News of a second Israeli air strike on Syria during the weekend pulled the oil market out of a morning slump May 6 with front-month crude up nearly 1% by the end of the New York market session.
North Sea Brent futures gained more, climbing above $105/bbl, “given that it is used to price Middle Eastern oil,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group.
However, he said, “While geo-political risk premium cannot be ignored, unless there is a substantial escalation of Middle East tensions whereby significant oil producers are drawn into a conflict this premium should fade in due course as the uncertainty subsides. Coupled with a tempering of demand prospects, especially from China, we doubt that Brent can stay sustainably above the $105/bbl mark unless the Middle East situation worsens.”
Ground said, “Growing confidence in oil has much to do with a growing optimism about the growth prospects for the US. We would concur that the outlook for US oil demand is promising but that a weaker outlook for the world’s other premier consumer of oil (China) will constrain upside. These disparate growth outlooks will most likely maintain the narrowness of the Brent-West Texas Intermediate spread.”
In Houston, analysts with Raymond James & Associates Inc. reported, “Natural gas pulled back by 1% on milder weather forecasts, and although the commodity is now trading sub-$4/Mcf, it is still up nearly 20% year-to-date.” Despite the lack of “major economic news” in the equity market, the Standard & Poor’s 500 Index “kept pushing on and closed at yet another record high after a marginal gain on the day,” they said. Energy stocks followed the broader market, with the SIG Oil Exploration & Production Index and the Oil Service Index posting 1% gains.
Energy prices
The June contract for benchmark US sweet, light crudes rose 55¢ to $96.16/bbl May 6 on the New York Mercantile Exchange. The July contract gained 57¢ to $96.39/bbl. On the US spot market, WTI at Cushing, Okla., was up 55¢ to $96.16/bbl.
Heating oil for June delivery increased 3.58¢ to $2.92/gal on NYMEX. Reformulated stock for oxygenate blending for the same month advanced 4.03¢ to $2.87/gal.
The June natural gas contract lost 3¢ to $4.01/MMbtu, more than wiping out its gain in the previous NYMEX session. On the US spot market, gas at Henry Hub, La., dropped 3.4¢ to $3.93/MMbtu.
In London, the June IPE contract for Brent gained $1.27 to $105.46/bbl. Gas oil for May increased 75¢ to $858.75/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was up $1.14 to $102.61/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.