MARKET WATCH: US crude continues rally in mixed markets
Benchmark US light, sweet crude continued its moderate rally in New York while North Sea Brent dipped slightly in mixed markets Apr. 27.
“Positive US personal spending and consumer confidence data failed to offset more downbeat data earlier last week,” said James Zhang at Standard New York Securities Inc., the Standard Bank Group. “Gasoline showed signs of some recovery after heavy sell-off in the previous 2 weeks. Middle distillates [gave] back some of their gains with the market viewing the rally, post the bullish US inventory report, as being overdone.”
Analysts at KBC Energy Economics, a division of KBC Advanced Technologies PLC, said oil prices “continue to defy gravity” despite Iran “now looking less hawkish” and the Euro-Zone debt crisis again boiling over. As a result, they said, “The market has a shaky feel to it.”
On Apr. 30, Spain officially confirmed it is in its second recession in 3 years, with its economy down 0.3% in the first quarter of 2012. That marked two consecutive quarters of economic contraction, which constitutes a technical recession. Seven other countries in the 17-nation Euro-Zone— Belgium, Ireland, Italy, The Netherlands, Portugal, Greece, and Slovenia—were already in recession, as were three other European Union members outside the Euro-Zone, the UK, Denmark, and the Czech Republic. “Concerns about Spain and the overall European debt crisis are causing pressure this morning,” with oil and gas prices marginally lower in early trading, said analysts in the Houston office of Raymond James & Associates Inc.
Last week Standard & Poor’s Ratings Services cut Spain’s credit rating two notches from A to BBB+ with a negative outlook, indicating a risk of further downgrades (OGJ Online, Apr. 27, 2012). “This came hard on the heels of other worrying news, including gross domestic product figures for the UK that showed the country was once again in recession,” said KBC analysts. “Although the Dutch government, which collapsed last week over austerity measures demanded by the EU, now appears to have reached a compromise, it is still too early to say whether the fragile coalition politics will result in a robust agreement. Meanwhile, opinion polls continue to suggest that French President Nicholas Sarkozy will lose to Socialist front runner Francois Hollande, in the presidential poll on May 6. Hollande has said he does not back the agreement with Germany on austerity. If France were to pull out of the agreement, it would cause turmoil in Brussels, and could cause panic in already jittery financial markets.”
Energy prices
The June and July contracts for benchmark US light, sweet crudes increased 38¢ each to $104.93/bbl and $105.32/bbl, respectively, Apr. 27 on the New York Mercantile Exchange. On the US spot market, West Texas Intermediate at Cushing, Okla., also was up 38¢ to $104.93/bbl, in step with the front-month futures contract.
Heating oil for May delivery declined 1.37¢ to $3.18/gal on NYMEX. Reformulated stock for oxygenate blending for the same month, however, gained 2.29¢ to $3.14/gal.
The new front-month June contract for natural gas climbed 6¢ to $2.19/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 5.3¢ to $2.03/MMbtu.
In London, the June IPE contract for North Sea Brent lost 9¢ to $119.83/bbl. Gas oil for May fell $8.75 to $1,008.50/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 11¢ to $117.25/bbl. So far this year, the OPEC basket price has averaged $117.66/bbl. OPEC’s Vienna office will be closed May 1.
Contact Sam Fletcher at [email protected]
Sam Fletcher | Senior Writer
I'm third-generation blue-collar oil field worker, born in the great East Texas Field and completed high school in the Permian Basin of West Texas where I spent a couple of summers hustling jugs and loading shot holes on seismic crews. My family was oil field trash back when it was an insult instead of a brag on a bumper sticker. I enlisted in the US Army in 1961-1964 looking for a way out of a life of stoop-labor in the oil patch. I didn't succeed then, but a few years later when they passed a new GI Bill for Vietnam veterans, they backdated it to cover my period of enlistment and finally gave me the means to attend college. I'd wanted a career in journalism since my junior year in high school when I was editor of the school newspaper. I financed my college education with the GI bill, parttime work, and a few scholarships and earned a bachelor's degree and later a master's degree in mass communication at Texas Tech University. I worked some years on Texas daily newspapers and even taught journalism a couple of semesters at a junior college in San Antonio before joining the metropolitan Houston Post in 1973. In 1977 I became the energy reporter for the paper, primarily because I was the only writer who'd ever broke a sweat in sight of an oil rig. I covered the oil patch through its biggest boom in the 1970s, its worst depression in the 1980s, and its subsequent rise from the ashes as the industry reinvented itself yet again. When the Post folded in 1995, I made the switch to oil industry publications. At the start of the new century, I joined the Oil & Gas Journal, long the "Bible" of the oil industry. I've been writing about the oil and gas industry's successes and setbacks for a long time, and I've loved every minute of it.
