Gas Oil Liquids Daily
North America's Gas, Oil & Liquids
News & Market Information
Thursday, April 24, 2008 No. 2027
--------------------------------------------------------------------------------Crude Oil Futures Up After EIA Inventory Report
Crude oil futures for June delivery on the NYMEX ended $0.23 higher yesterday to
settle at $118.30 per barrel, after the EIA released its weekly inventory report. RBOB
gasoline rose $0.0343 to settle at $3.0507 per gallon, and May heating oil futures gained
$0.0071 to $3.324 per gallon. Crude oil prices reached a record Tuesday when the dollar
touched an all-time low of $1.6018 to the euro. Unions planning to strike at a 200,000
bpd refinery in Scotland next week are holding talks with the plant's owners Ineos Group
Holdings after failing to reach agreement. The weakness of the dollar is a great driver.
Oil has become a monetary phenomenon, where low rates boost demand for oil in
emerging markets. Workers are planning to strike at Ineos' Scottish plant, which takes
crude from BP Plc's Forties Pipeline System that transfers oil from more than 50 North
Sea fields. Oil has also gained because of a supply disruption in Nigeria. Royal Dutch
Shell closed 169,000 bpd of supply after attacks on a pipeline last week. The EIA
released its weekly report on inventories. Crude oil stocks surged by 2.4 million barrels,
double the forecast level, mainly from gains on the West Coast. Gasoline inventories fell
for the 6th straight week, by 3.2 million barrels against the forecast for a 2.3 million
decline. Lingering geopolitical worries also supported prices. New attacks on Nigeria oil
export facilities are likely to partly offset this week's start-up of Saudi Arabia's 500,000
bpd Khursaniyah field. Refinery workers at Britain's Grangemouth refinery are due to
begin a 2-day strike on Sunday that will shut the plant and squeeze fuel supplies in
Scotland and northern England. In London, Brent crude oil futures for June delivery on
ICE gained $0.51 to $116.46 per barrel yesterday.
---------------------------------------------------------------------------------
NYMEX: Light Crude Oil Futures
Wednesday, April 23, 2008
Month/Yr
Jun '08
Jul '08
Aug '08
Sep '08
Oct '08
Nov '08
Dec '08
Jan '09
Feb '09
Mar '09
Apr '09
May '09
Open
117.45
116.61
115.83
116.27
115.75
114.70
114.73
114.20
113.50
113.18
112.76
112.36
High
118.69
117.59
116.89
116.27
115.75
115.24
114.73
114.20
113.67
113.18
112.76
112.36
Low
116.90
116.50
115.75
116.27
115.75
114.70
114.73
114.17
113.50
113.18
112.76
112.36
Last
118.30
117.59
116.89
116.27
115.75
115.24
114.73
114.17
113.67
113.18
112.76
112.36
Chg
+0.23
+0.33
+0.38
+0.42
+0.47
+0.48
+0.49
+0.49
+0.49
+0.49
+0.51
+0.53
Volume
225830
38732
14438
7620
2837
1827
15558
217
44
214
52
76
Open Int
Chg
369363
-7141
108246
-587
50136
+1723
59490
+226
48128
+323
23740
+128
197521
+1619
27392
-24
12070
+0
12992
+192
9349
+0
17746
+20
$/Barrel
-------------------------------------------------------------------------------NYMEX- Light Crude Oil Futures for June
NYMEX- Light Crude Oil Futures for June settled higher on Wednesday as it extended
this spring's rally into uncharted territory. June crude oil has rallied $20.96 since the
March 20th low. Wednesday's high-range close sets the stage for a steady to firmer
opening this morning. Studies are showing positive momentum but are now in
overbought territory, so some caution is warranted. The market's close above the 9-day
moving average suggests the short-term trend remains positive. With the close higher
than the pivot swing number, the market is in a slightly bullish posture. If June extends
this month's rally into uncharted territory, upside targets will be hard to project. Multiple
closes below the 20-day moving average crossing $109.73 would confirm that a shortterm high has been posted. First resistance is Tuesday's high crossing at $118.98. First
support is the 10-day moving average crossing at $114.17. Second support is the 20-day
moving average crossing at $109.73.
