Crude Recap: Nat Gas Continues Streak

by Trey Cowan

Rigzone Staff

Friday, May 11, 2012

Natural gas continues its streak of improvement, gaining 6 percent over the past five days of trading. Contrary to natural gas, crude and gasoline prices pulled back with WTI crude front-month contracts falling 5 percent.

Diary from last five days:

5/04/2012 – Light, sweet crude, roiled by U.S. employment softness, fell $4 to drop below $100 per barrel on Friday.

5/07/2012 – There was a continued sell-off in the energy complex as Greece and France weighed on the markets. France elected Francois Hollande to replace Nicolas Sarkozy as President, signaling the country's electorate is not in favor of austerity measures.

5/08/2012 – Stronger demand projections from the Energy Information Agency (EIA) sustained rally for natural gas. The rest of the energy complex continued to grind lower.

5/09/2012 – Energy complex settled flat for the most part. Natural gas continued its surge gaining 3 percent on the day.

5/10/2012 – Energy complex appeared to have found a bottom finally snapping a six-day slump for light, sweet crude.

On a year-to-date basis, reformulated blended gasoline futures (RBOB) continued to have a large gain on the overall energy complex even though demand continues to sag. In the most recent week, MasterCard SpendingPulse noted that gasoline consumption fell 0.7 percent versus the prior week--demand declining for the 59th straight week.

Having spent much of his career in the oil patch, Trey Cowan is a seasoned Wall Street analyst providing insights on both onshore & offshore oil field services. Email Trey at tcowan@rigzone.com.

WHAT DO YOU THINK?

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Philippe | May. 15, 2012

The natural gas consumption is to be expected this time of year. The basic problem with natural gas is the lack of distribution infrastructure, which is negative with respect of consumers. It is a catch 22, which come first the natural gas distribution network or the consumer. Demand without consumer is not possible without a distribution network. The Propane is the only alternative, but is limited to rural area. It is just not safe to have a propane tank in an urban setting. The gasoline demand is lower as the consumer driving habit is changing. The primary reason is the economy but also the internet, the online consumer purchasing translate in less driven miles. The other is the fuel oil which is not in high demand in summer. The future is with the natural gas, especially as an export from the US to whom wants it.