MARKET WATCH: US crude futures slip lower; gas continues to fall
US benchmark crude slipped to a 3-week low July 29, and front-month natural gas dropped 3% in the New York market with cooler weather forecast for the Midwest and Northeast.
In the US equity market, stocks pulled back broadly in the first trading session of what analysts in the Houston office of Raymond James & Associates Inc. described as “the week of the central bankers.” Executives of the US Federal Reserve Bank opened a 2-day meeting July 30, while the European Central Bank and the Bank of England are separately scheduled of policy meetings this week, increasing the possibility of major developments in markets.
“Although all three banks will likely just reaffirm their determination to keep a lid on interest rates for a long time, that won't stop speculators from doing what they do best,” Raymond James analysts said. Following the weakness in stocks and commodities, the SIG Oil Exploration & Production Index and the Oil Service Index slipped 1% each. Oil and gas prices were down in early trading July 30.
Investors are hoping Federal Reserve Chairman Ben Bernanke will reveal in post-meeting comments July 31 more information as to when the Fed will begin curbing its $85 billion bond purchases that have kept long-term borrowing rates low. A Reuter’s poll of economists indicated September is the most likely time for the bank to begin tapering bond purchases.
There also is speculation Bernanke may indicate when the Fed might raise its short-term interest rate, which has remained near zero since 2008. He previously said the rate will remain unchanged as long as US unemployment is above 6.5% and inflation is below 2.5%. Unemployment currently is 7.6% with inflation at 1%.
In the UK, there are expectations new Bank of England Governor Mark Carney will discuss the bank’s monetary policy and its effect on the British pound.
The European Central Bank’s monthly policy meeting is scheduled Aug. 1. No major monetary changes are expected from that meeting, but some hope bank officials may move to make their proceedings more transparent. The ECB is the only major central bank that does not release publicly the minutes of policy discussions.
Energy prices
The September contract for benchmark US sweet, light crudes slipped 15¢ to $104.55/bbl July 29 on the New York Mercantile Exchange. The October contract dipped 11¢ to $103.90/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., remained in step with the front-month futures contract, down 15¢ to $104.55/bbl.
Heating oil for August delivery inched up 0.61¢ to $3.02/gal on NYMEX. Reformulated stock for oxygenate blending for the same month, however, declined $3.19¢ to $3.01/gal, wiping out its gain from the previous session.
The August natural gas contract dropped 9.6¢ to $3.46/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., fell 12¢ to $3.47/MMbtu.
In London, the September IPE contract for North Sea Brent recovered 28¢ to $107.45/bbl. Gas oil for August took back the $3.25 lost in the previous session, closing at $913.75/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased 11¢ to $105.21/bbl.
Contact Sam Fletcher at [email protected].
Sam Fletcher | Senior Writer
I'm third-generation blue-collar oil field worker, born in the great East Texas Field and completed high school in the Permian Basin of West Texas where I spent a couple of summers hustling jugs and loading shot holes on seismic crews. My family was oil field trash back when it was an insult instead of a brag on a bumper sticker. I enlisted in the US Army in 1961-1964 looking for a way out of a life of stoop-labor in the oil patch. I didn't succeed then, but a few years later when they passed a new GI Bill for Vietnam veterans, they backdated it to cover my period of enlistment and finally gave me the means to attend college. I'd wanted a career in journalism since my junior year in high school when I was editor of the school newspaper. I financed my college education with the GI bill, parttime work, and a few scholarships and earned a bachelor's degree and later a master's degree in mass communication at Texas Tech University. I worked some years on Texas daily newspapers and even taught journalism a couple of semesters at a junior college in San Antonio before joining the metropolitan Houston Post in 1973. In 1977 I became the energy reporter for the paper, primarily because I was the only writer who'd ever broke a sweat in sight of an oil rig. I covered the oil patch through its biggest boom in the 1970s, its worst depression in the 1980s, and its subsequent rise from the ashes as the industry reinvented itself yet again. When the Post folded in 1995, I made the switch to oil industry publications. At the start of the new century, I joined the Oil & Gas Journal, long the "Bible" of the oil industry. I've been writing about the oil and gas industry's successes and setbacks for a long time, and I've loved every minute of it.
