MARKET WATCH: Gas price rises, but crude increase was 'underwhelming'
The February crude contract posted an “underwhelming” gain Jan. 10 in the New York futures market against a background of encouraging economic indicators, analysts said. Natural gas climbed 2.6%, however, and corporate energy stocks improved with the SIG Oil Exploration & Production Index up 1.2% and the Oil Service Index gaining 1.3%.
“Things are looking up in China too, with exports surging 14.1% last month, indicating that an uptick in Chinese oil demand may be on deck,” said analysts in the Houston office of Raymond James & Associates Inc. “The more optimistic outlook on global growth weighed on the US dollar yesterday, which is also positive for crude.” As for the crude contract’s unimpressive performance, they said, “Perhaps the market figured out what we've been saying all along: a lot more supply needs to go offline for the global oil market to reach a balance.”
The euro surged against the dollar after Mario Draghi, president of the European Central Bank, announced interest rates for the Euro-zone will remain unchanged.
However, Marc Ground at Standard New York Securities Inc., reported commodity markets were “rattled” in early trading Jan. 11 by a stronger-than-expected increase in Chinese consumer inflation, which rose 2.5% in December from the year-ago level. That’s “well up from the 2% pace seen in November and above the 2.3% consensus,” he said.
Energy prices
The February contract for benchmark US light, sweet crudes climbed 72¢ to $93.82/bbl Jan. 10 on the New York Mercantile Exchange. The March contract increased 71¢ to $94.27/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 72¢ to $93.82/bbl.
Heating oil for February delivery lost 1.56¢ to $3.05/gal on NYMEX. Reformulated stock for oxygenate blending for the same month recovered 1.44¢ to $2.79/gal.
The February natural gas contract rebound 8¢ to $3.19/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., dropped 4.6¢ to $3.07/MMbtu.
In London, the February IPE contract for North Sea Brent was up 13¢ to $111.89/bbl. Gas oil for January was unchanged at $948.50/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 29¢ to $109.30/bbl.
Contact Sam Fletcher at [email protected].
About the Author
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.