MARKET WATCH: Oil posts slight gain as 1Q ends on 'quiet note'

By OGJ editors

The first quarter of the year ended on a “quiet note” as crude oil prices posted a slight gain Mar. 30, observed analysts in the Houston office of Raymond James & Associates Inc. They noted, however, “The first quarter was the best quarterly performance for the stock market since 2009 and the best first quarter performance since 1998. With a slowly strengthening economic recovery, waning fears over Europe's sovereign-debt crisis, and the Federal Reserve's easy monetary policy, why can't the rally continue?”

They said, “History may be on its side as April has historically been the second-best performing month, which may lead to the old saying ‘sell in May, go away.’ Ahead of the open, broader market futures are pointing toward a flat open while crude and natural gas are looking to open lower.”

James Zhang at Standard New York Securities Inc., the Standard Bank Group, noted, “The oil market failed to recover on [Mar. 30] and ended last week substantially lower. WTI and Brent lost $3.85/bbl and $2.25/bbl respectively last week, as Saudi and the US vowed to keep the oil price in check.”

Zhang noted, “The front-end of the RBOB time spread shot up amid concerns of summer gasoline supply along the East Coast. Meanwhile, the front-end of the Brent time spread remained firm due to production issues in the North Sea and a strong refining margin in Europe.”

He said, “Net for the month of March, front-month WTI fell by $4.05/bbl, while front-month Brent gained 22¢/bbl. Despite a lacklustre performance during last month, WTI and Brent registered strong gains of $4.19/bbl (+4.2%) and $15.50/bbl (+14.4%) respectively.”

Zhang noted that the oil market would “likely to focus on Iran” over the next few weeks as the five permanent members of the United Nations’ Security Council are set to reopen negotiations with Iran on Apr. 17. “Little is likely to happen while the market waits for these negotiations,” he said.

Energy prices

The May contract for benchmark US light, sweet crudes gained 24¢ to $103.02/bbl Mar. 30 on the New York Mercantile Exchange. The June contract gained 23¢ to $103.54/bbl On the US spot market, West Texas Intermediate at Cushing, Okla., was up 24¢ to $103.02/bbl.

Heating oil for April delivery increased less than a penny to $3.17/gal on NYMEX. Reformulated stock for oxygenate blending for the same month was off 0.11¢ to $3.39/gal.

The new front-month May natural gas contract lost 2.3¢ to $2.13/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dipped 8¢ to $1.96/MMbtu.

In London, the May IPE contract for North Sea Brent gained 49¢ to $122.88/bbl. Gas oil for April fell $3.50 to $1,014.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes decreased 72¢ to $120.85/bbl.

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