-------------------------------------------------------------------------------NYMEX: West Texas Int. (C/S)
Wednesday, April 23, 2008
Month/Yr
Apr '08
May '08
Jun '08
Jul '08
Aug '08
Sep '08
Oct '08
Nov '08
Dec '08
Jan '09
Feb '09
Mar '09
$/Barrel
Last
112.88
118.06
117.39
116.69
116.10
115.60
115.06
114.58
114.01
113.47
113.07
112.63
Chg
+0.07
+0.26
+0.34
+0.39
+0.44
+0.47
+0.48
+0.49
+0.49
+0.49
+0.50
+0.51
--------------------------------------------------------------------------------Today's Petro Bulletins
*
*
*
*
Merrill Lynch Seen Laying Off Some Energy Traders
Sinopec Plans $2.9 Billion Investment to Upgrade Refineries
Buccaneer Has Second Gulf of Mexico Success
International Organized Crime Groups Control Significant Positions in Global Energy
and Strategic Materials and Expanding Holdings in US Justice Department Said
* Husky Names Alister Cowan Chief Financial Officer
* Jailed Texas Oilman Oscar Wyatt Seeks Home Detention
* Petro-Canada Completing Montreal Refinery Work
* WSI Energycast 2008 Tropical Forecast Calls for Active Atlantic Season
* Precision Drilling Profit Drops; Cuts 2008 Spending
--------------------------------------------------------------------------------Domestic: Crude Oil Spot Market
Wednesday, April 23, 2008
Alaska North Slope (Pac-Del)
Bonito Sour
Eugene Island Sour
Light Louisiana Sweet
Heavy Louisiana Sweet
Mars Sour
Midland WTI
Poseidon Sour
West Texas Sour
$118.55
$117.20
$117.08
$121.05
$120.45
$108.95
$118.25
$108.93
$112.88
$/Barrel
Domestic: Crude Oil Price Differentials
Wednesday, April 23, 2008
Midland WTI
Light Louisiana Sweet
Heavy Louisiana Sweet
West Texas Sour
Eugene Island Sour
Bonito Sour
Mars Sour
Poseidon Sour
Low
-0.1000
+2.5000
+2.0000
-6.6500
-1.3000
-1.2000
-9.4500
-9.5000
High
+0.0000
+3.0000
+2.3000
-6.5000
-1.1500
-1.0000
-9.2500
-9.2500
$/Barrel
European: Crude Oil Spot Market
Wednesday, April 23, 2008
Bonny Light
Brent Crude
Forties
Urals-Mediterranean
$/Barrel
$117.39
$115.38
$114.04
$109.34
Mid-Pt
-0.0500
+2.7500
+2.1500
-6.5800
-1.2300
-1.1000
-9.3500
-9.3800
Domestic: Refined Products Spot Market
Wednesday, April 23, 2008
Butane,Normal Mont Bel.Tx
Chicago ULS-Diesel
Chicago Unleaded
Group 3 ULS-Diesel
Group 3 Unleaded
Gulf Coast ULS-Diesel
Gulf Coast Heating Oil
Gulf Coast Unleaded
NY Harbor Diesel (500 ppm S)
NY Harbor Diesel (15 ppm S)
NY Harbor Jet 54
NY Harbor No.2 Fuel Oil
Propane,non-tet Mont Bel.Tx
Regular, LA, CARBOB Gasoline
RBOB Gasoline
PBOB Gasoline
Unleaded Regular Conventional
Unleaded Premium Conventional
$1.9942
$3.4800
$2.9482
$3.4775
$2.9757
$3.4425
$3.2650
$3.0107
$3.4525
$3.4725
$3.5250
$3.3375
$1.6897
$3.1450
$3.0469
$3.1882
$2.9482
$3.1182
NY Harbor: Refined Products Price Differentials
Wednesday, April 23, 2008
No.2 Heating Oil
No.2 Diesel
Ultra Low Sulfur Diesel
Jet 54
Regular Unleaded
Premium Unleaded
RBOB Gasoline
PBOB Gasoline
Low
+0.0100
+0.1175
+0.1375
+0.1975
-0.1200
+0.0675
-0.0075
+0.1375
High
+0.0150
+0.1225
+0.1425
+0.2025
-0.1150
+0.0725
-0.0025
+0.1425
Mid-Pt
+0.0125
+0.1200
+0.1400
+0.2000
-0.1175
+0.0700
-0.0050
+0.1400
Domestic: Daily Refining Margins
Date
04/23
04/22
04/21
04/18
04/17
04/16
NYMEX
3-2-1
+12.57
+11.53
+12.29
+13.10
+13.70
+13.32
E.Coast E.Coast
3-2-1 6-3-2-1
+7.95
+1.21
+6.75
+0.25
+7.59
+1.04
+8.07
+1.48
+8.43
+1.92
+7.88
+1.46
G.Coast
3-2-1
+11.56
+10.62
+11.85
+12.58
+13.42
+12.84
G.Coast
6-3-2-1
+3.56
+2.81
+3.97
+4.77
+5.74
+5.26
Related Closing Prices
Wednesday, April 23, 2008
ICE Brent Crude..………………….$116.46
ICE Gas-Oil............……………….…$1068.25
