MARKET WATCH: Power outages after Sandy bring down natural gas price
Crude oil prices rose slightly in electronic trading Oct. 30 in the New York market, but the front-month natural gas futures contract fell 3% on fear of extended power outages in the wake of Superstorm Sandy.
The Associated Press reported some 6.5 million homes and businesses are without power “as far west as Wisconsin and as far south as the Carolinas,” including 4 million in New York and New Jersey.
“Yesterday was another dark day on Wall Street as the market was closed for the second business day in a row,” said analysts in the Houston office of Raymond James & Associates Inc. It was the first weather related multiday closing of the New York Stock Exchange since the blizzard of 1888.
Floor trading reopened to cheers Oct. 31. “With US financial markets open again, we should see a heightened level of activity as participants play catch-up. This will most likely be accompanied by increased volatility across the commodity space,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group.
“Given the pent-up demand from the last couple of days, increased volume could create unusual price momentum out of the gates. But just in case things get too erratic, the Securities and Exchange Commission has the option to halt trading midday,” Raymond James analysts said.
“After sustained pressure, West Texas Intermediate managed a modest recovery yesterday as refineries on the East Coast began resuming operations,” Ground said. “While the extent of the damage to refining capacity has yet to be assessed, with crude oil prices at such low levels the market is unwilling to go short. Heating oil and reformulated stock for oxygenate blending (RBOB) both lost ground yesterday. Brent ended the day slightly down.”
He said, “As markets speculate the impact of Sandy on future crude oil and product demand in the US, yesterday’s release of American Petroleum Institute inventory numbers have been largely ignored.” API reported commercial US crude inventories dropped 351,000 bbl to 371.7 million bbl in the week ended Oct. 26, with gasoline stocks down 173,000 bbl to 199.2 million bbl and distillate fuels falling 2.6 million bbl to 118.2 million bbl.
The Energy Information Administration report usually released at midweek was postponed because of the storm.
Energy prices
The December and January contracts for benchmark US light, sweet crudes rose 14¢ each to $85.68/bbl and $86.19/bbl, respectively, Oct. 30 on the New York Mercantile Exchange.
Heating oil for November delivery lost 2.86¢ to $3.09/gal on NYMEX. RBOB for the same month declined 2.8¢ to $2.73/gal.
The new front-month December natural gas contract dropped 11.2¢ to $3.69/MMbtu. US spot market prices for oil and gas were not updated.
In London, the December IPE contract for North Sea Brent was down 36¢ to $109.08/bbl. Gas oil for November fell $7 to $963.50/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes regained 15¢ to $106.12/bbl.
Contact Sam Fletcher at [email protected].
Sam Fletcher | Senior Writer
I'm third-generation blue-collar oil field worker, born in the great East Texas Field and completed high school in the Permian Basin of West Texas where I spent a couple of summers hustling jugs and loading shot holes on seismic crews. My family was oil field trash back when it was an insult instead of a brag on a bumper sticker. I enlisted in the US Army in 1961-1964 looking for a way out of a life of stoop-labor in the oil patch. I didn't succeed then, but a few years later when they passed a new GI Bill for Vietnam veterans, they backdated it to cover my period of enlistment and finally gave me the means to attend college. I'd wanted a career in journalism since my junior year in high school when I was editor of the school newspaper. I financed my college education with the GI bill, parttime work, and a few scholarships and earned a bachelor's degree and later a master's degree in mass communication at Texas Tech University. I worked some years on Texas daily newspapers and even taught journalism a couple of semesters at a junior college in San Antonio before joining the metropolitan Houston Post in 1973. In 1977 I became the energy reporter for the paper, primarily because I was the only writer who'd ever broke a sweat in sight of an oil rig. I covered the oil patch through its biggest boom in the 1970s, its worst depression in the 1980s, and its subsequent rise from the ashes as the industry reinvented itself yet again. When the Post folded in 1995, I made the switch to oil industry publications. At the start of the new century, I joined the Oil & Gas Journal, long the "Bible" of the oil industry. I've been writing about the oil and gas industry's successes and setbacks for a long time, and I've loved every minute of it.
