Today the EIA published its weekly report about prices and stocks of crude oil in the US; Bloomberg reports about major oil companies selling their assets; some perspective about the recent volatility in Natural gas prices (NY gate spot); and finally, an update about the prices of major energy commodities and precious metals.
According to Bloomberg, major oil companies are selling their assets to such as BP that sold assets worth 21 billion USD in the last six months to raise money to pay off the cost of the Macondo oil spill a few months back.
Natural gas analysis
In the last couple of days the most volatile energy commodity was certainly the New York City Gate Spot prices; Three days ago it rose by a staggering 105%, following by a nearly 18% rise, and then yesterday it fell by nearly 25%. This zigzag of the commodity’s price, could mean that since it is a NY gate price and a spot not future price the demand for this commodity is very much linked to its price, i.e. when there is a shortage of Natural gas to the U.S. Northeast region, due to excess demand, because of the cold weather, the price of this commodity jumps high, and when the demand is met, it falls.
This explanation is a speculation, due to lack of evidence to support this claim; however, it does rely on the fact that according to the EIA: City gate prices “represent the total cost paid by gas distribution companies for gas received at the point where the gas is physically transferred from a pipeline company or transmission system”. As such, this could mean that any time when there is a shortage in gas because of delay in transfer from Pipeline Company or transmission system, the Natural gas prices will jack up promptly and radically.
Stocks of Crude oil for the passing week:
After last week’s small fall in crude oil stocks by 0.3%, this week there was a larger fall of 0.9%, which is a drop of over 9.8 million barrels of crude oil. This big drop was expected as there is an increase in consumption of energy throughout the US mainly for heating purposes.
According to this week’s EIA report, the ongoing rise in energy consumption is reflected by the increase in heating oil by 0.04 USD/g, and reaching an average of 3.24 USD/g, which are 0.5 USD/g higher then last year’s price.
After several weeks of Finished Motor Gasoline stocks showing a downward trend, mainly because of the maintenance repairs in major refineries throughout the US and Canada, last week there was a small fall as the stocks fell by 0.5% and 0.3 million barrels reaching 69.2 million barrels, which is a still a very low count.
The US average retail gasoline also rose by 2 cents, reaching 2.98 USD/g, which is 0.38 USD/g higher than last year for the same period.
The Stocks of Total Gasoline rose by 0.4% which is 0.8 million barrels, and reaching 214.7 million barrels.
Propane: the ongoing cold front of last week mainly in Midwest and east coast is one of the main reasons for the rise in propane consumption; as a result the propane stocks fell by 1.8 million barrels which is a 3% decline, reaching 61.1 million barrels.
Propane prices shot up last week by 0.03 USD/g reaching 2.63 USD/g – an increase of 0.27 USD/g compares to last year’s price over the same period
As the winter will progress we will probably continue to see this rise in heating oil and decline in stocks.
Here is an update on the prices of main energy and precious metals commodities for December 16th:
The crude oil price of short term futures (Nymex) – delivery for January 2011, as of 16.55 PM GMT, on the New York Mercantile Exchange, is currently traded at 88.27 USD per barrel, which represents a 0.35 USD/b decrease or a 0.39% fall.
The Dated Brent spot crude oil is at 91.45 USD per barrel – a 0.07 USD per barrel increase as of 17.05PM GMT.
The WTI spot price is trading as of 15.45PM GMT at 88.15 USD per barrel, a very moderate fall of 0.53% compare to the previous business day’s rate.
Natural Gas future price (the Nymex Henry Hub Future) is currently traded as of 16.55 PM GMT, at 4.06 $ MMBTU (one million BTU), a sharp decrease of 0.16 which is 3.88%. This shows that despite the rise in demand for Natural gas for heating, there is no apparent shortage in it, and therefore futures prices continue to fall.
Gold price continue to rise as it started at the beginning of the week, as the short term January delivery future (Gold 100 oz.) is currently traded at 1,369 USD /t. oz., a moderate 1.28% decrease or 17.8 USD /t. oz. at 16.53 PM GMT.
Silver price, more then Gold price, is sharply falling, and as of 16.53 PM GMT is traded at 28.61 $/t oz. a 2.2% decrease or 0.643 $/t oz, and thus Silver gets farther away from the 30 USD mark.
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