MARKET WATCH: Crude, gas futures prices rally despite down market
By OGJ editors
HOUSTON, July 30 -- Crude oil prices rallied for the commodity’s first positive finish of the week “despite the down market,” said analysts in the Houston office of Raymond James & Associates Inc.
Crude rallied 1.8%, RJA analysts said, “due to improving European economic sentiment (sending the dollar to a 12-week low against the euro) and was additionally boosted by falling US jobless claims.”
Natural gas, meanwhile, “jumped 2.3% after an increase in supplies came in below consensus and somewhat bullish [production data from the US Energy Information Administration]. Gains in oil & gas drove energy stocks to outperform the broader markets,” they reported.
Anuj Sharma, research analyst at Pritchard Capital Partners LLC in Houston, said, “The euro gained 0.7% against the dollar as an index of executive and consumer sentiment in Europe increased to 101.3 from 99 in June signaling improving confidence in the European economic outlook. Additionally, German unemployment declined to 7.6% from 7.7% on sustained recovery in exports from the region. The employment data on the domestic front was also slightly positive as US jobless claims fell by 11,000 to 457,000.”
Sharma said, “The improving economic outlook in Europe and the improving (albeit sluggishly) job market in the US have allayed some of the double-dip recession fears and have provided support to prices, although concerns about the deflationary pressures have started to surface. James Bullard, the president of the Federal Reserve Bank of St. Louis hinted about the same when he cautioned yesterday that the US economy might be at a risk of entering Japanese-style deflationary environment within the next several years.”
Meanwhile, EIA reported July 29 US gas in underground storage increased only 28 bcf to 2.9 tcf in the week ending July 22. Inventories now stand at 8.9% above the 5-year average but 3.1% or 94 bcf below last year’s level. Prices had rallied over last few days in anticipation of a bullish storage number. EIA also showed flat month-over-month production growth in the Lower 48 in May despite 200 MMcfd increase in onshore production, as production from the Gulf of Mexico declined by 200 MMcfd due to the pipeline repairs.
Energy prices
The September contract for benchmark US light, sweet crudes jumped $1.37 to $78.36/bbl July 29 on the New York Mercantile Exchange. The October contract gained $1.39 to $78.83/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up $1.37 to $78.36/bbl. Heating oil for August delivery gained 4¢ to $2.04/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month gained 3.4¢ to $2.10/gal.
The September natural gas contract continued climbing, up 10.9¢ to $4.83/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., was unchanged at $4.795/MMbtu.
In London, the September IPE contract for North Sea Brent crude increased $1.53 to $77.59/bbl. Gas oil for August rose $12 to $650.50/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes gained 93¢ July 29 to $74.19/bbl.