MARKET WATCH: Crude prices inch higher in mixed market

A stronger dollar pushed down through much of a mixed and volatile market before the front-month contract managed a small gain at closing on June 12.

Sam Fletcher
Senior Writer

HOUSTON, June 13 -- A stronger dollar pushed down through much of a mixed and volatile market before the front-month contract managed a small gain at closing on June 12.

The US dollar hit its highest mark in more than 3 months against the yen on the report of a 1% increase in retail sales in May.

"Overnight oil prices are lower, but crude oil values continue to be well into the $130s and the memory of last Friday's $11 rise [is] still fresh in people's minds," said analysts at Pritchard Capital Partners LLC, New Orleans. "We are starting to see some weakness in forward prices, especially for jet fuel. US and overseas airlines are cutting capacity by 10-16% over the next year. This is expected to sharply reduce demand so some selling pressure is seen in the forward curve. One would not notice this by looking at European gas oil prices. They are higher today on the International Petroleum Exchange."

Meanwhile, union representatives of white-collar workers in Nigeria said talks are not going well with officials of a Chevron Corp. subsidiary. The union renewed its strike threat effective June 18.

Energy prices
The July contract for benchmark US light, sweet crudes traded at $131.55-137.46/bbl before closing at $136.74/bbl, up 36¢ June 12 on the New York Mercantile Exchange. The August contract increased 40¢ to $137.38/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 36¢ to $136.74/bbl. The July contract for reformulated blend stock for oxygenate blending (RBOB) increased 6.02¢ to $3.53/gal on NYMEX. However, heating oil for the same month lost 3.21¢ to $3.94/gal.

The July natural gas contract climbed 13.8¢ to $12.80/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., increased 6¢ to $12.58/MMbtu. Pritchard Capital Partners said, "July natural gas futures posted a hefty gain [June 12] after a government inventory report showed additions to storage that were smaller than trader expectations. Longer-term observers, however, see the current supply argument as overdone."

In London, the July IPE contract for North Sea Brent crude gained $1.07 to $136.09/bbl. The June gas oil contract was unchanged at $1,257.75/tonne, however.

The average price for the Organization of Petroleum Exporting Countries' basket of 13 reference crudes advanced 88¢ to $129.77/bbl on June 12.

Contact Sam Fletcher at samf@ogjonline.com.

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