MARKET WATCH: Crude price increases in mixed market

The front-month crude price was up 1.4% Apr. 29 on the New York futures market, pulled along by an equity market that anticipated the European Central Bank will reduce interest rates at its May 2 meeting while the Federal Reserve Bank won’t raise its rates.

“Domestic rates remain at rock bottom in the US, which means the Fed has less flexibility to act and will presumably underline, highlight, and draw stars around its statement that it definitely, definitely won't be raising rates anytime soon,” said analysts in the Houston office of Raymond James & Associates Inc. “Equities surged in anticipation of this latest monetary ‘fix,’ with the Standard & Poor’s 500 Index climbing 0.7%. Oil futures also benefitted from the likely stimulus plans and were also supported by the grim prospect of US military action in Syria, which remains, at least hypothetically, on the table.”

They said, “Natural gas also roared ahead, with front-month futures rising 5.6%.”

North Sea Brent, however, was “a bit of a laggard.” Marc Ground at Standard New York Securities Inc., the Standard Bank Group, said the spread between Brent and West Texas Intermediate “narrowed to close at $9.31/bbl, its lowest closing level since January of last year.”

Ground said, “The upward [crude price] impetus was not due to any apparent good news on the demand front, with US data flow out yesterday (personal income and spending, and manufacturing activity) all coming in well below market expectations. US growth momentum has definitely slowed since February.”

He remains concerned about US crude and gasoline inventories. “Both the level of current gasoline stocks and in terms of days of supply are still above their 5-year averages,” Ground observed. “This could imply a limit on the extent to which refineries will drawdown crude oil stocks to bolster gasoline inventories.”

Energy prices

The June contract for benchmark US sweet, light crudes rebound $1.50 to$94.50/bbl Apr. 29 on the New York Mercantile Exchange. The July contract took back $1.47 to $94.72/bbl. On the US spot market, WTI at Cushing, Okla., followed the front-month futures contract, up $1.50 to $94.50/bbl.

Heating oil for May delivery slipped 0.05¢ but closed essentially unchanged at a rounded $2.90/gal on NYMEX. Reformulated stock for oxygenate blending for the same month declined 0.74¢ but also closed virtually unchanged at a rounded $2.83/gal.

The new front-month June natural gas contract jumped 16.9¢ to $4.39/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated 16¢ to $4.27/MMbtu.

In London, the July IPE contract for North Sea Brent increased 65¢ to $103.81/bbl. Gas oil for May dropped $1.25 to $857.50//tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes gained 21¢ to $100.91/bbl.

 

Contact Sam Fletcher at samf@ogjonline.com

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