MARKET WATCH: Oil prices continue to rise; gas price declines
Oil prices continued climbing albeit at a slower pace, following a rise in the equity market after the Federal Reserve Bank reiterated its commitment to low interest rates into 2014 and generated the largest 1-day market percentage gain in weeks.
“The Standard & Poor’s 500 Index gained 1.4% on the day, benefiting from the Fed's remarks as well as brighter expectations for growth in the Chinese economy in the first quarter from surveyed economists (they were wrong),” said analysts in the Houston office of Raymond James & Associates Inc.
“Ironically, a short-term spike in weekly jobless claims may have also fueled the bulls yesterday, as many saw the data point as increasing the likelihood that the Fed might initiate another round of easing,” they said. “Crude followed the broader markets to close a percentage point higher. Natural gas, on the other hand, remained flat at sub-$2/Mcf levels in spite of a weekly storage build well below expectations.”
James Zhang at Standard New York Securities Inc., the Standard Bank Group, reported that gasoline remained the leader across the complex, and middle-distillates also were strong following an earlier government report of a hefty fall in product inventories (OGJ Online, Apr. 11, 2012). He said, “Despite the rally in flat price, the very front end of Brent time spread fell further, with the May-June Brent spread trading below 20¢/bbl after hitting $1/bbl at the end of February. In contrast, the front-end of West Texas Intermediate spread rallied during the last few sessions as the pace of stock build at Cushing, Okla., has slowed sharply. The back end of the time spread, however, rallied sharply, and implied volatility for long-dated contracts also rose. Both suggest that substantial producer hedging volume might have gone through during the day.”
Total product stocks in the Amsterdam-Rotterdam-Antwerp region and in Singapore fell as spring maintenance of refineries in the northern hemisphere continues. “Clearly, refineries in Europe have responded to the very strong gasoline crack by scarifying middle distillate yield. In Singapore, total product stocks fell by 400,000 bbl week-over-week as the fall in fuel oil stock outpaced a rise in middle-distillate stock. Broadly speaking, product inventories are fairly comfortable in both regions as inventories of most product groups remain above their previous 5-year average levels,” said Zhang.
Energy prices
The May contract for benchmark US light, sweet crudes gained 94¢ to $103.64/bbl Apr. 12 on the New York Mercantile Exchange. The June contract increased 92¢ to $104.10/bbl. On the US spot market, WTI at Cushing, was up 94¢ to $103.64/bbl.
Heating oil for May delivery advanced 5.14¢ to $3.17/gal on NYMEX. Reformulated stock for oxygenate blending for the same month rose 6.12¢ to $3.36/gal.
The May natural gas contract dipped 0.1¢ but closed essentially unchanged at a rounded $1.98/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 2.2¢ to $1.89/MMbtu.
In London, the May IPE contract for North Sea Brent increased $1.53 to $121.71/bbl. Gas oil for April was unchanged at $999/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes lost 92¢ to $117.80/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.