MARKET WATCH: Oil prices increase as dollar weakens; gas prices fall

A weakening dollar helped boost oil prices June 6, with front-month crude up 1% in the New York futures market. However, a bigger-than-expected build in US natural gas inventories last week caused the front-month gas contract to fall 4%.

The Energy Information Administration earlier reported the injection of 111 bcf of natural gas into US underground storage last week, exceeding Wall Street’s consensus of 100 bcf. That increased working gas in storage to 2.252 tcf, down 616 bcf from the comparable period a year ago and 69 bcf below the 5-year average (OGJ Online, June 6, 2013).

Meanwhile, the US Department of Labor reported June 7 US employers hired 175,000 new workers in May, maintaining modest but steady job growth despite reduced government spending and increased taxes. Nonetheless, US unemployment increased to 7.6% from 7.5% in April as more people began looking for jobs. Analysts speculate signs of a still shaky economy should encourage the Federal Reserve Bank to continue its monthly bond purchases for a while.

Energy prices

The July and August contracts for benchmark US light, sweet crudes climbed $1.02 each to $94.76/bbl and $94.98/bbl, respectively, June 6 on the New York Mercantile Exchange. On the US spot market, West Texas Intermediate at Cushing, Okla., was up by the same amount to match the front-month futures contract’s closing of $94.76/bbl.

Heating oil for July delivery increased 1.6¢ to $2.87/gal on NYMEX. Reformulated stock for oxygenate blending for the same month rose 2.79¢ to $2.85/gal.

The July natural gas contract, however, fell 17.4¢ to $3.83/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 10.7¢ to $3.85/MMbtu.

In London, the July IPE contract for North Sea Brent gained 57¢ to $103.61/bbl. Gas oil for June lost $5.25 to $865.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes declined 16¢ to $100.93/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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