MARKET WATCH: Energy prices fall in last two sessions before holiday

Dec. 26, 2012

Energy prices generally fell Dec. 21 and 24 in low-trading sessions before Christmas, but oil and gas prices overall were up last week, especially after the report of a bigger-than-expected withdrawal of natural gas from US underground storage.

Sam Fletcher

Analysts in the Houston office of Raymond James & Associates Inc. reported crude prices were flat Dec. 24 while natural gas was down 3% on expectations the next report on gas inventories will show a seasonally weak withdrawal from storage. Markets remained weak in early trading Dec. 26 with Congress still on vacation less than a week before the fiscal cliff of automatic tax increases and spending cuts is to kick in.

Still, a widespread cold front brought freezing temperatures to much of the Midwest and snow even to parts of Texas on Christmas day as it moved toward the US Northeast. As a result, weather prognosticators say the Northeast may ring in a colder-than-normal New Year.

The equity market was down Dec. 26 after major retailers reported Christmas sales of electronics, clothing, jewelry, and home goods were up only 0.7% in the 2 months leading up to the holiday, the worst showing since the Great Recession of 2008. That disappointing data overshadowed increased home prices in most major US cities in October as the supply of available homes declined.

Energy prices

The February contract for benchmark US light, sweet crudes fell $1.47 on Dec. 21 and lost another 5¢ to $88.61/bbl Dec. 24 on the New York Mercantile Exchange. The March contract lost a total $1.52 over the two sessions to $89.17/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., followed the front-month crude contract down to $88.61/bbl.

Heating oil for January delivery lost 5.53¢ overall to $3/gal on NYMEX. Reformulated stock for oxygenate blending for the same month was down 1.96¢ Dec. 21 but regained 1.59¢ Dec. 24 to $2.75/gal.

The January natural gas contract dropped 11.6¢ over the 2 days to $3.35/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., rose 6.2¢ Dec. 21 but dropped 12.2¢ Dec. 24 to $3.28/MMbtu.

In London, the February IPE contract for North Sea Brent declined a total $1.40 to $108.80/bbl. Gas oil for January lost a sum of $13.75 to $927.50/tonne.

The offices of the Organization of Petroleum Exporting Countries were closed, with no price updates available.

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.