Commodity Corner: Oil Continues Decline
October oil futures continued their decline Thursday as Enbridge Energy prepared to return Line 6A of its Lakehead pipeline system back to service and new government data indicated weaker demand for oil and gas.
Enbridge's major pipeline, which can carry 670,000 barrels of crude a day, is scheduled to return to service Friday after a week-long
shutdown to repair a leak. Analysts fear that the restoration of service will cause oil inventories to swell.
Government reports also contributed to Thursday's decrease in oil prices. According to The Federal Reserve Bank of Philadelphia,
industrial production in the Mid-Atlantic region contracted in September. Some investors believe this provides evidence of a slowing
economic recovery, which can hinder oil-demand growth in the U.S. Additionally, the U.S. Labor Department reported a decrease of 3,000 initial jobless claims from the previous week. Unemployment benefits fell to a two-month low of 450,000.
Light, sweet crude settled at $74.57, down $1.45 a barrel. Oil for October delivery peaked at $75.99 and bottomed out at $ 74.11
Meanwhile, natural gas prices rose for the fifth consecutive day, settling at $4.07 per thousand cubic feet. Gas stockpiles increased by
103 billion cubic feet last week, the U.S. Energy Information Administration (EIA) reported Thursday. Compared to last year's net injection of 67 Bcf, data indicate a lower demand for gas-fired electricity. Working gas in storage exceeds the 5-year average for this time of the year in each of the storage regions since March 26, 2010.
Analysts do not expect tropical storm activity to have any significance on oil and gas prices.
The intraday range for natural gas was $3.85 to $4.14.
Front-month gasoline futures settled at $1.92 per gallon. Gasoline fluctuated from $1.90 to $1.95 Thursday.