MARKET WATCH: Warm weather reduces natural gas prices

Energy prices fluctuated within a narrow range with crude oil making minimal gains Mar. 5 in the New York market while natural gas fell 5% on forecasts of warmer than normal weather for March.

The broader market declined for a second consecutive session, down almost 1%, said analysts in the Houston office of Raymond James & Associates Inc. “Positive economic data from the US services sector failed to give the market any momentum,” they said.

James Zhang at Standard New York Securities Inc., the Standard Bank Group, reported, “The broad market for risky assets appeared to be subdued following a downward revision of the country’s growth target by the Chinese government. Although the US president increased the rhetoric over Iran ahead of the Israeli prime minister’s visit to Washington, most observers see military action against Iran ahead of the US presidential election as very unlikely. Oil products were also soft, with their time spreads at the front-end of the forward curves turning into contango. Technically, the oil market came under more pressure as most stochastic measures have turned negative.”

China announced it is targeting 7.5% growth in its 2012 gross domestic product, the lowest level since 2004. “While the oil market largely ignored the news for now, we do expect a slowing Chinese economy to have a negative impact on the oil market as well, although to a lesser extent than metals,” said Zhang. “It is important to note that China accounts for roughly half of the global demand growth for oil (400,000 b/d out of total 800,000 b/d growth, according to the latest International Energy Agency oil report, while demand from Organization for Economic Cooperation and Development countries continued to decline against a recovering economy. Distillates is likely to be hit more than gasoline as the government continues to tame the housing market and slows down infrastructure investment.”

In other news, a portion of Enbridge Inc.'s 318,000 b/d Lakehead System was shut in over the weekend following a two-vehicle collision that ruptured a small above-ground section of the oil pipeline in an industrial park in New Lenox, Ill. It is the largest crude oil pipeline to the US from Canada. The interruption of that crude supply “puts near-term downward pressure on Canadian and Bakken pricing as barrels are more or less stranded,” said Raymond James analysts. The pipeline is not expected to be back in service until Mar. 8.

Energy prices

The April contract for benchmark US sweet, light crudes inched up 2¢ to $106.72/bbl Mar. 5 on the New York Mercantile Exchange. The May contract increased 1¢ to $107.18/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 2¢ to $106.72/bbl in conjunction with the front-month futures contract.

Heating oil for April delivery gained 1.56¢ to $3.22/gal on NYMEX. Reformulated stock for oxygenate blending for the same month, however, dipped 1.41¢ to $3.26/gal.

The April natural gas contract fell 12.9¢ to $2.36/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., lost 7.2¢ to $2.31/MMbtu.

In London, the April IPE contract for North Sea Brent rose 15¢ to $123.80/bbl. Gas oil for March advanced $4.25 to $1,014.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes dropped 74¢ to $122.34/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

IEA: Global oil supplies plunge in March on lower OPEC output

04/11/2014 Global crude oil supplies fell month-on-month in March by a steep 1.2 million b/d to 91.75 million b/d, with a decline in output from members of th...

MARKET WATCH: Crude oil futures prices slide in week’s see-saw market

04/11/2014 The New York Mercantile Exchange May crude oil contract price was down 20¢ on Apr. 10, closing at $103.40/bbl. The June contract fell 27¢ to $102.3...

ConocoPhillips raises estimates on Eagle Ford recoverable resources, production

04/11/2014 ConocoPhillips has increased its estimated resource base in the Eagle Ford play to 2.5 billion bbl of oil in place from 1.8 billion bbl, as well as...

Environmental groups to challenge FWS’s lesser prairie chicken ruling

04/11/2014 Three environmental organizations notified the US Fish and Wildlife Service that they plan to sue over the US Department of the Interior agency’s r...

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected