The front-month natural gas contract climbed 4% Feb. 9 in the New York market after Chesapeake Energy Corp. told investors its production cuts are actually more than the minimum 500 Mcfd it indicated last month.
Chesapeake announced plans to cut its operated dry gas drilling rig count to 24 rigs, a decline of 50 rigs from its 2011 average operated dry gas rig count, citing the lowest natural gas prices in 10 years (OGJ Online, Jan. 23, 2012).
West Texas Intermediate and Brent crudes increased 1% each after a Greek coalition of socialist and conservative politicians agreed to spending-reduction alternatives to those rejected earlier.
Both oil and equity stock prices dropped in early trading Feb. 10 after finance ministers of the other Euro-Zone countries insisted Greece reduce spending another €325 million through legislation to be passed by the Greek parliament and to guarantee enforcement of the austerity measures following elections in April. A general strike in Greece turned violent, and three ministers and two deputy ministers resigned after that demand.
“Yesterday, Greece pledged to make all sorts of reforms and budgetary cuts, but it seems that the German are less and less keen on giving money against a pledge that is undone once the money is in the bank. This being said with the austerity measures that Greece is told to take, we really don’t know how economic growth is going to come back ever to that country,” said Olivier Jakob at Petromatrix in Zug, Switzerland.
Meanwhile, data from the Organization for Economic Cooperation and Development show Greece loaded up in November on Iranian crude, with imports “at the highest level since September 2008 and [amounting to] 55% of the Greek crude oil imports,” Jakob said. “Over the 6 months to November, Greece on average imported 51% of its crude oil from Iran. The OECD countries of Europe imported 871,000 b/d of crude oil from Iran in November; the European Union countries (i.e. excluding Turkey) imported 693,000 b/d of crude from Iran.” Imports into the EU were split 24% into the northern countries (167,000 b/d) and 76% into the southern countries (526,000 b/d).”
James Zhang at Standard New York Securities Inc., the Standard Bank Group, said, “The oil market continued with its strong rally yesterday but with further signs of being overstretched as term structures failed to follow flat price moves. Oil products were also higher on the day, led by a rebound in gasoline driven by some follow-though buying after [the Energy Information Administration’s Feb. 8] inventory report. The ICE gasoline market is strong due to continuous cold weather in Europe.”
The March contract for benchmark US light, sweet crudes climbed as high as $100.18/bbl in intraday trading Feb. 9 before closing at $99.84/bbl, up $1.13 for the day on the New York Mercantile Exchange. The April contract increased $1.14 to $100.24/bbl. On the US spot market, WTI at Cushing, Okla., was up $1.13 to $99.84/bbl.
Heating oil for March delivery gained 1.9¢ to $3.21/gal on NYMEX. Reformulated stock for oxygenate blending for the same month rose 3.76¢ to $3.01/gal.
The March natural gas contract regained 2.9¢ to $2.48/MMbtu on NYMEX, wiping out the loss from the previous session. On the US spot market, gas at Henry Hub, La., reclaimed 1.7¢ to $2.50/MMbtu.
In London, the March IPE contract for North Sea Brent increased $1.39 to $118.59/bbl
Gas oil for February was up $6.75 to $997.75/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased $1.09 to $116.27/bbl.
Contact Sam Fletcher at email@example.com