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MARKET WATCH: Oil, gas futures prices down in mixed market

Prices for front-month crude oil and natural gas contracts declined in mixed and generally directionless trading Aug. 8 in the New York market.

“Despite a short-lived pop from a bullish Department of Energy report, crude finished the day largely flat. Meanwhile, natural gas fell 1%,” said analysts in the Houston office of Raymond James & Associates Inc.

They also reported, “Yesterday marked the fourth straight gain for the broader market…. Standard & Poor’s 500 Index ended the day at a 3-month high with a gain that was modest at best (up 0.06%).” The Oil Service Index and SIG Oil Exploration & Production Index finished essentially flat. Natural gas and broader market futures were down in early trading Aug. 9, but oil prices were up.

The US Department of Labor reported a seasonally adjusted 361,000 new applications for unemployment benefits last week, down 6,000 from the previous week. The most recently available data show 5.8 million people collected unemployment benefits in the week ended July 21.

Government officials also reported the US trade deficit fell to the lowest level in 18 months, primarily the result of lower prices for imported oil and increased foreign sales of autos, pharmaceuticals, and industrial machinery. However, US exports to China were down more than 4%.

US inventories

The Energy Information Administration reported Aug. 9 the injection of 24 bcf of natural gas into US underground storage in the week ended Aug. 3, below Wall Street’s consensus for an increase of 30 bcf. That raised the amount of working gas in storage to 3.241 tcf, up 465 bcf from the comparable period a year ago and 386 bcf above the 5-year average.

EIA earlier reported commercial US crude inventories fell 3.7 million bbl to 369.9 million bbl in the week ended Aug. 3, exceeding Wall Street’s consensus for a decline of 1.6 million bbl. Gasoline stocks dropped 1.8 million bbl to 206.1 million bbl, exactly as Wall Street projected. Finished gasoline inventories increased while blending components decreased. Distillate fuel inventories were down 700,000 bbl to 123.5 million bbl last week, opposite analysts’ expectations of a 300,000 bbl increase (OGJ Online, Aug. 8, 2012).

The petroleum inventories update “was bullish relative to consensus, as a larger-than-expected draw in crude was compounded by an unexpected draw in distillates,” Raymond James analysts said. “Combining crude, gasoline, and distillates, inventories fell by 6.3 million bbl, compared with the consensus forecast for a draw of 3.1 million bbl.  The draw was likely driven by the supply side as total petroleum imports increased to 10.6 million b/d from 10.1 million b/d, and total petroleum demand was down 1.1% week-over-week. Refinery utilization increased to 92.6% as summer driving season continues.”

They also noted, “Cushing, Okla., inventories have fallen 4 of the last 5 weeks and were down 800,000 bbl [last] week. Combining supply and demand, total days of supply increased 0.3 days and are 1.7 days above year-ago levels.”

Energy prices

The September contract for benchmark US sweet, light crudes dropped 32¢ to $93.35/bbl Aug. 8 on the New York Mercantile Exchange. The October contract lost 31¢ to $93.63/bbl. On the US spot market, West Texas Intermediate at Cushing followed the front-month crude futures contract, down 32¢ to $93.35/bbl.

Heating oil for September delivery increased 1.79¢ to $3.02/gal on NYMEX. Reformulated stock for oxygenate blending for the same month dipped 1.09¢ to $2.98/gal.

The September natural gas contract fell decreased 3.1¢ to $2.93/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., declined 1.9¢ to $2.97/MMbtu.

In London, the September IPE contract for North Sea Brent gained 14¢ to $112.14/bbl. Gas oil for August climbed $8.50 to $955.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was up 78¢ to $108.36/bbl.

Contact Sam Fletcher at samf@ogjonline.com.


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