OPEC Basket...............……………….....$109.92
CBOT Ethanol.............……………….......$2.554
NY Close: US.$/Euro.................$1.5890
+$0.51
-$0.25
+$0.99
-$0.012
Midco
3-2-1
+12.89
+11.54
+12.61
+13.74
+14.63
+14.18
-------------------------------------------------------------------------------Goldman Sachs Says Window Closing Fast for Oil Drop
Goldman Sachs Group, the most profitable Wall Street bank, said the window for a
decline in oil this spring is closing fast, as prices rise to records and the summer period of
peak gasoline demand approaches. US crude imports are likely to rise because of lower
inventories and the strength of local oil prices relative to the rest of the world, Goldman
analysts led by Giovanni Serio said in their Energy Weekly report. ‘Looking into the
second half of this year, given the fundamental tightness, we believe the risks are
substantially skewed to the upside,’ the report said. The bank said on April 10th that oil
may not fall as far as it expected previously, predicting that prices may slip to $98.80 in
the spring, above a previous floor of $90 per barrel. Crude oil futures rose to a record
$119.90 per barrel Tuesday. Goldman maintained its expectations for the price of the
front-month crude contract in 3, 6 and 12-months at $102, $107.50 and $115 per barrel
respectively. The bank's forecast for the average price in 2008 of $105 is the secondhighest.
-------------------------------------------------------------------------------NYMEX: Natural Gas Futures
Wednesday, April 23, 2008
03
06
12
18
Month
Month
Month
Month
Month/Yr
May '08
Jun '08
Jul '08
Aug '08
Sep '08
Oct '08
Nov '08
Dec '08
Jan '09
Feb '09
Mar '09
Apr '09
$/MMBtu
Avg..................................................... 10.9370
Avg..................................................... 11.0683
Avg.....................................................11.3076
Avg..................................................... 10.8687
Open
10.470
10.620
10.760
10.825
10.845
10.930
11.220
11.820
11.810
11.780
11.500
9.820
High
10.820
10.955
11.037
11.084
11.164
11.189
11.246
11.511
11.866
12.046
11.751
10.021
Low
10.430
10.595
10.735
10.825
10.845
10.905
11.220
11.820
11.810
11.780
11.500
9.820
+0.1793
+0.1755
+0.1664
+0.1596
Last
10.781
10.946
11.084
11.164
11.189
11.246
11.511
11.866
12.086
12.046
11.751
10.021
Chg
+0.174
+0.183
+0.181
+0.174
+0.172
+0.169
+0.169
+0.164
+0.159
+0.154
+0.149
+0.149
Volume
75252
32935
10447
6006
3050
5445
1801
917
2786
924
2211
2419
Open Int
41418
129202
80013
32142
26513
66889
32235
35647
54653
14192
44292
37047
---------------------------------------------------------------------------------
NYMEX- Henry Hub Natural Gas Futures for May
NYMEX- Henry Hub Natural Gas Futures for May settled higher on Wednesday as it
extended this month's rally above March's high crossing at $10.365. Wednesday's highrange close sets the stage for a steady to firmer opening this morning. Stochastics and the
RSI are overbought but remain neutral to bullish signaling that sideways to higher prices
are a possibility in the near-term. If May extends this month's rally, monthly resistance
crossing at $11.505 is the next upside target. Multiple closes below the 20-day moving
average crossing at $10.061 would confirm that a double top with March's high has been
posted. First resistance is Wednesday's high crossing at $10.838 then monthly resistance
crossing at $11.505. First support is the 10-day moving average crossing at $10.380.
Second support is the 20-day moving average crossing at $10.061.
