Oil's Bullish Momentum Loses Steam, Nat. Gas Charges Ahead
Although Wall Street's risk appetite helped lift the market on Monday, U.S. crude oil futures were further pressured below $70 a barrel on the New York Mercantile Exchange, after concerns about the burden of ample domestic oil inventories outweighed a weaker greenback and rising equities.
Falling for the ninth consecutive trading session -- the longest losing streak for the energy commodity in eight years -- the price of light, sweet crude oil for January delivery headed back into negative territory, ultimately settling down 36 cents from Friday's final price tag to $69.51 a barrel.
Soaring to their highest settlements in 14 months, the Dow and S&P 500 indexes gained 33.03 points and 7.13 points, respectively, on news that Abu Dhabi would throw debt-laden Dubai a $10-billion lifeline, according to a snapshot of U.S. stocks put out by Reuters.
Today's purchasing enthusiasm on Wall Street did not bleed over to the commodity market to buoy oil prices, however, despite additional optimism spurring investors from ExxonMobil's $30-billion takeover deal of a leading U.S. unconventional natural gas producer with a resource base equivalent to 45 trillion cubic feet of gas.
"Today's price really shows that oil has run out of bullish momentum for the meantime," noted Phil Flynn, vice president in charge of research for PFG Best in Chicago. "Having said that, we're not down too much today. However, I do think it is significant that we have fallen for nine consecutive days."
Exxon Bets on Natural Gas, Prices Ride High
"Obviously the major story that everyone is talking about is the Exxon-XTO deal," noted Flynn. Monday, ExxonMobil, the largest publicly traded energy company, confirmed that it would acquire XTO Energy, which will catapult the oil major into the top slot as the nation's biggest U.S. natural gas producer by enhancing its position in this increasingly popular and "greener" energy resource.
"It really shows that ExxonMobil is making a huge bet on natural gas. With ongoing concerns about emissions from coal, ExxonMobil has laid down the gauntlet that these unconventional sources of natural gas are going to be a component of our energy future, and I think they made a wise investment," the analyst contended.
When asked whether ExxonMobil's multi-billion-dollar transaction was bullish news for U.S. natural gas prices, Flynn said, "I think long term, it is. Today, natural gas would have gone up regardless because of the weather reports that we have. But from a longer-term viewpoint, I think that this is bullish news because it acknowledges the idea that natural gas is going to play a much larger role in our energy future," the analyst underscored once more.
Monday, natural gas spot prices at the Henry Hub closed nearly 17 cents higher to $5.332 per thousand cubic feet on the NYMEX.