MARKET WATCH: Energy futures mixed upon lingering international conflicts

Oil prices fell modestly on the New York market Aug. 6 while heating oil, gasoline, and natural gas futures prices all rose. Analysts expect strong oil demand through Dec. 31, acknowledging lingering concerns about international conflicts and potential oil supply disruptions (OGJ Online, Aug. 6 2014).

Meanwhile, Russian President Vladimir Putin banned food imports from the European Union, US, and other Western countries in response to recent sanctions aimed at discouraging Russia in its ongoing conflict with Ukraine.

Australia, Canada, and Norway also were targeted in the food import ban. In addition, Russian government officials said Ukrainian airlines are banned from flying across Russia, which reportedly also is considering banning transit flights for EU and US airlines across Russia.

Barclays Inc. analysts noted in a recent research note that US natural gas prices remain depressed at under $4/MMbtu, but “in our view, the risk to prices is skewed to the upside” through the end of the year.

On Aug. 7, the Energy Information Administration estimated US natural gas in underground storage in the Lower 48 at a rounded 2.4 tcf as of Aug. 1. That represented a net increase of 82 bcf from the previous week.

Stocks were 538 bcf less than last year at this time and 608 bcf below the 5-year average of nearly 3 tcf, the weekly gas storage report said.

Energy prices

The New York Mercantile Exchange September crude oil contract dropped 46¢ on Aug. 6, closing at $96.92/bbl, which was the front-month commodity’s lowest settlement since February. The October contract decreased 33¢ to $96.24/bbl.

The natural gas contract for September climbed 3.6¢ to a rounded $3.93/MMbtu. On the US cash market, gas at Henry Hub, La., was $3.89/MMbtu, up 4¢.

Heating oil for September delivery rose a 2.92¢ to a rounded $2.88/gal. Reformulated gasoline stock for oxygenate blending for September delivery climbed 2.42¢ to a rounded $2.74/gal.

The September ICE contract for Brent crude delivery dropped 2¢ to $104.59/bbl, marking its lowest settlement since November 2013. The October contract went the opposite direction, rising 2¢ to $105.27/bbl. The ICE gas oil contract for August was up $9.25 to $878.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $102.05/bbl on Aug. 6, down 18¢. OPEC was scheduled Aug. 8 to release its monthly oil market report.

Contract Paula Dittrick at paulad@ogjonline.com.

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