Oil prices drop as supply improves

Press, 26 July 1989, Page 35

Oil prices drop as supply improves

NZPA-Reuter London Good supply and the suspension of a strike in the British ’’North Sea pushed crude oil prices lower on Monday, with prices quoted mid-afternoon at around US4Oc a barrel below levels seen at the end of last week, traders said. North Sea Brent Blend, the European marker crude, stood at SUSI 7.30 for cargoes loading over the next two weeks. September Brent cargoes were last traded at $17.09 and are currently testing $l7, the traders said. In New York, the American benchmark crude, West Texas Intermediate, fell to trade as low as $18.97 after closing on Friday at $19.51. On the International Petroleum Exchange, September Brent futures sold from $17.31 down to a low of $17.06. Prices began to fall on Friday, when a two-month-old strike campaign, by oilfield construction and maintenance workers in the British sector of the North Sea was called off, pending talks on pay, safety legislation and union recognition. Traders said falls had been expected because supply in Europe was good and refining margins were poor. “We’ve been waiting for some correction for a long time,” said one dealer, who expected prices to drop $1 to $2 over the next two months. "Prices could be weaker (about $l6) in the next month or two due to weaker seasonal demand and increasing North Sea production,” according to a report by S. G. Warburg Securities. Warburg Securities said they expect prices to average around $l7 a barrel in the second half of the year, with winter demand buoying markets in the fourth quarter. Physical Brent prices have fluctuated in a $1 range around $lB over the last month.