Energy prices continued to decline Aug. 24 with crude inching lower and natural gas down 5% in the New York market, “moving almost entirely on sentiment and rumors,” said analysts in the Houston office of Raymond James & Associates Inc.
“A letter written from [Federal Reserve Chairman] Ben Bernanke to Rep. Darrell Issa [R-Calif., chairman of the House Committee on Oversight and Government Reform] surfaced suggesting that ‘there is scope for further action by the Federal Reserve to ease financial conditions,’ and news that the European Central Bank may be evaluating a new bond-buying program buoyed stocks to marginal returns after a weak open,” Raymond James analysts reported. “A durable goods orders report came in better than expected but missed estimates when adjusted for transportation related items (OGJ Online, Aug. 24, 2012).”
Oil prices continued retreating in early trading Aug. 27 on reports of an apparently reduced threat to offshore production in the Gulf of Mexico from Tropical Storm Isaac and continued speculation of release of oil from the US Strategic Petroleum Reserve as a sop to voters complaining of high pump prices.
The National Hurricane Center said Isaac is expected to hit the Gulf Coast as a Category 1 hurricane instead of Category 2 as earlier predicted. Isaac blew past the Florida Keys headed northwestward over the open gulf Aug. 27 and is expected to reach minimum hurricane strength before making landfall Aug. 28—just a day shy of the seventh anniversary of Hurricane Katrina that hit the Louisiana coast in 2005—somewhere within 300 miles from southwest of New Orleans to the west boundary of the Florida Panhandle.
The Bureau of Safety and Environmental Enforcement reported Aug. 26 workers were evacuated from 39 of the 596 manned production platforms and 8 of the 76 rigs active in the gulf. It estimated 24.19% of daily oil production and 8.24% of daily gas production in the gulf were shut in ahead of the storm.
Meanwhile, investors appear to be waiting for Bernanke’s scheduled speech Aug. 31 at Jackson Hole, Wyo., in hopes the Fed will take action to stimulate the economy. Many analysts expect that speech to prove a disappointment, however.
The October contract for benchmark US light, sweet crudes decreased 12¢ to $96.15/bbl Aug. 24 on the New York Mercantile Exchange. The November contract declined 15¢ to $96.45/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 12¢ to $96.15/bbl.
Heating oil for September delivery dipped 2.29¢ to $3.11/gal on NYMEX. Reformulated stock for oxygenate blending for the same month retreated 3.78¢ to $3.08/gal.
The September natural gas contract dropped 10¢ to $2.70/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., increased 1.5¢ to $2.79/MMbtu.
In London, the October IPE contract for North Sea Brent fell $1.42 to $113.59/bbl. Gas oil for September lost $6 to $989.50/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was down $1.44 to $112.12/bbl. So far this year, OPEC’s basket price has averaged $110.10/bbl.
Contact Sam Fletcher at firstname.lastname@example.org.