MARKET WATCH: Gas futures price falls, crude climbs

Sam Fletcher
OGJ Senior Writer

HOUSTON, Mar. 23 -- The front-month natural gas futures contract fell 2.2% Mar. 22 on the New York market, wiping out the gain from the previous session, on the forecast of a major warm-up by Apr. 1.

Front-month crude was down 2.6% in early trading but rebounded to a 1% price increase “on a rise in the broader markets and a drop in the dollar,” said analysts in the Houston office of Raymond James & Associates Inc. Oil was down again in early trading Mar. 23, but natural gas was up 1%.

Olivier Jakob at Petromatrix, Zug, Switzerland, said, “US equities managed to rebound from some early pressure and then managed to bring some support back to crude oil.” However, the Mar. 22 advance in crude prices was capped by the gasoline crack “that was losing almost as much as flat price crude oil was gaining,” he said.

Jakob also noted the traffic volume trends reported by the US Highway Administration showed the number of vehicle miles travelled in January was down 1.6% compared with January 2009. There was a sharp drop in miles travelled in the in the West, South and South Atlantic while the Northeast showed an increase in January before the “Snowmaggedon” storms that shut down much of that area in early February. “Vehicles miles travelled for 2009 was revised broadly higher, hence the number for January of 2010 is at the lowest level since 2004,” Jakob said.

Meanwhile, Fitch Ratings Ltd., London, said a “prolonged downturn in oil prices or continued difficulty in the refining sector” could delay cash generation that European major oil companies need to meet their strategic goals and would negatively affect credit ratings.

In other news, the Chinese Foreign Ministry called for a “long-term” diplomatic resolution of Iran’s plans to push ahead with its nuclear power program, undercutting the international sanctions favored by the US and other members of the United Nations.

Energy prices
The April contract for benchmark US sweet, light crudes traded as low as $78.87/bbl Mar. 22 before closing at $81.25/bbl, up 57¢ for the day on the New York Mercantile Exchange. The May contract climbed 63¢ to $81.60/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 57¢ to $81.25/bbl. Heating oil for April delivery on NYMEX inched up 0.7¢ to $2.08/gal. Reformulated blend stock for oxygenate blending for the same month increased only 0.06¢ with its closing price virtually unchanged at $2.26/gal.

The April natural gas contract traded at $4.04-4.17/MMbtu through the session before closing at $4.08/MMbtu, down 9¢ for the day on NYMEX. On the US spot market, gas at Henry Hub, La., regained 3.5¢ to $4.06/MMbtu.

In London, the May IPE contract for North Sea Brent crude was up 66¢ to $80.54/bbl. Gas oil for April gained $3.50 to $662.25/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes dropped 42¢ to $76.75/bbl.

Contact Sam Fletcher at samf@ogjonline.com