MARKET WATCH: Oil prices climb despite talk of SPR release
Oil prices continued climbing Aug. 16 with front-month crude up 1.3% in the New York market despite news reports that an unnamed member of President Barack Obama’s administration indicated the possible release of Strategic Petroleum Reserves to drive down gasoline prices at the pump.
Many analysts have long anticipated the administration will release SPR oil in an appeal to voters ahead of the November presidential election. In the latest trading session, however, oil commodities followed the rise of the equity market “after a cluster of blue-chip companies reported better-than-expected second quarter earnings,” indicating economic recovery, said analysts in the Houston office of Raymond James & Associates Inc.
The Conference Board Inc. said Aug. 17 consumer confidence increased 0.4% in July—primarily the result of increased applications for residential construction permits and decreased applications for unemployment benefits—after dropping 0.4% in June. That raised its Consumer Confidence Index to 95.8%, matching its May level, the Associated Press reported.
Meanwhile, the Energy Information Administration earlier reported US emissions of carbon dioxide during the first 4 months of 2012 fell to the lowest level since 1992 as power plants switched from coal to cheaper and incidentally cleaner natural gas for fuel. An AP survey of “environmental experts, scientists, and utility companies” indicated “virtually everyone believes the shift could have major long-term implications for US energy policy” via the increased production of gas in the US. The press association also noted the environmental change is the result of market forces and not political mandates. US natural gas prices continued to fall in the Aug. 16 market.
“Both government and industry experts said the biggest surprise is how quickly the electric industry turned away from coal,” the AP reported. It cited the EIA report that use of coal to fuel power plants fell to 34% in March—“the lowest level since it began keeping records nearly 40 years ago”—from 50% in 2005.
Energy prices
The September and October contracts for benchmark US light, sweet crudes climbed $1.27 each to $95.60/bbl and $95.89/bbl, respectively, Aug. 16 on the New York Mercantile Exchange. On the US spot market, West Texas Intermediate at Cushing, Okla., also was up $1.27 to $95.60/bbl in step with the front-month futures contract.
Heating oil for September delivery gained 3.77¢ to $3.12/gal on NYMEX. Reformulated stock for oxygenate blending for the same month slipped 0.08¢ but closed essentially unchanged at a rounded $3.08/gal.
The September natural gas contract dropped 2.4¢ to $2.72/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., was down 1.1¢ to $2.77/MMbtu.
In London, the September IPE contract for North Sea Brent rose 65¢ to $116.90/bbl. Gas oil for September gained $8.25 to $977.25/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes increased $1.46 to $112.11/bbl. OPEC’s Vienna office will be closed Aug. 20.
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.
