MARKET WATCH: Crude, gas prices climb in New York market

Sam Fletcher
OGJ Senior Writer

HOUSTON, Feb. 18 -- Oil and natural gas prices rose Feb. 17 in the New York market with crude hitting a 3-week high and the Dow Jones Industrial Average trading 40 points higher on better-than-expected performance in the US housing and industrial sectors last month.

“Natural gas traded up a little over 1% after this information and also after more forecasts for colder weather,” said analysts in the Houston office of Raymond James & Associates Inc. “Last week's relatively colder weather caused multiple power outages across the Mid-Atlantic, but that could likely be offset by wellhead freeze-offs from the cold weather. With more forecasts for colder weather in late February, we could see significant withdrawals from storage over the next couple of weeks.”

In New Orleans, analysts at Pritchard Capital Partners LLC said, “Crude rose despite dollar strength on positive economic data; US industrial production increased 0.9% in January, above the 0.8% consensus, and housing starts rose 2.8%.” They said, “Expect positive movement out of the crude contract if the US dollar doesn’t move higher and there is a draw in crude.”

Olivier Jakob at Petromatrix, Zug, Switzerland, said, “The current technical formation on West Texas Intermediate is a carbon copy of the price action that preceded the severe $7/bbl price drop at the beginning of February, and if the dollar index remains a market-maker for crude oil prices, we will nonetheless be cautious on length in crude oil given the significant bearish divergence in the American Petroleum Institute and the Department of Energy reports.”

He reported, “Production issues at the Buzzard field in the North Sea led to a narrowing of the Brent contango and of the WTI premium to Brent. However, the French workers union is calling for an extension of the strike against Total SA and this should lead to some back-up of crude supplies as refinery runs would be cut further.” Total’s six refineries and 12 product depots in France were hit by labor strikes supporting the Feb. 16 takeover by workers of the idle 137,000-b/d Dunkirk refinery (OGJ Online, Feb. 17, 2010).

In other news, Iran rejected as “worthless and illogical” a nuclear settlement proposal presented by the US, France, and Russia.

US inventories
The DOE’s Energy Information Administration said Feb. 18 commercial US crude inventories jumped by 3.1 million bbl to 334.5 million bbl in the week ended Feb. 12, well above Wall Street’s consensus of a 1.7 million bbl gain. Gasoline stocks advanced 1.7 million bbl to 232.1 million bbl, also exceeding a consensus for a 1.5 million bbl increase. Distillate fuel inventories fell 2.9 million bbl to 153.3 million bbl, exceeding analysts’ expectations of a 1.5 million bbl decline but still above average for this time of year.

The American Petroleum Institute earlier reported a 63,000 bbl decline in US crude inventories, a 1.4 million bbl increase in gasoline, and an increase of 1.3 million bbl in distillates.

Imports of crude into the US increased 206,000 b/d to 8.5 million b/d last week, EIA reported. In the 4 weeks through Feb. 12, US crude imports averaged 8.3 million b/d, down 1.3 million b/d from the comparable period in 2009.

The input of crude into US refineries increased by 182,000 b/d to 13.8 million b/d in the latest week, with units operating at 79.8% of capacity. Gasoline production decreased to 8.4 million b/d, but distillate fuel production increased to 3.4 million b/d.

EIA also reported the withdrawal of 190 bcf of natural gas from US underground storage in the week ended Feb. 12. That left 2.03 tcf of working gas in storage, up 26 bcf from year-ago levels and 53 bcf above the 5-year average.

Energy prices
The March contract for benchmark US sweet, light crudes increased 32¢ to $77.33/bbl Feb. 17 on the New York Mercantile Exchange. The April contract gained 31¢ to $77.73/bbl. On the US spot market, WTI at Cushing, Okla., was up 32¢ to $77.33/bbl. Heating oil for March delivery advanced 1.04¢ to $2.01/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month increased 1.89¢, also to $2.01/gal.

The March natural gas contract gained 7.6¢ to $5.39/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 19¢ to $5.47/MMbtu.

In London, the April IPE contract for North Sea Brent crude was up 59¢ to $76.27/bbl. Gas oil for March declined 25¢ to $611/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes increased $1.27 to $74.33/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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