MARKET WATCH: Oil prices increase as dollar weakens; gas prices fall

June 7, 2013

A weakening dollar helped boost oil prices June 6, with front-month crude up 1% in the New York futures market. However, a bigger-than-expected build in US natural gas inventories last week caused the front-month gas contract to fall 4%.

Sam Fletcher

The Energy Information Administration earlier reported the injection of 111 bcf of natural gas into US underground storage last week, exceeding Wall Street’s consensus of 100 bcf. That increased working gas in storage to 2.252 tcf, down 616 bcf from the comparable period a year ago and 69 bcf below the 5-year average (OGJ Online, June 6, 2013).

Meanwhile, the US Department of Labor reported June 7 US employers hired 175,000 new workers in May, maintaining modest but steady job growth despite reduced government spending and increased taxes. Nonetheless, US unemployment increased to 7.6% from 7.5% in April as more people began looking for jobs. Analysts speculate signs of a still shaky economy should encourage the Federal Reserve Bank to continue its monthly bond purchases for a while.

Energy prices

The July and August contracts for benchmark US light, sweet crudes climbed $1.02 each to $94.76/bbl and $94.98/bbl, respectively, June 6 on the New York Mercantile Exchange. On the US spot market, West Texas Intermediate at Cushing, Okla., was up by the same amount to match the front-month futures contract’s closing of $94.76/bbl.

Heating oil for July delivery increased 1.6¢ to $2.87/gal on NYMEX. Reformulated stock for oxygenate blending for the same month rose 2.79¢ to $2.85/gal.

The July natural gas contract, however, fell 17.4¢ to $3.83/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 10.7¢ to $3.85/MMbtu.

In London, the July IPE contract for North Sea Brent gained 57¢ to $103.61/bbl. Gas oil for June lost $5.25 to $865.75/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes declined 16¢ to $100.93/bbl.

Contact Sam Fletcher at [email protected].

About the Author

Sam Fletcher | Senior Writer

I'm third-generation blue-collar oil field worker, born in the great East Texas Field and completed high school in the Permian Basin of West Texas where I spent a couple of summers hustling jugs and loading shot holes on seismic crews. My family was oil field trash back when it was an insult instead of a brag on a bumper sticker. I enlisted in the US Army in 1961-1964 looking for a way out of a life of stoop-labor in the oil patch. I didn't succeed then, but a few years later when they passed a new GI Bill for Vietnam veterans, they backdated it to cover my period of enlistment and finally gave me the means to attend college. I'd wanted a career in journalism since my junior year in high school when I was editor of the school newspaper. I financed my college education with the GI bill, parttime work, and a few scholarships and earned a bachelor's degree and later a master's degree in mass communication at Texas Tech University. I worked some years on Texas daily newspapers and even taught journalism a couple of semesters at a junior college in San Antonio before joining the metropolitan Houston Post in 1973. In 1977 I became the energy reporter for the paper, primarily because I was the only writer who'd ever broke a sweat in sight of an oil rig. I covered the oil patch through its biggest boom in the 1970s, its worst depression in the 1980s, and its subsequent rise from the ashes as the industry reinvented itself yet again. When the Post folded in 1995, I made the switch to oil industry publications. At the start of the new century, I joined the Oil & Gas Journal, long the "Bible" of the oil industry. I've been writing about the oil and gas industry's successes and setbacks for a long time, and I've loved every minute of it.