Current Crude Oil Price Drops to New Low Level for the Year

The current crude oil prices fell to a new low level this year with rumors that Greece may leave the euro currency.

In the NYMEX, the Benchmark WTI crude price dropped $1.35 to finish at $94 a barrel. That is the lowest rate since the 19th of December last year.

On the ICE Futures exchange in London, Brent crude prices were lower by $1.61 to end at $110.65.

Elsewhere in the energy markets, the price of heating oil fell by 3.46 cents at $2.9290 a gallon. Gasoline futures reduced by 2.87 cents at $2.9721 a gallon. Natural gas price is lower by 0.8 cent for $2.501 for every 1,000 cubic feet.

Gasoline prices in the U.S. have declined by about 21 cents per gallon since the month of April when they reached their highest level this year of $3.939. The recent crude price reduction should help maintain low gasoline prices.

The slow growth of China that can hurt oil demand also worried oil traders. Recently, the government expressed that the growth in industrial production for the month of April became weak and the output of electricity changed minimally.

However, traders disregarded the recent announcement of China of its plan to make a 0.5 percentage point reduction on its required bank reserve. The third reduction in the reserve ratio since the month of November is for the purpose of strengthening lending and triggering economic development.

Rumors that Greece will leave the eurozone helped strengthen the dollar. Consequently, that lowers down the price of crude oil by leading commodities such as oil to become more costly for investors who trade on other currencies. The dollar is the currency used in oil trading.

In New York, the euro recently fell from $1.2925 to $1.2866.

Several analysts say that the current crude oil price decline is not being influenced by the fundamentals of world supply and demand but of seasonal factors that see traders offer assets at the start of the summer months.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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