Sam Fletcher
OGJ Senior Writer
HOUSTON, Jan. 5 -- Energy prices jumped Jan. 4 following news of increased manufacturing and a weaker dollar, with crude increasing in the New York market for the eighth consecutive session to top $81/bbl—a height last reached in October 2008.
“The Institute for Supply Management manager's survey showed that the US manufacturing sector grew for the fifth straight month (surpassing economists' forecasts) while Chinese manufacturing expanded at its fastest pace in more than 5 years, with output climbing for a ninth straight month,” said analysts in the Houston office of Raymond James & Associates Inc.
Moreover, they said, “Cold weather in the Northeast, where more than four fifths of the nation's heating oil is consumed, boosted heating oil for February delivery by 3.5% and could lead to a seventh straight week of supply draws. Cold weather also gave gas bulls some hope as natural gas for February delivery jumped 5.6%. Energy stocks responded by deftly outperforming the broader markets, with the oil service index up 3.9% and the Standard & Poor's 1500 Oil & Gas Exploration & Production sub-industry index jumping 4.8% compared [with] the Dow Jones Industrial Average’s gain of 1.5%.”
Olivier Jakob at Petromatrix, Zug, Switzerland, said the dollar index is under pressure and should remain volatile this week. “Both the old and the new continents are under a cold spell, and heating oil is now priced to move out of storage in the US while coal is receiving some demand and price support,” he said. However, Jakob warned, “While the next 7 days should remain colder than normal in the US, the following week is more uncertain, especially in the Midwest.”
The market also was spurred by early reports of Russia cutting oil supplies to Belarus, but Russian officials later said exports had resumed.
Energy prices
The February contract for benchmark US sweet, light crudes climbed $2.15 to $81.51/bbl Jan. 4 on the New York Mercantile Exchange. The March contract was up $2.10 to $82.12/bbl. The new front-month February heating oil escalated 7.49¢ to $2.19/gal on NYMEX. Reformulated blend stock for oxygenate blending (RBOB) for the same month increased 5.15¢ to $2.10/gal.
Thanks to demand created by cold weather in the post-holiday season, the February natural gas contract shot up 31.2¢ to $5.88/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., was up 25¢ to $6.06/MMbtu.
In London, the February IPE contract for North Sea Brent crude gained $2.19 to $80.12/bbl. Gas oil for January climbed $18.25 to $653.75/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes rose to $78.18/bbl Jan. 4 from a revised $77.16/bbl on Dec. 31. The OPEC Secretariat will be closed Jan. 6, with no price update available.
Contact Sam Fletcher at [email protected].
