Current Oil Price Falls as Investors Observe European Efforts

The current oil price dropped as investors continue to observe the efforts of Europe to resolve its debt problem and the tensions in the Middle East that might possibly disrupt supply.

In the NYMEX, the crude price per barrel for delivery in October lost 33 cents to $96.53 in London’s midday trading. It finished the previous day’s trading with a 71-cent gain to $96.68.

The prime minister of Greece will convene with the main leaders of Europe in the coming days to request additional time to meet its targets for deficit reduction.

Moreover, traders wait for minutes of the Fed’s July meeting to be released for signs of a possible decline in interest rates.

Lower rates have the tendency to affect the crude price per barrel since they pull investors away from investments that are considered less risky and into higher risk asset classes, like crude oil.

In the meantime, Goldman Sachs’ analysts said that tight supplies and the standoff between the West and Iran over the latter’s nuclear program are factors to be taken into account to determine where current oil prices are headed.

In an email commentary, analysts said that they believe it is only a matter of time before the spare capacity of OPEC supplies are effectively consumed, which will require increased oil prices to limit keep demand in proportion with the available crude supply. Further, with the growing tensions between the West and Iran, the risk to the current oil prices is more likely headed upward.

In London’s ICE Futures exchange, the crude price per barrel of Brent lost 68 cents to $113.96.

Elsewhere in the energy markets, the price of heating oil was 0.2 cents lower at $3.11 per gallon while that of natural gas gained 4 cents to $2.81 for every 1,000 cubic feet.

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.

Facebook Twitter LinkedIn Google+ YouTube