Diminished Storm Threat Reduces Energy Prices
Source: Oil & Gas Journal, Sam Fletcher (6/29/10)
"Alex-inflated natural gas prices also closed down 3%"
"After keeping global economies on a sugar high of stimulus for the better part of two years now, the G20 nations vowed to cut deficit spending in developed countries in order to avoid a [recessionary] double dip," said analysts in the Houston office of Raymond James & Associates Inc.
They said, "Alex-inflated natural gas prices also closed down 3% as the storm headed west, in addition to cooler-than-normal weather tempering natural gas demand expectations. The broader markets outperformed energy stocks, with the Dow Jones Industrial Average and Standard & Poor's 500 index closing just lower but above the Oil Service Index (down 1.1%) and the S&P 1500 Exploration & Production sub-industry index (down 1.9%)." The price of crude was down 1.8% in early trading June 29 and the broader markets also were down after reports that the Chinese leading economic index was revised down to show the smallest gain in 5 months.
New projections showed TS Alex will move across the southern gulf "sparing not only the Macondo spill area but most of the gulf production region as well," said Anuj Sharma, research analyst at Pritchard Capital Partners LLC in Houston. "The dollar's 0.7% gain against the euro weighed further on prices."
More signs of a continuing recovery as positive consumer sentiment data June 25 were followed by strong consumer spending figures June 28. "Consumer spending in the US grew by 0.2% in May vs. the consensus of 0.1%. We continue to believe that elevated inventory levels will weigh on prices keeping them rangebound in the near term," Sharma reported.