By OGJ editors
HOUSTON, Nov. 23 -- The front-month crude oil contract in the New York market fell Nov. 20, while the front-month gas contract made slight gains. Analysts at Pritchard Capital Partners said, “Fundamentals remain poor as crude, gasoline, and distillate inventories” are a respective “6%, 5%, and 33% above their 5-year averages.”
They said, “We expect this week’s [US Energy Information Administration] crude inventories report may show a spike in imports given the previous week’s data was impacted by a sharp decline in imports to the Gulf Coast region due to import curtailments stemming from Hurricane Ida. While a weaker than expected inventory report may pressure crude, ultimately we believe the commodity will continue to trade at an inverse relationship to the [US dollar], which we expect to remain weak for the foreseeable future given the low interest rate environment and government stimulus spending.
They added, “Nonetheless, if the euro continues to weaken against the [dollar], as evidenced in the [dollar] rebound late last week, crude may come under pressure.”
Regarding natural gas, Pritchard Capital analysts said, “Despite forecasts calling for cooler weather this week, we believe natural gas may be pressured as temperate weather last week may keep [heating degree days] below their 5-year average of 118 days, and if such is the case we’d expect a build in storage, which has not happened in the last week of November since 2001 (+30 bcf).”
They added, “Recent data indicates the market is becoming more bearish on gas, as short positions outnumber longs by 167,284 contracts. While this may spark a violent short covering, similar what we saw in recent months, if the fundamentals continue to remain this poor we would expect gas prices to decline further, as the E&Ps 2010 production forecast increases simply will not support gas at these levels.”
The December contract for benchmark US light, sweet crudes dropped 74¢ to $76.72/bbl Nov. 20 on NYMEX. The January contract dropped 58¢ to $77.47/bbl. On the US spot market, WTI at Cushing, Okla., was down 74¢ to $76.72/bbl. Heating oil for December delivery declined 2¢ to $1.98/gal on NYMEX. Reformulated blend stock for oxygenate blending (RBOB) for the same month gained 1¢ to $1.98/gal.
The December natural gas contract, however, gained 8¢ to $4.42/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., was down 34¢ to $3.19/MMbtu.
In London, the January IPE contract for North Sea Brent crude lost 44¢ to $77.20/bbl. Gas oil for December fell by $11.75 to $609.25/tonne.
The average price for OPEC’s basket of 12 reference crudes was down 99¢ to $75.78/bbl on Nov. 19.