Oil Prices Move Sharply Lower

Oil prices moved “sharply lower” on Tuesday, analysts at Standard Chartered highlighted in a new report sent to Rigzone late yesterday.

The commodity tested below $105 per barrel in early trading as the recent “tug of war” between recessionary fears and falling demand on the one side and unstable geopolitics and falling supply on the other side moved in favor of the former combination, the analysts noted in the report.

“Along the curve, Brent for delivery five years out fell by $0.19 per barrel week on week to settle at $74.27 per barrel on 4 July,” the analysts stated in the report.

“The front of the curve steepened further, with the December 2022 to December 2023 Brent spread widening by $1.08 per barrel week on week to $14.76 per barrel,” the analysts added.

At the time of writing, the price of Brent crude oil was trading at $105.08 per barrel. The Brent price closed at $102.77 per barrel on Tuesday, diving from its previous close of $111.63 on July 1. Brent has closed above $120 per barrel this year on several occasions, the last of those coming on June 14.

Gas Prices

Looking at gas prices, the Standard Chartered analysts noted in the report that the August contracts for both UK National Balancing Point (NBP) and Dutch Title Transfer Facility (TTF) natural gas increased by more than 25 percent week on week.

“August NBP gained UKp 58.33 per therm week on week to settle at UKp 282.24 per therm on 5 July, while August TTF gained EUR 32.693 per megawatt hour (MWh) to EUR 162.94/MWh,” the analysts said.

“NBP gas has continued higher, pushing above UKp 300 per therm in early trading on 5 July. Prices are still well below the all-time highs set in early March in the immediate aftermath of Russia’s invasion of Ukraine when NBP settled above UKp 500 per therm and TTF settled above EUR 225/MWh,” the analysts added.

“That is likely to be of only limited solace for policy makers as, for example, current NBP prices are 220 percent higher year on year and 1,900 percent higher than two years ago,” the analysts continued.

In the report, the analysts stated that the latest push higher in European gas prices was reinforced by industrial action in Norwegian gas fields and by mounting concerns that the Nord Stream 1 pipeline might not return to service on time, or even at all, after its scheduled 11-21 July maintenance.

To contact the author, email andreas.exarheas@rigzone.com