MARKET WATCH: Oil prices continue fall on signs of slowing US economy
Energy prices fell Jan. 7 for the third consecutive trading session on the New York market amid continued signs of a slowing economy and forecasts for mild weather in the Northeast.
HOUSTON, Jan. 8 -- Energy prices fell Jan. 7 for the third consecutive trading session on the New York market amid continued signs of a slowing economy and forecasts for mild weather in the Northeast.
There was a brief rally in early trading with reports that a fleet of Iranian vessels on Jan. 5 threatened to attack three US Navy ships at the Straits of Hormuz, the entry to the Persian Gulf. US officials said the Iranians retreated when the US ships prepared to fire. "Listening to the Pentagon gave the impression for a while that the Gulf of Hormuz had become a new Gulf of Tonkin," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland. "The incident was, however, rapidly discounted by the oil market as a bit too vague and a bit too conveniently close to the US president's visit to the Middle East, which will be a road show against the Iranian threat (if not a nuclear threat, then at least a naval threat)."
As a result, traders focused on Treasury Secretary Henry Paulson, who said Jan. 7 there is no simple solution to the troubled US housing market. Meanwhile, the US dollar strengthened, putting pressure on the price of crude futures that previously provided a hedge against the dollar's decline.
On Jan. 8, Raymond James & Associates Inc. analysts in Houston said crude futures prices were up moderately in premarket trading on speculation of new attacks by militants on multiple oil field facilities in Nigeria and anticipation of yet another bullish government report Dec. 9 on US crude inventories.
They said the Organization of Petroleum Exporting Countries increased production by 1.2% in December as the UAE raised output after completing maintenance of fields. "Also, tanker rates are through the roof right now, signaling more crude shipments," said Raymond James analysts. "Natural gas was up moderately premarket and has risen more than 15% since bottoming in late December."
The February contract for benchmark US sweet, light crudes fell $2.82 to $95.09/bbl Jan. 7 on the New York Mercantile Exchange. The March contract dropped $2.79 to $94.90/bbl. On the US spot market, West Texas Intermediate was down $2.82 to $95.10/bbl. Heating oil for February delivery lost 9¢ to $2.59/gal on NYMEX. The February contract for reformulated blend stock for oxygenate blending (RBOB) dropped 8.12¢ to $2.43/gal.
The February natural gas contract gained 3.8¢ to $7.88/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated 4¢ to $7.57/MMbtu.
In London, the February IPE contract for North Sea Brent crude dropped $2.40 to $94.39/bbl. The January gas oil contract lost $30 to $816.50/tonne.
The average price for OPEC's basket of 12 reference crudes fell $1.65 to $92.01/bbl on Jan. 7.
Contact Sam Fletcher at firstname.lastname@example.org.