--------------------------------------------------------------------------------Natural Gas Daily Price Index
Flow Date: Thursday, April 24th, 2008
Eastern Region
Delivery Point
Algonquin Citygates
Beverly Salam
Columbia Gas TCO Pool
Columbia Gas TCO-Seg Pool
Cove Point
Dominion-South
Dracut
Iroquois (Into)
Iroquois Zone 2
New York Citygates
TETCO M2
TETCO M3
TGP Niagara
TGP Zone 6 200 Leg
Transco Zone 5 WGL
Transco Zone 6-non NY
Transco Zone 6-NY
Wtd Avg
11.07
11.02
10.91
10.91
10.95
10.86
10.87
10.98
11.05
11.02
10.90
10.98
10.91
11.03
10.97
11.00
11.00
Gulf Coast/Texas Region
Delivery Point
Agua Dulce
ANR LA
ANR Southeast
Carthage
Columbia Gulf Mainline
Columbia Gulf Onshore
FGT Zone 3
Henry Hub
Houston Ship Channel
Katy
Moss Bluff Interconnect
NGPL LA.Pool
NGPL South Texas
Sonat Tier 1 Pool
Stingray
TETCO East LA.
TETCO East Texas
TETCO M1 24"
TETCO M1 30"
TETCO South Texas
TETCO West LA.
TGP Zone 0
TGP Zone 1 100 Leg
TGP Zone 1 500 Leg
TGP Zone 1 800 Leg
TGT Zone SL FT Pool
TGT Zone 1 FT Pool
Transco St.30
Transco St.45
Transco St.65
Transco St.85
Trunkline East LA.
Trunkline West LA.
Wtd Avg
10.08
10.33
10.33
10.22
10.31
10.29
10.37
10.33
10.15
10.17
10.31
10.12
10.07
10.32
10.26
10.29
9.94
9.79
10.45
10.08
10.25
10.19
10.30
10.35
10.27
10.32
10.30
10.20
10.31
10.37
10.44
10.33
10.32
Mid-Continent Region
Delivery Point
Alliance Delivered
ANR Southwest
CEGT Flex
CEGT North
CEGT South
CEGT West
Chicago Citygates
Consumers Energy Citygate
Demarc
MichCon Citygate
NGPL Amarillo Pool
NGPL MidCont Pool
NGPL TXOK
NGPL TXOK West
Oneok
PEPL
Southern Star
Ventura
Wtd Avg
10.22
9.14
9.11
9.09
9.39
9.13
10.21
10.76
9.44
10.80
9.28
9.16
9.91
9.38
9.27
9.16
9.19
9.85
Western Region/Canadian
Delivery Point
AECO
Cheyenne
CIG Mainline
El Paso Permian-Keystone
El Paso San Juan-Blanco
El Paso San Juan-Bondad
El Paso South Mainline
El Paso Waha
Huntingdon/Sumas
Kern River-Del
Kern River-Rec
Kingsgate
Malin
Northwest Rocky Mtn
Northwest Wyoming
Opal
PG&E Citygate
PG&E Topock
SoCal Border
Stanfield Pool
TW Blanco
TW Central
TW West Texas
Waha Hub
Wtd Avg
9.76
8.39
8.39
9.45
8.57
7.73
10.02
9.50
9.90
10.02
8.43
9.79
9.99
8.11
8.43
8.44
10.47
9.99
10.00
9.88
8.64
9.40
9.41
9.64
$/MMBtu
--------------------------------------------------------------------------------Refining Margins Seen Narrowing From 2009
Global refining margins may narrow from next year as new capacity comes on-stream
and ethanol takes a more prominent role in the gasoline mix, a Wood Mackenzie
consultant said. New refineries including Reliance Industries’ Jamnagar plant and the
increased use of ethanol in gasoline could cause refining margins to decline through
2012, Alan Gelder, a consultant for downstream oil at Edinburgh-based Wood
Mackenzie, said yesterday at a refining conference in Barcelona. Increased ethanol use in
North America means less oil-based gasoline is required, which will lower demand and
cut profits for refiners, Gelder said. Slowing economic growth will also lead to less
consumption of gasoline, he said. Refining margins, or the profit from turning a barrel of
oil into fuels, in the first quarter this year averaged $0.86 per barrel. Refiners using Brent
crude in their facilities in northwest Europe may have earned $1.10 per barrel so far this
year. Investments in petrochemical production using naphtha crackers should stop
because there is ample spare capacity and margins will be weak up to 2010 and beyond,
Gelder said. Petrochemicals include ethylene, building blocks for consumer goods like
plastics. Reliance will produce propylene, another building block for plastics, using a
fluid catalytic cracker, or FCC, at its second refinery in Jamnagar. FCC's are normally
used in the production of gasoline. The new refining complex is due for completion by
the end of this year, Vikram Sampat, vice-president of the strategic planning department
at Reliance said yesterday at the same conference.
