Current Oil Prices Drop with China Further Slows and Norway Resolves Strike

Current oil prices fell amid indications of China’s economic slowdown and after Norway’s government took action to bring a crippling strike against North Sea oil production to an end.

In the NYMEX, the benchmark US crude oil blend, West Texas Intermediate, declined by $2.08, to end at a per barrel oil price of $83.91. In London, Brent crude fell by $2.35 to end at a per barrel oil price of $97.97.

The imports of China for the month of June grew by 6%, but that is lower compared to its rate in the month of May and way below the projection of analysts. China’s exports also declined. As the second largest consumer of oil worldwide after the United States, China’s economic slowdown implies that it will not be using plenty of energy.

The threat in Norway recently ended following the government’s binding settlement with the Statoil workers who were on strike. That stopped a possible lockout that may have declined the daily production of Brent crude by 1.6 million barrels. Brent is used as a benchmark to price different types of foreign oils. It is also used by many refineries in the East Coast USA to produce gasoline.

The ongoing strike is likely to limit the supplies to main export markets such as the U.K., France, Germany and Netherlands just as Europe imposes the Iranian oil embargo.

In the United States, the Energy Information Administration released its Short Term Energy Outlook showing that the average per barrel oil price of its Benchmark crude is projected to fall in this year’s second half compared to last month’s projection. It also showed the average prices of retail gas at around $3 per gallon for quarter three of this year and for the entire next year.

At the pump, the average gasoline price today throughout the country stayed at $3.38 per gallon said the Oil Price Information Service, Wright Express and AAA. That is higher by 5 cents versus last week and lower by about 25 cents versus last year.

By: Chris Termeer