MARKET WATCH: Crude ends brief rally as energy prices decline

Dec. 14, 2012

Energy prices fell Dec. 13, ending a 2-day rally, with front-month crude and natural gas down 1% each in the New York market despite—or perhaps because of—a “frank discussion” between President Barack Obama and House Speaker John Boehner of the budget deadlock. No resolution has yet been reached.

Sam Fletcher

The equity market also was down, terminating its 6-day rally as Standard & Poor’s 500 Index dropped 0.6% amid market uncertainty. “Crude traded down with the broader market, and gas fell on supply concerns given higher-than-average temperatures across the US,” said analysts in the Houston office of Raymond James & Associates Inc.

In other news, the US Department of Labor reported retail gasoline prices fell 7.4% in November, the biggest decline in 4 years, and offset a 0.2% increase in food prices. As a result, the seasonally adjusted consumer price index dropped 0.3% last month. In the past year, consumer prices have climbed 1.8%.

Energy prices

The January contract for benchmark US light, sweet crudes dropped 88¢ to $85.89/bbl Dec. 13 on the New York Mercantile Exchange. The February contract fell 87¢ to $86.44/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., remained in lockstep with the front-month futures contract, down 88¢ to $85.89.

Heating oil for January delivery decreased 2.31¢ to $2.94/gal on NYMEX. Reformulated stock for oxygenate blending for the same month declined 4.44¢ to $2.60/gal.

The January natural gas contract continued to retreat, down 3.5¢ to $3.35/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., lost 6.6¢ to $3.27/MMbtu.

In London, the January IPE contract for North Sea Brent dropped $1.59 to $107.91/bbl. The new front-month January contract for gas oil decreased $2.50 to $920.50/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes, however, increased 18¢ to $106.01/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.