MARKET WATCH: Crude prices continue to climb; gas to fall

Crude prices kept climbing with the front-month contract up 0.8% Nov. 30 in the New York market while natural gas continued to drop, down 7.8¢ in that session, as budget negotiations remained deadlocked in Washington, DC.

US economic data also “was not particularly encouraging,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. “Personal income for October was flat, while spending fell 0.2% month-over-month. The Chicago Purchasing Managers Index managed to creep above 50, although at 50.4 this was hardly inspiring and even fell short of the market’s modest expectations (consensus: 50.5).”

Ground said, “Looking at the latest US Commodities Futures Trading Commission data after the ceasefire between Israel and Hamas, the brief increase in net speculative length that we saw off the back of the tensions in the previous week was dramatically reversed this past week. A considerable 47.3 million bbl were liquidated, the largest decline since May of this year.”

In Houston, analysts with Raymond James & Associates Inc. said, “One thing the [Democrat and Republican] parties can agree on is further sanctions on Iran, with the Senate unanimously approving additional financial penalties for foreign businesses and banks linked to the regime,”

In other news, Raymond James analysts said, “Greek government bond yields reached the lowest level since March today—a mere 14.6%—after a $13 billion repurchase, part of yet another bailout package agreed to by Euro-zone ministers last week. Things are indeed looking up in Athens.”

Despite a 50% drop in the number of rigs drilling for gas in the last 12 months, US gas supplies remain “resilient.” In the latest monthly data from the Energy Information Administration, gross natural gas withdrawals in the Lower 48 totaled 73.05 bcfd—“a new record for US supply,” said Raymond James analysts. “Onshore supply came out to 69.4 bcfd, marking sequential growth of 400 MMcfd and a year-over-year increase of 3.2 bcfd. Not surprisingly, the large majority of this year-over-year growth continues to be generated from the ‘other states’ (namely, the Marcellus) while some minor growth out of Texas is serving to offset the decline in Louisiana.” They continue to project more than 1.5 bcfd of gas supply growth in 2013.

Energy prices

The January contract for benchmark US light, sweet crudes gained 84¢ to $88.91/bbl Nov. 30 on the New York Mercantile Exchange. The February contract advanced 83¢ to $89.49/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 84¢ to $88.91/bbl.

The expiring December contract for heating oil inched up 0.07¢ but closed essentially unchanged at a rounded $3.04/gal on NYMEX. Reformulated stock for oxygenate blending for the same month declined 2.56¢ to $2.76/gal.

The January natural gas contract dropped 8.7¢ to $3.56/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., fell 15.7¢ to $3.48/MMbtu.

In London, the January IPE contract for North Sea Brent increased 47¢ to $111.23/bbl. Gas oil for December rose $1.50 to $950.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was up $1.13 to $108.59/bbl. So far this year, OPEC’s basket has averaged $109.70/bbl, compared with $107.46/bbl for all of 2011.

Contact Sam Fletcher at samf@ogjonline.com.

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