MARKET WATCH: Crude price flattens; gas price rebounds slightly in mixed market

Oct. 27, 2010
Crude oil prices were essentially flat in mixed trading Oct. 26 in the New York market among mixed economic signals, while natural gas rebounded marginally after falling to a 13-month low earlier in the week.

Sam Fletcher
OGJ Senior Writer

HOUSTON, Oct. 27 -- Crude oil prices were essentially flat in mixed trading Oct. 26 in the New York market among mixed economic signals, while natural gas rebounded marginally after falling to a 13-month low earlier in the week.

“The market fell early as August home prices rose less than expected but retraced much of these losses after a positive consumer confidence report was released later,” said analysts in the Houston office of Raymond James & Associates Inc. “At the end of the day, both the Standard & Poor’s 500 Index and the Dow Jones Industrial Average came in relatively flat. Similarly, crude prices rose marginally as the improvement in consumer confidence was offset by the strengthening dollar and expectations for a build in crude inventories.”

Anuj Sharma, research analyst at Pritchard Capital Partners LLC in Houston reported, “The dollar strengthened against the euro and yen, nullifying the benefit for crude from better-than-expected consumer confidence data.”

The November natural gas contract in the New York market “whipsawed all day on lack of direction, and gained 1.1% on prospects of below-normal temperatures in the Northeast next week,” Sharma said. “Lack of heating and cooling demand in October has played havoc with prices, which have now reached levels to attract bottom pickers in droves at the first sign of weather.” He said the amount of gas in US storage could set a new record soon if warmer-than-normal weather continues. The previous record was set last year at 3.837 tcf.

Energy inventories
The Energy Information Administration said Oct. 27 commercial US crude inventories jumped by 5 million bbl to 366.2 million bbl in the week ended Oct. 22, far exceeding the Wall Street consensus for a 1 million bbl increase. Gasoline stocks fell 4.4 million bbl to 214.9 million bbl in the same period, counter to analysts’ expectations of a 600,000 bbl gain. Both finished gasoline inventories and blending components inventories decreased. Distillate fuel inventories dropped 1.6 million bbl to 168.4 million bbl, slightly exceeding Wall Street’s prediction of a 1.5 million bbl decline.

Imports of crude into the US increased by 863,000 b/d to 9.5 million b/d during the same period, said EIA. In the 4 weeks through Oct. 22, crude imports averaged 8.8 million b/d, down 76,000 b/d from the same period last year. Total gasoline imports (including both finished gasoline and blending components) last week averaged 1 million b/d while distillate fuel imports averaged 190,000 b/d.

The input of crude into US refineries increased 171,000 b/d to 14.1 million b/d last week with units operating at 83.7% of capacity. Gasoline production increased to 9.2 million b/d. Distillate fuel production increased to 4.4 million b/d, EIA reported.

Energy prices
The December contract for benchmark US light, sweet crudes continued to advance, up 3¢ to $82.55/bbl Oct.26 on the New York Mercantile Exchange. However, the January contract dipped 1¢ to $83.20/bbl.

On the US spot market, West Texas Intermediate at Cushing, Okla., was up 55¢ to match the front-month futures price of $82.55/bbl. Heating oil for November delivery slipped by 0.5¢ to $2.25/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month increased 1.67¢ to $2.09/gal.

The November contract for natural gas rebounded, up 3.7¢ to $3.35/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated 13.7¢ to $3.32/MMbtu.

In London, the December IPE contract for North Sea Brent gained 12¢ to $83.66/bbl. Gas oil for November was unchanged at $710.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes dropped 28¢ to $79.75/bbl.

Contact Sam Fletcher at [email protected].