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

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

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


OGJ's Midyear Forecast 2015

When Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

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