MARKET WATCH: Oil, gas prices decline in disappointed markets

The front-month crude contract dropped 1% Aug. 23 in the New York futures market on fading hopes for economic stimulus from the Federal Reserve System, and natural gas was down 0.7% after the government reported a larger-than-expected injection in US underground storage.

The Energy Information Administration reported the injection of 47 bcf of natural gas into US underground storage in the week ended Aug. 17, up from Wall Street’s consensus for an input of 40 bcf. That brought working gas in storage to 3.308 tcf, up 423 bcf from the comparable period in 2011 and 357 bcf above the 5-year average (OGJ Online, Aug. 23, 2012).

Released minutes of the July 31-Aug. 1 meeting of the Federal Open Market Committee were showed several members thought more stimulus might be needed soon. But initial market optimism was dashed when St Louis Federal Reserve President James Bullard said US economic data had strengthened since the meeting, and immediate action may not be warranted.

However, oil and gas prices were up in early trading Aug. 24 despite the US Department of Commerce reporting orders for US durable goods, excluding the volatile transportation category, were down in July—the fourth decline in 5 months. Total orders for durable goods increased a seasonally adjusted 4.2% last month, but when transportation goods were excluded, the remaining core categories were down 0.4% overall.

The US Department of Labor earlier reported applications for unemployment benefits increased by 4,000 last week to 372,000 new filings, indicating possibly a slower rebound in August than in July. It subsequently said Aug. 24 only 56% of workers laid off January 2009 through December 2011 had found new jobs by the first of this year, most of them at lower pay. A third of those recycled workers took income reductions of 20% or more. The pay data would have been even lower if the survey included those who found only part-time work, officials said.

Energy prices

The October contract for benchmark US light, sweet crudes dropped 99¢ to $96.27/bbl Aug. 23 on the New York Mercantile Exchange. The November contract fell 95¢ to $96.60/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 99¢ to $96.27/bbl.

Heating oil for September delivery inched up 0.43¢ but closed essentially unchanged at a rounded $3.13/gal on NYMEX. Reformulated stock for oxygenate blending for the same month increased 1.16¢ to $3.12/gal.

The September natural gas contract lost 2.4¢ to $2.80/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., was down 4.5¢ to $2.77/MMbtu.

In London, the October IPE contract for North Sea Brent gained 10¢ to $115.01/bbl, but subsequent months posted losses. Gas oil for September increased $10.50 to $995.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes climbed $1.36 to $113.56/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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