling 825,000 barrels per day (b/d), down from 910,000 b/d in May.
  • Occidental Petroleum Corp. expects to resume normal pumping on the Cano Limon crude oil export pipeline in Colombia by May 30.
  • The 3-2-1 crack spread jumped to $3.26/bbl, but is still nearly $1 lower than normal for this time of year.
  • Wholesale unleaded regular prices climbed 0.77* to 55.97*/gallon, while June No. 2 heating oil futures dropped 0.41* to 47.91*/gallon.

Statistics:

  • WTI crude oil futures for July delivery traded 86 cents per barrel lower than Friday's expiring June contract on the first day of trading.
  • Natural gas futures fell to $1.851/MMBtu, a decline from the previous levels.
  • The WTI-Brent spread decreased to $1.65/bbl, down from the $2.35/bbl spread on the June contracts Friday.
  • The Louisiana Offshore Oil Port (LOOP) reported a decrease in imported crude oil nominations for June, totaling 825,000 b/d, down from 910,000 b/d in May.
  • Occidental Petroleum Corp. expects to resume normal pumping on the Cano Limon crude oil export pipeline in Colombia by May 30.
  • The 3-2-1 crack spread jumped to $3.26/bbl, but is still nearly $1 lower than normal for this time of year.
  • Wholesale unleaded regular prices climbed 0.77* to 55.97*/gallon.

Sources:

  • The Oil Daily in cooperation with Computer Petroleum Corp.
  • London's International Petroleum Exchange (IPE)
  • New York Mercantile Exchange (NYMEX)
  • Occidental Petroleum Corp.
  • Ecopetrol