MARKET WATCH: Energy prices weak in 'uninspired' markets
Energy prices primarily were down in mixed markets Oct. 17 with crude essentially flat in New York as indications of a strengthening economic recovery were tempered by a jump in US inventories.
Trading was “uninspired” because “the smorgasbord of global macro issues driving crude prices hasn't shifted too dramatically in recent weeks,” said analysts in the Houston office of Raymond James & Associates Inc.
Natural gas prices increased ahead of the Energy Information Administration report of 51 bcf of gas injected into US underground storage in the week ended Oct. 12, compared with Wall Street’s consensus for 47 bcf. This increased working gas in storage to 3.776 tcf, up 181 bcf from the comparable period a year ago and 249 bcf above the 5-year average.
EIA earlier said commercial US crude inventories climbed 2.9 million bbl to 369.2 million bbl last week, nearly twice the Wall Street consensus for a 1.5 million bbl gain. Gasoline stocks were up 1.7 million bbl to 197.1 million bbl in the same period, primarily because of increased blending components and far exceeding the cumulative 500,000 bbl gain analysts expected. Distillate fuel inventories fell 2.2 million bbl to 118.7 million bbl, outstripping an anticipated 1.5 million bbl drop (OGJ Online, Oct. 17, 2012).
With distillate fuel stocks still in decline, “there is significant potential for rising crude oil demand from this avenue as we move into the US winter,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group.
“Distillate inventories remain particularly low, below the 5-year range we’ve seen at this time of year,” Ground said. “Even in terms of days of supply, the level of distillate stocks has slipped below the seasonal 5-year range.”
He reported, “Some realism in expectations concerning the outcome of the European Union Summit (Oct. 18-19 in Brussels) have suspended euro strength, keeping the common currency on a relatively even keel this morning. The positive sentiment that drove markets upward yesterday is absent. Perhaps this will change should US jobless claims, the Philadelphia Federal Reserve Bank, and leading indicator data confirm yesterday’s indications of a strengthening US economy.”
Energy prices
The November contract for benchmark US sweet, light crudes inched up 3¢ to $92.12/bbl Oct. 17 on the New York Mercantile Exchange. The December contract advanced 5¢ to $92.59/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., followed the front-month futures contract up 3¢ to $92.12/bbl.
Heating oil for November delivery dipped 0.91¢ to $3.19/gal on NYMEX. Reformulated stock for oxygenate blending for the same month dropped 6.36¢ to $2.78/gal.
The November natural gas contract increased 3.3¢ to $3.47/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., rose 0.4¢ to $3.27/MMbtu.
In London, the new front-month December IPE contract for North Sea Brent lost 78¢ to $113.22/bbl, further narrowing its premium over WTI. Gas oil for November fell $6.50 to $996.75/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes lost 85¢ to $110.24/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.