MARKET WATCH: Gas futures prices climb during US freeze

Natural gas futures prices climbed on the New York market Dec. 9 upon anticipated strong demand for gas-fired heat, which analysts attributed to freezing temperatures across much of the US Midwest and the East Coast. The prices for crude oil and products dropped modestly in Dec. 9 trading.

The January gas contract on the New York Mercantile Exchange closed Dec. 9 at its highest price since May 24. Meanwhile, weather forecasters said below-normal temperatures could linger for up to 10 more days.

Crude oil supplies remain robust in the US given rising production. The Energy Information Administration last week reported 385.8 billion bbl of crude oil inventories, excluding those in the Strategic Petroleum Reserve.

The report marked a decline of 5.6 million bbl for the week ended Nov. 29, yet EIA said crude inventories remained at the highest end-November level since 1930.

On Dec. 9, TransCanada Corp. confirmed it began injecting oil into a new 700,000 b/d pipeline from Cushing to Port Arthur, Tex., refineries, which would ease a bottleneck of crude oil supplies in Oklahoma. TransCanada declined to give an exact date for when commercial service might start. Previously, TransCanada has said service might begin during January 2014.

In a weekly oil market recap, PIRA Energy Group of New York reported Dec. 10 that the US Midcontinent fundamentals weakened during November.

“High crude stocks on the Gulf Coast led to a further disconnect between US and foreign markets in November, with the Brent-LLS differential rising to a record $10/bbl,” PIRA said, referring to Louisiana Light Sweet crude. “However, by late November and early December, fundamentals were improving and all differentials had strengthened.”

Energy prices

The New York Mercantile Exchange January crude contract decreased 31¢ on Dec. 9, closing at $97.34/bbl. The February contract dropped 34¢ to settle at $97.56/bbl.

Heating oil for January delivery dipped by 4.2¢ to settle at a rounded $3.01/gal on NYMEX. Reformulated gasoline stock for oxygenate blending for January delivery dropped 5.2¢ to a rounded $2.67/gal.

The January natural gas contract on NYMEX was up 11.8¢, settling at a rounded $4.23/MMbtu. On the US spot market, the gas price at Henry Hub, La., was a rounded $4.23/MMbtu, a 9¢ rise.

In London, the January ICE contract for Brent crude oil dived by $2.22, closing at $109.39/bbl. The ICE gas oil contract for December dropped $6.50 to settle at $934.25/tonne.

The Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes closed at $107.72/bbl on Dec. 9, declining 28¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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