--------------------------------------------------------------------------------NYMEX:
RBOB
Gasoline
Futures
Wednesday, April
Month/Yr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
'08
'08
'08
'08
'08
'08
'08
'08
'09
'09
'09
'09
23, 2008
Open
3.0192
3.0126
3.0000
2.9651
2.9320
2.8166
2.7956
2.7549
2.7890
2.8189
2.8449
2.9804
High
3.0544
3.0465
3.0336
3.0100
2.9801
2.8459
2.8088
2.7979
2.8022
2.8189
2.8449
2.9804
Low
2.9925
2.9874
2.9750
2.9550
2.9266
2.8130
2.7875
2.7483
2.7832
2.8189
2.8449
2.9804
Last
3.0507
3.0424
3.0294
3.0084
2.9774
2.8459
2.8109
2.7964
2.8024
2.8189
2.8449
2.9804
Chg
+0.0343
+0.0323
+0.0293
+0.0278
+0.0258
+0.0238
+0.0223
+0.0203
+0.0193
+0.0193
+0.0193
+0.0193
$/Gallon
--------------------------------------------------------------------------------NYMEX- RBOB Gasoline Futures for May
NYMEX- RBOB Gasoline Futures for May settled higher on Wednesday as it
extended this month's rally into uncharted territory. Wednesday's high-range close sets
the stage for a steady to firmer opening this morning. Studies are showing positive
momentum but are now in overbought territory, so some caution is warranted. The
market's close above the 9-day moving average suggests the short-term trend remains
positive. The close over the pivot swing is a somewhat positive setup. Upside targets will
be hard to project now that May is trading into uncharted territory. Multiple closes below
the 20- day moving average crossing at $2.8245 are needed to confirm that a short-term
high has been posted. First resistance is Wednesday's high crossing at $3.0544. First
support is the 10-day moving average crossing at $2.9232. Second support is the 20-day
moving average crossing at $2.8245.
--------------------------------------------------------------------------------NYMEX:
RBOB
Crack
Spread
Wednesday, April
Month/Yr
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Swap
23, 2008
'08
'08
'08
'08
'08
'08
'08
'08
'08
'09
'09
'09
Last
8.71
9.72
9.84
9.66
8.95
3.93
3.00
2.87
3.69
4.92
6.42
12.55
Chg
+0.33
+1.10
+0.89
+0.77
+0.64
+0.53
+0.46
+0.36
+0.32
+0.32
+0.31
+0.30
---------------------------------------------------------------------------------
BP Preparing for Possible Cut in Forties Oil Pipeline
Output
BP is preparing for a possible shut down of the Forties Pipeline System, which ships
crude from North Sea oil fields, because of a strike at Scotland's only oil refinery. Ineos
Group Holdings is in talks with its main labor union, which has threatened to strike on
April 27 at its Grangemouth refinery over a dispute about pensions. The chemical
company has started closing down the 200,000 bpd refinery, supplied by the Forties
pipeline, in preparation for the strike. ‘We are making preparations for the eventuality
that we need to shut down the Forties Pipeline System if that is required,’ a spokeswoman
for BP, said. ‘A total shutdown of the Grangemouth refinery would impact the Forties
Pipeline System.’ BP has been talking with Ineos to establish whether the shutdown will
halt supplies of steam and electricity at the nearby Kinneil terminal, which are essential
services for deliveries of Forties crude, she said.
