Energy prices were mixed and relatively flat July 28 despite expectations Tropical Storm Don will come ashore tonight possibly between Brownsville and Corpus Christi, Tex.
Early today the storm was 190 miles southeast of Corpus Christi, 165 miles east of Brownsville, and moving west-northwest at 14 mph with top sustained winds of 50 mph. It is expected to maintain that path until landfall. Although the storm could strengthen, weather forecasters see little chance of it becoming even a minimal hurricane.
As a result, the storm will more likely be a boon to Texas farmers and ranchers by bringing several inches of rain to dry South Texas and coastal lands, instead of a threat to oil and gas operations in the Gulf of Mexico or refiners along the coast. A tropical storm warning is in effect from the mouth of the Rio Grande to Matagorda, Tex.
On July 28, Bureau of Ocean Energy Management, Regulation, and Enforcement reported 11 of the 679 manned production platforms in the Gulf of Mexico were evacuated because of the tropical storm, but none of the 62 rigs in gulf waters. BOEMRE also reported 94,962 b/d or 6.8% of total oil production from the gulf were shut in as were 148 bcfd or 2.8% of total gulf natural gas production.
In Houston, analysts with Raymond James & Associates Inc., said, “Despite the modest pressure on supply, the commodities were weaker with oil ending [July 28] flat while gas was in the red (down 1.8%) following a larger than expected injection.”
The Energy Information Administration earlier reported the injection of 43 bcf of gas into US underground storage last week, above analysts’ consensus for 36 bcf input. That brought working gas in storage to 2.71 tcf, down 201 bcf from the comparable period last year and 65 bcf below the 5-year average (OGJ Online, July 28, 2011).
Analysts at the Centre for Global Energy Studies (CGES), London, noted the front-month ICE September Brent crude contract hovered around $117/bbl all this week. “This resilience is slightly surprising, given the headwinds that are impeding the global economy at present,” they said. “The most threatening obstacle remains the Eurozone crisis and, while the recent bailout for Greece held off imminent disaster, near-record yields on Italian 10-year government bonds indicate the market is far from convinced the saga is over.”
CGES analysts observed, “The profoundly contentious US budget negotiations suggest that political divisions in Washington might adversely affect that country’s economic recovery—and hence oil demand.” They added, “Preliminary data for the second quarter show the rate of year-on-year global oil demand growth has slowed significantly, while oil consumption in the Organization for Economic Cooperation and Development countries during the same period actually declined.”
However, recent weakness of the US dollar along with tropical storm activity in the Gulf of Mexico has limited downward pressure on oil prices, they said.
Meanwhile, the US Department of Commerce said July 29 the US economy expanded at an annual rate of just 1.3% this spring after scarcely growing at all in the first 3 months of the year. Officials reported economic growth in the first half of 2011 was the weakest since the end of the recession was declared 2 years ago. The government sharply trimmed its January-March figures down to just 0.4% from its previous estimate of 1.9%.
The September contract for benchmark US light, sweet crudes increased just 4¢ to $97.44/bbl July 28 on the New York Mercantile Exchange. The October contract inched up 3¢ to $97.87/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., dropped 36¢ to $97.04/bbl.
Heating oil for August delivery gained 2.26¢ to $3.11/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month was down 2.47¢ to $3.12/gal.
The new front-month September natural gas contract fell 7.4¢ to $4.24/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., decreased 2.5¢ to $4.42/MMbtu.
In London, the September IPE Brent contract lost 7¢ to $117.36/bbl. Gas oil for August regained $4.50 to $979/tonne, wiping out its loss from the previous session.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes slipped 4¢ to $113.36/bbl.
Contact at firstname.lastname@example.org.