MARKET WATCH: Oil prices continue climbing; gas price falls

Oil prices continued climbing Dec. 19 with crude up 1.8% in New York and 1.3% in London on a bullish inventory report, but natural gas fell 2%, wiping out its gain from the previous session.

The equity market ended a 2-day rally with the Dow Jones Industrial Average down 0.8% after President Barack Obama threatened to veto House Speaker John Boehner’s “Plan B” back up proposal for a budget settlement. The Republican-controlled House planned to vote on Boehner’s proposal Dec. 20.

Meanwhile, stock and energy prices were up in early trading after the National Association of Realtors reported US sales of existing homes rose 5.9% to a seasonally adjusted annual rate of 5.04 million in November, the highest level in 3 years. Officials credited the increase to a better job market and record low mortgage rates.

 

US inventory drops

The Energy Information Administration said commercial US crude inventories dropped 1 million bbl to 371.6 million bbl in the week ended Dec. 14, less than Wall Street’s consensus for a 1.8 million bbl draw. Gasoline stocks climbed 2.2 million bbl to 219.3 million bbl in the same period despite an increase in blending components. Analysts were expecting a 2 million bbl gain in gasoline. Distillate fuel inventories fell 1.1 million bbl to 117 million bbl, opposite the market’s outlook for a 1 million bbl boost (OGJ Online, Dec. 19, 2012).

Analysts with Raymond James & Associates Inc. in Houston noted the total tally of crude, gasoline, and distillate fuel inventories last week was below Wall Street’s expectations because of the unexpected drop in distillates. “Small declines in jet fuel and residual fuel oils were outweighed by an increase in unfinished oils,” they said.

Marc Ground at Standard New York Securities Inc., the Standard Bank Group, said the 1.1% increase in refinery utilization last week put it as the highest level since August.

EIA subsequently reported the withdrawal of 82 bcf of natural gas from US underground storage in the week ended Dec. 14, surpassing Wall Street’s expectation of a 76 bcf draw. That left working gas in storage at 3.724 tcf, which is 66 bcf more than the comparable period in 2011 and 345 bcf above the 5-year average.

 

Energy prices

The January and February contracts for benchmark US sweet, light crudes were up $1.58 each to $89.51/bbl and $89.98/bbl, respectively, Dec. 19 on the New York Mercantile Exchange. On the US spot market, West Texas Intermediate at Cushing, Okla., matched the front-month futures contract’s increase to $89.51/bbl.

Heating oil for January delivery gained 3.91¢ to $3.04/gal on NYMEX. Reformulated stock for oxygenate blending for the same month climbed 5.22¢ to $2.74/gal.

The January natural gas contract fell 9.8¢ to $3.32/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 2.7¢ to $3.26/MMbtu.

In London, the February IPE contract for North Sea Brent rose $1.52 to $110.36/bbl. Gas oil for January was up $8.75 to 937/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 72¢ to $107.10/bbl.

Contact Sam Fletcher at samf@ogjonline.com

 

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