MARKET WATCH: Positive indicators push up energy prices

Energy prices climbed slightly July 27 despite a slow-down in the equity market rally that has helped lift crude prices in eight of the last nine trading sessions on the New York market.

Sam Fletcher
OGJ Senior Writer

HOUSTON, July 28 -- Energy prices climbed slightly July 27 despite a slow-down in the equity market rally that has helped lift crude prices in eight of the last nine trading sessions on the New York market.

“Along with the broader markets, crude rose yesterday following positive economic data and a weakening US dollar. Specifically, US home sales came in higher than expected in June, while inventories declined to a multiyear low, raising optimism about current economic conditions,” said analysts in the Houston office of Raymond James & Associates Inc.

The Standard & Poor's-Case-Shiller index, released July 28, showed a rise in home prices in May—the first monthly increase since the summer of 2006. That could indicate the real estate market may be stabilizing, analysts said.

However, the New York-based Conference Board said its Consumer Confidence Index fell to 46.6, down from 49.3 in June. That marked the second consecutive month of declines after an increase in consumer confidence earlier this year. Analysts blamed consumers’ concerns about job security for the downturn.

Olivier Jakob at Petromatrix, Zug, Switzerland, said, “On the supply side, the UAE is keeping its [crude] supply cuts steady for September and in the US we will need to monitor developments over the shut-in of the Eugene Island pipeline in the US Gulf of Mexico following the discovery of a leak. A prolonged shut-down could help in creating a bottom on the West Texas Intermediate prompt contango, especially since the product cracks are still improving.”

In New Orleans, analysts at Pritchard Capital Partners LLC, said, “Gasoline has risen 18% in July and the weekly Department of Energy data has shown large and persistent gasoline builds over the past 2 months.” However, they said, “The increase in gasoline price may reflect that this trend may soon reverse. If the trend in gasoline builds were to reverse, it would be positive for crude as the size of the builds in gasoline and distillates has been negative and handicapped crude over the past few months.”

Energy prices
The September contract for benchmark US sweet, light crudes advanced 33¢ to $68.38/bbl July 27 on the New York Mercantile Exchange. The October contract increased 26¢ to $70.05/bbl. On the US spot market, WTI at Cushing, Okla., was up $1.83 to match the front-month crude futures contract’s closing price of $68.38/bbl. The spot market price for crude has generally paralleled the futures market price for several months now. Heating oil for August delivery increased 1.53¢ to $1.80/gal on NYMEX. Reformulated blend stock for oxygenate blending (RBOB) for the same month was up 1.88¢ to $1.93/gal.

The August natural gas contract dropped 9.1¢ to $3.60/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., climbed 9.5¢ to $3.48/MMbtu.

In London, the September IPE contract for North Sea Brent crude increased 49¢ to $70.81/bbl. August gas oil gained $6.50 to $575/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes was up $1.21 to $69.01/bbl on July 27.

Contact Sam Fletcher at samf@ogjonline.com.

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