MARKET WATCH: Natural gas markets 'slammed' by selling pressure wave

By OGJ editors
HOUSTON, Dec. 17
-- Natural gas markets were “slammed” Dec. 16 by “a wave of selling pressure on the [US Energy Information Administration] storage release,” said analyst James Crandell with Barclays Capital. EIA reported a 164-bcf drop in stocks, which was in line with consensus estimates, Crandell noted.

“On a weather-adjusted basis, the storage withdrawal was not remarkable, continuing the trend so far this season,” he said, adding, “It is hard to explain the negative reaction to the storage release on this basis, except that the weather-adjusted balance is evolving more weakly than last year, and when temperatures moderate, this factor should become more apparent.”

He said, “The saga of temperatures continues to unfold, showing a warmer pattern in the 11-15 day window. The temperature map is not completely without warmth, as Texas and the Rockies are expected to move from neutral to warmer-than-normal temperatures through the forecast window. The East is also expected to become less cold—small consolation for the author of this piece.”

Crude, meanwhile, followed the broader market upwards early Dec. 16 as the dollar fell and investors felt more comfortable with European sovereign debt levels, according to analysts with Raymond James & Associates Inc. Oil ended the day down 0.9%, they said.

Energy prices
The January natural gas contract lost 17.4¢ to $4.05/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 12¢ to $4.105/MMbtu.

The January contract for benchmark US light, sweet crudes fell 92¢ to $87.70/bbl Dec. 16 on the New York Mercantile Exchange. The February contract lost 84¢ to $88.40/bbl. On the US spot market, WTI at Cushing, Okla., maintained pace with the front-month futures price, down 92¢ to $87.70/bbl.

Heating oil for January delivery nudged down only slightly, settling at $2.476/gal on NYMEX. Reformulated blend stock for oxygenate blending for January was down fractionally as well, settling at $2.304/gal.

In London, the January IPE contract for North Sea Brent crude lost 49¢ to $91.71/bbl. Gas oil for January rose $1 to $769.25/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes gained 54¢ to $88.76/bbl.

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