MARKET WATCH: Energy prices increase in mixed markets

Facing mixed economic signals, energy prices turned around again with the front-month contracts for crude oil and natural gas both up Aug. 14 in the New York market.

“The market couldn't decide on whether the strong retail sales growth number for July was worth getting excited about,” said analysts in the Houston office of Raymond James & Associates Inc. “The Standard & Poor’s 500 Index and the Dow Jones Industrial Average both traded flat on the day as broader markets mused the dichotomy that the first gain in 4 months could mean faster third quarter growth but could also lower the likelihood of a [third round of quantitative easing (QE3)].”

They said, “Commodities, however, got a boost on hopes of a Euro stimulus and worries about supply constraints for North Sea Brent crude. Natural gas traded up 4% on bullish forecasts for [last] week's injection, and West Texas Intermediate and Brent both gained 0.5%. Energy stocks rode the wave of the solid retail numbers and commodity gains, with the Oil Service Index and the SIG Oil Exploration & Production Index (EPX) up a modest 0.5% and 0.3%, respectively.”

Prices generally were down in early trading Aug. 15 on another mixed batch of economic data. The Federal Reserve System reported US industrial production increased 0.6% in July. Meanwhile, many traders are still hoping for economic stimulus from central banks.

US inventories

The Energy Information Administration said Aug. 15 commercial US inventories of crude fell 3.7 million bbl to 366.2 million bbl in the week ended Aug. 10, far more than the Wall Street consensus for a 1.5 million bbl decline. Nonetheless, crude stocks remain above average for this time of year. Gasoline inventories dropped 2.4 million bbl to 203.7 million bbl, more than the 2 million bbl draw analysts expected. Both finished gasoline and blending components were down. Distillate fuel stocks increased 700,000 bbl to 124.2 million bbl last week. The market was projecting a decrease of 300,000 bbl.

Imports of crude into the US increased 90,000 b/d to 8.7 million b/d last week. In the 4 weeks through Aug. 10, crude imports averaged 8.8 million b/d, up 494,000 b/d from the comparable period in 2011. Gasoline imports averaged 788,000 b/d last week while distillate fuel imports averaged 110,000 b/d.

The input of crude into US refineries increased 104,000 b/d to 15.7 million b/d last week with units operating at 92.6% of capacity. Gasoline production increased to 9.4 million b/d, while output of distillate fuel production advanced to 4.7 million b/d.

Energy prices

The September contract for benchmark US light, sweet crudes increased 70¢ to $93.43/bbl Aug. 14 on the New York Mercantile Exchange. The October contract gained 71¢ to $93.74/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 70¢ to $93.43/bbl.

Heating oil for September delivery rose 1.63¢ to $3.03/gal on NYMEX. Reformulated stock for oxygenate blending for the same month advanced 1.07¢ to $3/gal.

The September natural gas contract climbed 10.5¢ to $2.83/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., gained 2.9¢ to $2.80/MMbtu.

In London, the September IPE contract for North Sea Brent increased 43¢ to $114.03/bbl. Gas oil for September inched up 25¢ to $957.50/tonne.

The Organization of Petroleum Exporting Countries’ office in Vienna was closed Aug. 15, so no price update for OPEC’s basket of 12 benchmark crudes was issued.

Contact Sam Fletcher at samf@ogjonline.com.

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