MARKET WATCH: Gas futures price falls 7% in New York market

Sam Fletcher
Senior Writer

HOUSTON, Aug. 7 -- The front-month natural gas contract in the New York market plummeted more than 7% Aug. 6 after the Energy Information Administration reported the injection of 66 bcf of gas into US underground storage in the week ended July 31.

That injection boosted the amount of working gas in storage to 3.09 tcf, up 580 bcf from the year-ago level and 496 bcf above the 5-year average (OGJ Online, Aug. 6, 2009). Energy prices generally declined as the dollar strengthened against the euro.

EIA’s report on gas storage eclipsed earlier reports Enterprise Products Partners LP shut its 42-in. Gulf of Mexico pipeline due to an explosion at a compressor plant (OGJ Online, Aug 6, 2009).

Oil was down in early trading Aug. 7 after closing flat in the previous session. Olivier Jakob at Petromatrix in Zug, Switzerland, said, “West Texas Intermediate has been trading a very tight range for the last 3 days, and this re-enforces the view that a volatility outbreak is in preparation.”

He said. “Technically, WTI is in a total standstill between $70-72/bbl. It is in pure congestion mode, but this never lasts for long and we have to be prepared for a volatility outbreak. The direction of which, however, we can not predict at this stage.”

Adam Sieminski, chief energy economist, Deutsche Bank, Washington, DC, said, “Crude oil prices have recently been linked strongly to the performance in Standard & Poor's 500 stock index, but this correlation is not stable. It seems plausible to us that as investors become more comfortable with an increasingly positive economic outlook, oil will start trading more on its own set of fundamentals, which we believe are set to remain relatively weak into 2010, and not those of the broader economy.”

As for natural gas, he said, “Weather trends are providing mixed signals: The Pacific Decadal Oscillation looks like it has flipped into a cold phase. If it has, we may have some cold winters ahead despite an underlying trend of global warming. But this winter could be warmed-up by a developing El Niño, and this summer is still seeing a significant build in natural gas storage and little evidence of looming hurricane activity that are keeping downward pressure on prices.”

FTC issues rule
Meanwhile, the Federal Trade Commission issued a final rule prohibiting fraud or deceit in wholesale petroleum markets, and omissions of material information that are likely to distort petroleum markets, with possible fines as much as $1 million/day. Proponents claim the measure will target such practices as keeping tankers offshore and impeding imports, closing refineries for maintenance when prices or demand are high, or exporting crude at a low price to manipulate US inventories.

Commissioner William E. Kovacic, who voted against it, said the rule was flawed because it does not require that an alleged violation be intentional and either actually or likely distort markets (OGJ Online, Aug. 6, 2009).

The new FTC rule “would have a greater impact on correctly reporting stocks in Cushing[, Okla., storage] or reporting cash deals than on speculative flows so we would not be overly concerned about these new rules for the general trading and positions in futures,” Jakob said.

In other news, the Labor Department reported Aug. 7 US payrolls dropped 247,000 in July compared with a 443,000 loss in June. The US unemployment rate declined for the first time since April 2008, down to 9.4% from 9.5% previously. Analysts hailed it as the clearest sign yet that the recession is easing.

Energy prices
The September contract for benchmark US light, sweet crudes traded as high as $72.42/bbl Aug. 6 on the New York Mercantile Exchange before closing at $71.94/bbl, down 3¢ for the day. The September contract lost 6¢ to $73.87/bbl. On the US spot market, WTI at Cushing was down 3¢ to $71.94/bbl. Heating oil for September delivery dropped 2.02¢ to $1.94/gal on NYMEX. Reformulated blend stock for oxygenate blending (RBOB) for the same month increased 0.95¢ to $2.06/gal.

The September contract for natural gas fell 29.9¢ to $3.74/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., increased 7¢, to an average $3.74/MMbtu.

In London, the September IPE contract for North Sea Brent briefly reached a high for this year at $76/bbl in intraday trading. It closed at $74.83/bbl, down 68¢ for the day. Gas oil for August gained $4 to $611/tonne

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 47¢ to $72.99/bbl on Aug. 6.

Contact Sam Fletcher at samf@ogjonline.com

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by
Available Webcasts


Operating a Sustainable Oil & Gas Supply Chain in North America

When Wed, Oct 7, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.

register:WEBCAST


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected