MARKET WATCHNatural gas futures jump above $8/MMbtu
Sam Fletcher
Senior Writer
HOUSTON, Aug. 1 -- Natural gas futures prices soared past $8/MMbtu July 31 to the highest level in almost 6 months on the New York market, pulling crude prices up with it in anticipation of record demand for electricity as most of the US continues to bake in the summer heat.
The September gas contract jumped by $1.03 to $8.21/MMbtu on the New York Mercantile Exchange as high temperatures curtailed nuclear power plant operations and increased peak-load demand for electric power from gas-fueled generators. It was the biggest 1-day gain since early December and the highest closing price for a front-month gas contract since the first week of February, analysts said.
"The sharp increase, which has extended into [early trading] this morning, is due to the extensive heat wave that seems to be shifting toward the east coast, causing record gas-fired power demand," said analysts in the Houston office of Raymond James & Associates Inc. in an Aug. 1 report. "Oil [was] also trading slightly higher. . .as uncertainty arising from the Israeli-Lebanon conflict remains. Furthermore, traders seem a bit skittish in regard to Tropical Storm Chris as it heads toward the Gulf of Mexico, containing roughly a third of US oil production."
Crude prices, following gas prices' lead, were helped along by Russian reports of a "minor" leak in the 2,500-mile Druzhba pipeline from Siberia's oil fields to eastern and central Europe. The leak is in the western Bryansk region.
Also, earlier this week during his visit to Iran, Venezuela's Energy Minister Rafael Ramirez reiterated a threat to cut oil exports to the US because of alleged hostile policies by US officials against the Venezuelan government.
Energy prices
The September contract for benchmark US sweet, light crudes gained $1.16 to $74.40/bbl July 31 on NYMEX, recouping most of its loss in the July 28 session. The October contract advanced by $1.29 to $75.68/bbl.
On the US spot market, West Texas Intermediate at Cushing, Okla., increased by $1.16 to $74.41/bbl. Heating oil for August delivery was up by 2.67¢ to $1.97/gal. However, regular gasoline for the same month dipped by 0.46¢ to $2.23/gal.
In London, the September IPE contract for North Sea Brent crude climbed by $1.76 to $75.15/bbl. Gas oil for August was up by $3.25 to $632.25/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes lost 55¢ to $68.42/bbl on July 31. So far this year, OPEC's basket price has averaged $62.25/bbl.
Contact Sam Fletcher at [email protected].