MARKET WATCH: Hot weather lifts gas prices; oil market remains flat

Crude oil prices slipped slightly Aug. 21, ending a brief rally in New York, but the oil market remained essentially flat while the front-month natural gas futures contract recovered some of its recent loss, up 2.1% on forecasts of hotter weather in the next 2 weeks for much of the US.

“Crude prices were marginally in the red on US dollar strength,” said analysts in the Houston office of Raymond James & Associates Inc.

In the equity market, Standard & Poor’s 500 Index remained at a 4-year high, although Raymond James analysts reported, “The broader market ended the day flat on another day of low volume as the European Central Bank dismissed reports of yield caps on Euro-zone bonds.” Those rumors earlier prompted Germany to voice concerns over potential ECB bond purchases (OGJ Online, Aug. 20, 2012).

Crude prices increased in early trading Aug. 21 on hopes the US Federal Reserve System will do something to stimulate economic recovery.

However, the latest data indicate the financial crisis in the 17-member Euro-zone is deteriorating, which would undermine US recovery as well. Greece, Spain, Italy, Cyprus, Portugal, and Malta already are in recession. Key officials from France, Germany, and Greece are scheduled to meet this week in efforts to find some solution to the 3-year crisis.

Meanwhile, the Sept. 3 Labor Day holiday will mark the end of the peak summer demand for gasoline in the US. With “Brent crude back above $110/bbl (demand destruction?), and most refining names ringing ‘overbought’ on momentum indicators, many industry pundits (and admittedly us to some degree) have been a bit leery about blindly chasing the [refining] group [for investments] in recent weeks,” Raymond James analysts said. However, the investment “pullback is likely to be fairly shallow and relatively short-lived as the third quarter earnings picture for the group is shaping up to be just as strong as the second quarter,” they said. “While it is too early to mark-to-market numbers for the third quarter, we believe it is important to highlight the strength in crack spreads thus far and the likely upside to consensus estimates (clearly, our numbers as well).”

Energy prices

The September contract for benchmark US sweet, light crudes dipped 4¢ to $95.97/bbl Aug. 20 on the New York Mercantile Exchange. The October contract receded 6¢ to $96.26/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., copied the front-month futures contract’s performance, down 4¢ to $95.97/bbl.

Heating oil for September delivery inched up 0.05¢ but closed essentially unchanged at a rounded $3.09/gal on NYMEX. Reformulated stock for oxygenate blending for the same month advanced 0.33¢ but also finished unchanged, at $3.03/gal.

The September natural gas contract recouped 5.7¢ to $2.78/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., reclaimed 1¢ to $2.73/MMbtu.

In London, the October IPE contract for North Sea Brent declined 1¢ to $113.70/bbl. Gas oil for September lost 75¢ to $979/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was down 7¢ to $111.49/bbl. So far this year, OPEC’s basket price has averaged $110.04/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Related Articles

DOE approves LNG exports to non-FTA countries from Oregon project

03/24/2014 The US Department of Energy conditionally approved Jordan Cove Energy Project LP’s application to export LNG through its proposed terminal on Orego...

MARKET WATCH: Front-month crude oil contract closes up, gas down on week

03/24/2014

The front-month crude oil contract ended the week higher Mar. 21 while natural gas futures prices edged slightly lower.

HSC remains closed, fuel cleanup continues after barge collision

03/24/2014 The Houston Ship Channel (HSC) remained closed to unauthorized vessels Mar. 24 as the result of a temporary emergency safety zone being established...

Judge bars Anadarko e-mails as evidence in Macondo blowout hearing

03/21/2014 A federal district judge in New Orleans refused to accept e-mails between Anadarko Petroleum Corp. and BP PLC as evidence in a hearing to determine...

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