MARKET WATCH: Weak dollar lifts oil price
The price of the front-month crude contract was up 1.1% on Apr. 30 in the New York market as the US dollar weakened for the third consecutive day and the economic outlook improved over a pending bailout of financially troubled Greece.
OGJ Senior Writer
HOUSTON, May 3 – The price of the front-month crude contract was up 1.1% on Apr. 30 in the New York market as the US dollar weakened for the third consecutive day and the economic outlook improved over a pending bailout of financially troubled Greece.
However, the Oil Service Index dropped 3% as investors sold off holdings for fear that political reaction to the massive oil spill in the Gulf of Mexico will reduce earnings for the oil field services sector, said analysts in the Houston office of Raymond James & Associates Inc
In New Orleans, analysts at Pritchard Capital Partners LLC said crude futures prices increased 2.9% in April, the third consecutive monthly gain. “Although well placed optimism about the global economy has been very supportive to prices,” they said, “we believe that elevated inventory levels will dampen a sustained appreciation at current price levels. We are also keeping an eye on the fallout from the Deepwater Horizon [blowout] for any short-term impact driven by supply disruptions as a result of possible shipping and platform shutdowns, and also on the long-term impact as a result of a policy response from the Administration.”
As a safety measure, two platforms in the Gulf of Mexico ceased gas production in areas of oil sheen produced from the blowout (OGJ Online, May 1, 2010.).
“Although these shutdowns affected only 6.2 MMcfd production so far, more such shutdowns might be in the cards if the situation worsens and would provide additional support to [gas] prices in the event that shutdowns become sizeable,” said Pritchard Capital analysts.
The price of natural gas continued to decline Apr. 30, dropping below $4/MMbtu on the New York futures market “as bulging inventories and strong supplies continue to restrain any sustainable price appreciation,” reported Pritchard Capital Partners. “However, with summer demand ahead of us and industrial demand coming back, we expect that prices will find support at current levels despite projected strong injections into underground storage over the coming weeks.”
The June contract for benchmark US light, sweet crudes advanced 98¢ to $86.15/bbl Apr. 30 on the New York Mercantile Exchange. The July contract gained $1.11 to $88.36/bbl.
On the US spot market, West Texas Intermediate at Cushing, Okla., was up 98¢ to $86.15/bbl. Heating oil for May delivery increased 3.73¢ to $2.29/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month climbed 4.07¢ to $2.40/gal.
The June natural gas contract dropped 6¢ to $3.92/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., fell 22¢ to $3.89/MMbtu.
In London, the June IPE contract for North Sea Brent crude increased 54¢ to $87.44/bbl. Gas oil for May gained $3.50 to $731.75/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes was up 54¢ to $84.13/bbl.
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