Major US stock indexes jumped in early trading Jan. 2 after the US House of Representatives finally passed a budget bill in a late-night session on New Year’s day when the country technically went over the long-feared fiscal cliff as automatic tax increases and spending cuts kicked in.
Oil prices followed the equity market higher in early trading, but natural gas futures continued to slump. “Stock futures rallied on news of the deal. But today's celebration could turn sour next month when Congress will be asked to raise the debt ceiling,” said analysts in the Houston office of Raymond James & Associates Inc.
Meanwhile, US Coast Guard officials reported a concial drilling unit that ran aground in a storm off Alaska appeared to be stable with no indication that any of its 143,000 gal of diesel fuel and 12,000 gal of combined lube oil and hydraulic fluid was leaking (OGJ Online, Jan. 2, 2013). The 266-ft Kulluk drilling unit had been working in the Beaufort Sea off Alaska’s North Slope and was being towed to its winter home in Seattle when it encountered a severe storm with 24-ft waves on New Year’s Eve. It was reported tug crews were forced by the storm to cut loose the barge, which then drifted 10 hr before grounding off uninhabited Sitkalidak Island 200 miles south of Anchorage.
The double-hull Kulluk was built in 1983 by Japan’s Mitsui & Co. Ltd. and is a veteran of Alaska drilling. It underwent $292 million in improvements before resuming work last year in the Beaufort Sea.
Even USCG classifies the mishap as a maritime transportation accident. But that didn’t stop Rep. Ed Markey of Massachusetts, top-ranking Democrat on the House Natural Resources Committee, from saying it confirms his claim drilling expansion “could prove disastrous for this sensitive environment.” Markey has long opposed oil and gas exploration and development in Alaska. He now also opposes US exports of natural gas exports, claiming US residents and industries shouldn’t be deprived of that energy resource.
Energy prices
The February contract for benchmark US light, sweet crudes rose $1.02 to $91.82/bbl Dec. 31 on the New York Mercantile Exchange. The March contract gained 97¢ to $92.27/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up $1.02 to $91.82/bbl.
The expiring heating oil contract for December delivery inched up 0.03¢ to $3.05/gal on NYMEX. Reformulated stock for oxygenate blending for the same month increased 1.21¢ to $2.82/gal.
The February natural gas contract fell 11.8¢ to $3.55/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., gained 0.1¢ but closed essentially unchanged at a rounded $3.40/MMbtu.
In London, the February IPE contract for North Sea Brent advanced 49¢ to $111.11/bbl. Gas oil for January dropped $6 to $927/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes declined 8¢ to $107.79/bbl. OPEC’s basket price averaged $109.45/bbl through 2012, compared with an average $107.46/bbl in 2011.
Contact Sam Fletcher at [email protected].
