The crude oil contract for November delivery gained modestly to close at lower than $46/bbl on the New York market Sept. 25, ending the week with an overall gain for a second consecutive week as statistics showed the US rig count continued to soften.
The Baker Hughes Inc. rig count showed the rig count fell 4 units to 838 rigs working during the week ended Sept. 25 (OGJ Online, Sept. 25, 2015).
US natural gas prices came under more pressure last week, falling below $2.60/MMbtu, and Barclays analyst Nicholas Potter said gas futures prices in New York dipped to their lowest level since April.
“A larger-than-expected inventory build brought storage levels 4.5% above the 5-year average,” Potter said. “The market generally seems to be coming to terms with the fact that prices will continue to be pressured into 2016.”
More US gas producers might adjust their hedge targets to lower levels for 2016, Potter said, noting that previous hedge targets above $3.50/MMbtu are looking increasingly unlikely. Barclays research indicates large-cap producers only have 9% of 2016 gas production hedged.
Some producers suggest $3/MMbtu is a hedge level that they might have to accept next year, Potter said.
“Gas prices are unlikely to find much additional support in the coming weeks and will need to wait for some cold weather in order to see a boost in residential and commercial demand levels,” he said.
The November crude oil contract on the New York Mercantile Exchange rose 79¢ to $45.70/bbl on Sept. 25 while the December crude oil contract was up 71¢ to $46.19/bbl.
The natural gas contract for October fell by 2.7¢ to $2.56/MMbtu. The Henry Hub, La., gas price dropped 2¢ to $2.54/MMbtu.
Heating oil for October delivery declined less than a penny to a rounded $1.52/gal. The price for reformulated gasoline stock for oxygenates blending for October was up 3¢ to a rounded $1.40/gal.
The November ICE contract for Brent crude increased 43¢ to $48.60/bbl, and the December contract added 41¢ to settle at $49.27/bbl.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was $43.76/bbl on Sept. 25, down 72¢ from the previous day.
Contact Paula Dittrick at firstname.lastname@example.org.
*Paula Dittrick is editor of OGJ’s Unconventional Oil & Gas Report.