Oil and gas prices fell May 31 as the generally anticipated decision by the Organization of Petroleum Exporting Countries to maintain current production targets appeared nevertheless to weigh on markets (OGJ Online, May 31, 2013).
In the equity market, the Standard & Poor’s 500 Index closed down 1% in the holiday-shortened week—“the first such consecutive weekly decline since November,” said analysts in the Houston office of Raymond James & Associates Inc.
Traders seemed to shrug off some positive indications of a strengthening US economy and focused instead on signs last week of further economic contractions in China, said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. Investor interest in oil markets and most commodities cooled last week amid signs the Federal Reserve Bank will start winding down its bond purchases, he said.
“‘Taper’ is quickly becoming the most-feared word in the dictionary for money-managers, and the market will likely continue to hang on every utterance from the Federal Reserve,” Raymond James analysts said. The front-month crude contract fell 2% in the New York market last week following OPEC’s decision and a Department of Energy report US crude inventories have climbed to their highest level since EIA began collecting data in 1978.
“Meanwhile, traders sent natural gas prices on a 6% plunge (below the $4 handle) on milder weather forecasts and bearish injection data,” Raymond James reported. The SIG Oil Exploration & Production Index and the Oil Service Index both posted 2% losses last week.
The July contract for benchmark US light, sweet crudes fell $1.64 to $91.97/bbl May 31 on the New York Mercantile Exchange. The August contract dropped $1.59 to $92.21/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down $1.64 to $91.97/bbl.
Heating oil for July delivery lost 6.28¢ to $2.78/gal on NYMEX. Reformulated stock for oxygenate blending for the same month declined 3.36¢, also closing at a rounded $2.78/gal.
The July natural gas contract retreated 3.9¢ to $3.98/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., decreased 12.7¢ to $4/MMbtu.
In London, the July IPE contract for North Sea Brent declined $1.80 to $100.39/bbl. Gas oil for June dropped $14 to $844.75/tonne.
The average price for OPEC’s basket of 12 benchmark crudes fell 99¢ to $98.78/bbl. So far this year, OPEC’s basket price has averaged $105.85/bbl.
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