MARKET WATCH: Israeli attack adds to oil market uncertainties

Natural gas climbed 4.7% Nov. 13 in the New York market as colder weather spread across much of the nation, but oil prices slipped, with crude down 0.2% as traders focused on Greece's mounting debt crisis and the fiscal cliff facing the US if Congress can’t compromise on a solution by yearend.

However, the price of crude rose in early trading Nov. 14 following Israeli airstrikes in Gaza that killed a Hamas military commander. Israel indicated it was the opening shot in a military response to recent rocket attacks on its civilians by militants in adjacent Palestinian territory.

As for the previous trading session, Marc Ground at Standard New York Securities Inc., the Standard Bank Group, said, “Crude oil markets continued their downward trend started Nov. 12, although this time it was Brent that was harder hit.” That reduced the price spread between Brent and West Texas Intermediate “from the previous day’s 12-month high,” he said.

The downward bias of oil prices is largely due to a market that is well-supplied amid an uncertain demand outlook, as recently reported by the Energy Information Administration, the International Energy Agency, and the Organization of Petroleum Exporting Countries.

Meanwhile, EIA’s inventory report usually released at midweek has been delayed due to the US Veterans Day holiday Nov. 12. That report is expected to indicate reduced energy demand because of damage inflicted by Hurricane Sandy.

Energy prices

The December contract for benchmark US light, sweet crudes dipped 19¢ to $85.38/bbl Nov. 13 on the New York Mercantile Exchange. The January contract dropped 23¢ to $85.84/bbl. On the US spot market, WTI at Cushing, Okla., also was down 19¢ to $85.38/bbl.

Heating oil for December delivery declined 3.84¢ to $2.96/gal on NYMEX. Reformulated stock for oxygenate blending for the same month decreased 2.25¢ to $2.65/gal.

However, the December natural gas contract continued its rise, up 16.9¢ to $3.74 MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., climbed 17.1¢ to $3.58/MMbtu.

In London, the December IPE contract for North Sea Brent was down 81¢ to $108.26/bbl. The new front-month December contract for gas oil fell $13.50 to $923.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes lost 62¢ to $105.97/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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