MARKET WATCH: Crude oil, natural gas prices slip lower

The front-month crude contract’s price dipped 0.5% Oct. 11 in the New York market as the US dollar strengthened, and natural gas continued its decline, down 1.4% on forecasts of mostly normal temperatures through Oct. 25.

Sam Fletcher
OGJ Senior Writer

HOUSTON, Oct. 12 -- The front-month crude contract’s price dipped 0.5% Oct. 11 in the New York market as the US dollar strengthened, and natural gas continued its decline, down 1.4% on forecasts of mostly normal temperatures through Oct. 25.

“After hitting an 8-year low against the euro and 15-year low against the yen last week, the dollar finally strengthened,” said analysts in the Houston office of Raymond James & Associates Inc. “Despite falling commodities, energy stocks hung tough yesterday and were roughly in line with the broader markets, closing flat on the day.” Raymond James reported oil and gas prices were down in early trading Oct. 12.

At Standard New York Securities Inc., part of the Standard Bank Group, analyst Walter de Wet said Oct. 12 the strike at French ports of Fos and Lavera is now in its 16th day, with no end yet in sight. “It has been reported that the La Mede Refinery with 157,000 b/d crude distillation capacity is shutting down due to crude shortage. And seven other refineries relying on the import [of crude] via the ports are reported running at a reduced rate. The strike has pushed down the spot Urals Med differential vs. dated Brent to an 8-week low of $1.63/bbl. Another impact has been a reduced gasoline export to the US, which boosted reformulated blend stock for oxygenate blending (RBOB) cracks in recent weeks,” said De Wet.

He said, “Front-month West Texas Intermediate, Brent, ICE gas oil, and New York Mercantile Exchange heating oil all closed below their 5-day and 8-day moving average, with only NYMEX RBOB as the exception staying above the 5-day and 8-day moving average.”

The resumption of crude transport to 80% of the capacity of Enbridge Energy Partners LP’s reactivated 670,000 b/d 6A crude pipeline that was shut-in Sept. 9 because of a leak also weighed on prices, said Anuj Sharma, research analyst at Pritchard Capital Partners LLC in Houston. The pipeline was shut again Oct. 8-9 after a defect was detected during inspection.

Meanwhile, Sharma said the market is not expecting any change in quotas when the Organization of Petroleum Exporting Countries meets in Vienna on Oct. 14 as the cartel is happy with the current price level while the market remains well-supplied.

Energy prices
The November contract for benchmark US sweet, light crudes climbed as high as $83.50/bbl in intraday trading Oct. 11 on NYMEX before closing at $82.21/bbl, losing 45¢ for the day. The December contract declined 34¢ to $83.01/bbl.

On the US spot market, WTI at Cushing, Okla., was down 45¢ to $82.21/bbl. Heating oil for November delivery dipped 0.29¢ but was essentially unchanged at a rounded $2.28/gal on NYMEX. RBOB for the same month, however, continued climbing, up 1.43¢ to $2.17/gal.

The November natural gas contract lost 5¢ to $3.60/MMbtu, wiping out its 3.4¢ gain from the previous session on NYMEX. On the US spot market, gas at Henry Hub, La., gained 17¢ to $3.46/MMbtu, recouping most of the previous day’s loss.

In London, the November IPE contract for North Sea Brent crude decreased 31¢ to $83.72/bbl. Gas oil for October increased by $1 to $722.75/tonne.

The average price for OPEC’s basket of 12 reference crudes was up 49¢ to $80.44/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

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