MARKET WATCH: Energy commodities pare back previous gains

Energy commodities generally gave back July 11 most of the price surge in the previous session, with crude down 1.5% in the New York futures market after the Paris-based International Energy Agency predicted global oil supply will outstrip demand in 2014.

The front-month natural gas futures contract dropped 2.3%, more than eliminating its earlier gain, “after the Energy Information Administration injection number beat the 5-year average for the 6th straight week,” said analysts in the Houston office of Raymond James & Associates Inc.

In other news, the US Department of Labor said July 12 wholesale prices rose 0.8% in June, the largest amount in 9 months, primarily from a jump in gasoline prices. Wholesale energy prices were up 2.9%. Food costs increased 0.2%. Wholesale prices for passenger cars gained 0.8%—the most since November 2011.

US inventories

EIA reported the injection of 82 bcf of natural gas into US underground storage in the week ended July 5, in line with Wall Street’s consensus. This increased working gas in storage to 2.687 tcf, down 443 bcf from the comparable period a year ago and 22 bcf below the 5-year average (OGJ Online, July 11, 2013).

“Excluding weather-related demand, there was 3.9 bcfd of additional natural gas added to storage [last] week compared with last year, and we have averaged 4.08 bcfd looser over the past 4 weeks,” Raymond James analysts said.

Energy prices

The August contract for benchmark US light, sweet crudes fell $1.61 to $104.91/bbl July 11 on the New York Mercantile Exchange. The September contract dropped $1.24 to $104.38/bbl. Subsequent futures contracts through January also posted losses. On the US spot market, West Texas Intermediate at Cushing, Okla., was down $1.61 to $104.91/bbl.

Heating oil for August delivery dipped 0.67¢ but closed essentially unchanged at a rounded $3/gal on NYMEX. Reformulated stock for oxygenate blending for the same month inched up 0.65¢ to $3.02/gal.

The August natural gas contract lost 6.7¢ to $3.61/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., declined 5.7¢ to $3.65/MMbtu.

In London, the August IPE contract for North Sea Brent gave up more than its previous gain, down 78¢ to $107.73/bbl. Gas oil for July declined $2.25 to $911.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 12¢ to $104.81/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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