U.S. crude-oil futures retreated on Monday, while natural-gas prices climbed to a fresh 14-year high as fears about shortages in Europe also impacted the U.S. market.
Price action
- West Texas Intermediate crude for September delivery CLU22, -3.69% CL.1, -3.69% was down $3.43, or 3.8%, with the front-month contract worth $87.34 per barrel on the New York Mercantile Exchange. The contract expires at the end of the session. The most-active October contract CLV22, -3.55% CL00, -3.55% traded at $87.20, down $3.36, or 3.6%.
- October Brent crude BRNV22, -3.52% was also down $3.44, or 3.6 % at $93.28 per barrel on ICE Futures Europe.
- Back on Nymex, September gasoline RBU22, -5.08% traded at $2.8546, down 16.2 cents, or 5.4% per gallon, while September heating oil HOU22, +0.72% added 2.7 cents, or 0.7%, to $3.7274 a gallon.
- September natural-gas prices NGU22, +2.84% rose 1.7% to $9.497 per million British thermal units, headed their highest finish since the summer of 2008.
What analysts are saying
Crude-oil prices headed sharply lower in Monday dealings, getting “knocked down” over demand concerns, said Colin Cieszynski, chief market strategist at SIA Wealth Management.
The People’s Bank of China cut its benchmark loan prime rate on Monday in a move to support its slowing economy, after it already lowered two other key policy rates last week.
That’s raised concerns that “China could be falling into recession, and that other countries could eventually follow suit, which could reduce global demand” for oil, Cieszynski told MarketWatch.
But natural gas stole the spotlight on Monday as prices in the U.S. surged to fresh 14-year highs. A team of energy analysts at ING attributed the move in gas prices to Russia’s decision to halt flows to Europe along the Nord Stream 1 pipeline.
Also see: Why natural-gas prices have climbed to a 14-year high
“Gazprom announced that flows along its Nord Stream 1 pipeline will come to a halt so that maintenance can be carried out at a compressor station. Maintenance is expected to last for 3 days, and the real concern for the market is whether flows will resume after this period,” the ING analysts said in a note.
Over in the U.S., the August/September period has “historically been a seasonally stronger time of the year for natural gas, related to a combination of potential supply disruptions from hurricanes and anticipation of the upcoming home heating season,” said SIA Wealth Management’s Cieszynski.
This year, however, “issues related to Russian natural gas supply into Europe have also been a factor,” he said.
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