EDITORIAL: Oil Price Review

• Date: 01 October 2016
• Published date: 01 October 2016
• DOI: http://doi.org/10.1111/oet.12431

OIL PRICE REVIEW

ThirdQuarter2016

Dated Brent crude 24 June close: $46.69 per barrel

25 June-1 July Friday close: $47.65

Crude oil prices started the week down on the previous

week’s close on continuing, but vague fears that the

UK’s decision to leave the European Union (EU) would

somehowcause a slump in global oil demand,along with

all manner of other unspecieddisasters: or, at least, the

end of the recent bull market in oil. Sentiment rapidly

changed, however, and prices began to recover, rising by

more than $2 in some cases on fears of a strike by workers

on Norwegian oil platforms and a fall in US inventory

levels.

2-8 July Friday close: $44.53

Market attention remained rmly focused on supply

as the threatened Norwegian strike failed to material-

ize. North Sea and other sweet crudes were available

in ample quantities; some sour blends less so, although

thereappearedtobeadequatevolumesavailablefrom

Russia and the Persian Gulf. On the demand side, fears

about the British EU vote, dubbed “Brexit,” resurfaced

with further dire predictions of its eects on global eco-

nomic growth. Wildres caused some Canadian oil pro-

duction to be shut-in, boosting the price of some US and

Latin American crudes, but supplies across the Western

Hemisphere remained comfortable. Product prices fell

on high supplies and stock levels.

9-15 July Friday close: $46.25

Demand and supply fundamentals were little changed,

but crude prices managed to stage a small recovery.

North Sea prices received a boost from news that Nor-

wegian oil workers might be going to strike aer all and

there were rumblings of discontent among workers on

some British produc tion platforms. Meanwhile, reners

in Asia increased their purchases of both British and

Norwegian oil. e lightersweet crudes and condensates

faredlesswellowingtoweaknaphthaandgasolineprices

east of Suez. Western Hemisphere crude prices came

under downward pressure as re-aec ted Canadian pro-

duction began to re sume. US products rose while most

other markets remained weak and oversupplied.

16-22 July Friday close: $44.24

Prices fell on fears of slowing demand g rowth and rising

inventory levels. Concerns about demand were focused

fortheshorttermonpossiblecutsinreneryruns,asa

result of poor margins for gasoline. Light, sweet crudes

were seen as oversupplied in such circumstances and

weakened accordingly,although a number of spareNige-

riancargoeswereabletondhomesinLatinAmerica

and India. e reopening of an export te rminal in Libya

closed by local unrest allowed more light, sweet crude

ontoanalreadyoversuppliedEuropeanmarket.InAsia,

low margins for gasoline and naphtha cut demand for

regional light crudes and condensates, although heav-

iergradesgainedrelativelyasaresultofgooddemand

for middle disti llate. Firm Asian demand for fuel oil

attractedsuppliesfromEurope.

23-29 July Friday close: $40.76

Market concerns switched back to supply as North Sea

cargoesremainedunsoldandUSproductionandinven-

tories both notched-up. Atlantic Basin crudes fell by as

much as $3.75/bbl. In Asia, heavy, sweet grades took the

greatest hit. Persian Gulf sour blends also fell but rose

a little in relation to light, sweet Atlantic Basin grades.

While a good dea l of market attention was on the rise in

global inventories of crude, it began to become clear that

stocks of rened products were climbing at a worrying

rate. Land-based storage was reported f ull in some areas

and products were reported as being stored at sea.

30 July-5 August Friday close: $42.47

Crude oil prices began the week by falling, taking prompt

Brent futures down to $41.80/bbl and WTI below $40.

Crude and product stockdraws in the US prompted a

mid-week revival for WTI, sending it northwards by

$2.42/bbl before the US benchmark eased downwards

to nish the week at $41.80. European stock levels

remained high, especially for products, but it was a dif-

ferent story in Asia, where stock levels generally fell.

Growing unrest in Nigeria meant there was less crude

available, boosting the price of grades such as Bonny

Light and Qua Iboe.

6-12 August Friday close: $45.12

An outbreak of optimism helped to drive Brent futures

up to nearly $47/bbl at one stage as traders speculated

onapossible,butunlikelyfreezeinproductionbyOPEC

and Russia. More speculation, this time in global stock-

markets, drove share indices up to new dizzy heights,

and oil markets were content to follow. Nigerian exports

continuedtobecutbyunrestintheDeltaregion,and

in the US product ion of shale oil carried on falli ng. Sour

marketsrmedonashortageofsuppliesfromsomepro-

ducers, including Ira q and Colombia, and several Mid dle

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