MARKET WATCH: Economic indicators boost oil prices

Oil prices continued rising June 13 with front-month crude up 0.8% in the New York futures market among positive economic indicators.

“Oil markets received a shot in the arm from yesterday’s US retail sales number,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group.

The US Census Bureau said its seasonally adjusted estimate of US retail and food services sales in May totaled $421.1 billion, up 0.6% from April and 4.3% above May 2012, topping analysts’ expectations. The increase was driven by auto purchases and home improvements, officials said.

“Meanwhile, natural gas futures gained 1% despite a neutral injection number,” said analysts in the Houston office of Raymond James & Associates Inc.

The Energy Information Administration reported the injection of 95 bcf of natural gas into US underground storage in the week ended June 7, just under Wall Street’s consensus for an input of 96 bcf. Working gas in storage increased to 2.347 tcf, down 587 bcf from the comparable period a year ago and 58 bcf below the 5-year average (OGJ Online, June 13, 2013).

“Following a 3-day selloff, equities reacted positively to strong US economic data and shrugged off continued weakness in Japan, giving the Standard & Poor’s 500 Index its biggest daily gain since January,” Raymond James analysts reported. The S&P was up 1.5% as initial unemployment claims declined more than expected. Energy stocks rallied, with the Oil Service Index up 1.9% and the SIG Oil Exploration & Production Index increasing 1.4%.

“Trading in European markets this morning has extended yesterday’s gains, still supported by yesterday’s US data flow,” Ground said. “There might also be an element of geopolitical concerns propping up prices today as Iranians go to the polls to elect a new president. While voters have said that their choice of candidate will be influenced by a desire to see an end to sanctions (an outcome which would be bearish for oil prices), the uncertainty surrounding the election result is likely enough to keep the geopolitical risk premium elevated for now.”

Energy prices

The July contract for benchmark US light, sweet crudes climbed 81¢ to a 3-week high of $96.69/bbl June 13 on the New York Mercantile Exchange. The August contract rose 82¢ to $96.92/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 81¢ to $96.69/bbl.

Heating oil for July delivery increased 4.43¢ to $2.94/gal on NYMEX. Reformulated stock for oxygenate blending for the same month recovered 5.12¢ to $2.86/gal.

The July natural gas contract continued its rise, up 3.7¢ to $3.81/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., fell 5.6¢ to $3.73/MMbtu.

In London, the July IPE contract for North Sea Brent gained 76¢ to $104.25/bbl. The new front-month July contract for gas oil escalated by $6 to $879/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 37¢ to $101.26/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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