Crude Oil Prices Recover, Natural Gas Futures Decline Due to Storage Report

As the deadline for expiring May contracts approached, crude oil prices initially slid on Thursday before rebounding in the late afternoon. In contrast, natural gas futures plummeted by nearly 8 cents following a bearish storage report. The American Gas Association's storage report indicated a larger-than-expected injection into domestic storage and an increase in storage levels compared to last year, prompting traders to minimize their market positions.

Key Takeaways:

• Crude oil prices initially fell on Thursday ahead of the expiration of May contracts, but recovered in the late afternoon, with the June crude contract ending up 7 cents at $15.39/bbl.
• Natural gas futures crashed by nearly 8 cents after the bearish storage report, with the June Henry Hub natural gas futures contract settling at $2.221/MMBtu, down 7.7 cents.
• The spot market saw significant decreases in gas prices, with Gulf Coast gas prices tumbling 12 cents in Louisiana and 9 cents in South Texas.
• Nymex refined products, including gasoline and heating oil, were sold ahead of the expiration of May contracts, resulting in losses of 0.96 cents and 0.33 cents per gallon, respectively.
• June gasoline, however, gained 0.22 cents to close at 52.46 cents/gallon, while June heating oil posted a 0.57 cents gain to settle at 44.21 cents/gallon.
• Spot prices for liquefied petroleum gas (LPG) were somewhat lower on the week due to light trading, while spot prices for methyl tertiary butyl ether (MTBE) continued to climb due to increasing demand and healthy margins.
• MTBE consultant Brian Grigsby of CMAI in Houston attributed the strength in gasoline oxygenates to low retail prices, increasing demand for premium blends.

Sources:

• American Gas Association (TOD, 4-30-98, p. 7)
• New York Mercantile Exchange (Nymex)
• International Petroleum Exchange (IPE) in London
• CMAI in Houston
• Houston-based consultant Brian Grigsby