--------------------------------------------------------------------------------NYMEX: Heating Oil Futures
Wednesday, April 23, 2008
Month/Yr
May '08
Jun '08
Jul '08
Aug '08
Sep '08
Oct '08
Nov '08
Dec '08
Jan '09
Feb '09
Mar '09
Apr '09
Open
3.3240
3.3071
3.3031
3.2926
3.2850
3.3100
3.3121
3.3485
3.3275
3.3288
3.2915
3.2385
High
3.3285
3.3100
3.3127
3.3162
3.3265
3.3393
3.3461
3.3600
3.3559
3.3545
3.3100
3.2525
Low
3.2785
3.2585
3.2645
3.2680
3.2829
3.2941
3.3049
3.3141
3.3275
3.3288
3.2900
3.2378
Last
3.3240
3.3072
3.3112
3.3162
3.3262
3.3367
3.3472
3.3572
3.3627
3.3547
3.3187
3.2602
Chg
+0.0071
+0.0100
+0.0130
+0.0140
+0.0135
+0.0130
+0.0135
+0.0140
+0.0145
+0.0160
+0.0180
+0.0200
$/Gallon
-------------------------------------------------------------------------------NYMEX- Heating Oil Futures for May
NYMEX- Heating Oil Futures for May settled slightly higher on Wednesday as it
extended this month's rally into uncharted territory. Wednesday's high-range close sets
the stage for a steady to firmer opening this morning. Studies are showing positive
momentum but are now in overbought territory, so some caution is warranted. The close
above the 9-day moving average is a positive short-term indicator. The market has a
slightly positive tilt with the close over the swing pivot. If May extends this month's rally
into uncharted territory, upside targets will be hard to project. Multiple closes below the
20-day moving average crossing at $3.1384 would confirm that a short-term high has
been posted. First resistance is Tuesday's high crossing at $3.3500. First support is the
10-day moving average crossing at $3.2664. Second support is the 20-day moving
average crossing at $3.1384.
NYMEX: Heating Oil vs. Crude Oil
Wednesday, April 23, 2008
Month/Yr
Jun '08
Jul '08
Aug '08
Sep '08
Oct '08
Nov '08
Dec '08
Jan '09
Feb '09
Mar '09
Apr '09
May '09
Last
20.60
21.48
22.39
23.43
24.39
25.34
26.27
27.06
27.23
26.21
24.17
22.22
Chg
+0.19
+0.22
+0.21
+0.15
+0.07
+0.08
+0.10
+0.12
+0.18
+0.27
+0.33
+0.38
--------------------------------------------------------------------------------NYMEX: Propane Futures
Wednesday, April 23, 2008
Month/Yr
May '08
Jun '08
Jul '08
Aug '08
Sep '08
Oct '08
Nov '08
Dec '08
Jan '09
Feb '09
Mar '09
Apr '09
$/Gallon
Last
1.6350
1.6400
1.6450
1.6500
1.6550
1.6600
1.6650
1.6700
1.6750
1.5975
1.6025
1.6075
Chg
+0.0000
+0.0000
+0.0000
+0.0000
+0.0000
+0.0000
+0.0000
+0.0000
+0.0000
+0.0000
+0.0000
+0.0000
--------------------------------------------------------------------------------Weekly API Oil Statistics
Statistics compiled by the American Petroleum Institute for the week ending April 18th, 2008
Product
Gasoline stocks
Gasoline prod
Light fuel oil stocks
Light fuel oil prod
Heavy fuel oil stocks
Heavy fuel oil prod
Jet fuel stocks
Jet fuel production
Crude runs daily
% Rated Capacity
Domestic output daily
Domestic crude oil stocks
US Daily crude import
US Daily prod import
04/18/08
213,118,000
61,726,000
108,441,000
29,211,000
38,981,000
4,844,000
37,631,000
10,549,000
14,724,000
87.7
5,123,000
318,733,000
9,732,000
3,591,000
Chg:04/11/08
-2,326,000
84,000
-1,744,000
539,000
1,579,000
-350,000
-2,556,000
847,000
487,000
3.3
0
809,000
398,000
-293,000
04/20/07
198,505,000
60,928,000
116,754,000
29,659,000
40,253,000
4,683,000
39,482,000
9,135,000
14,694,000
87.6
r5,158,000
339,428,000
9,889,000
3,591,000
r- revised
--------------------------------------------------------------------------------Relationship Between Crude Oil & Natural Gas Prices
The EIA love a good debate, particularly on issues of energy and prices. Recently, they
have been trying to figure out: Has a shift or evolution in market forces led to a
‘decoupling’ of crude oil and natural gas prices in the United States? Proponents of a
relationship between crude oil and natural gas prices argue that competitive market
forces, especially on the demand side, maintain a relationship between the prices. Oil and
natural gas are substitute fuels primarily in the electric generation and industrial sectors.
Dual-fired units can burn the less expensive fuel, subject to environmental restrictions.
However, potential fuel switching is not limited to dual-fired units. Changes in
consumption patterns also occur system-wide based on relative fuel prices, either among
units operated by a single company with multiple plants or operated by competitors. The
potential to shift consumption based on relative prices would operate to mitigate
excessive price differentials between natural gas and oil. The opposing view questions
whether the fuel switching that remains today still can affect the market given that the
diminishing number of dual-fired units, on a relative if not absolute level, limits fuel
competition at the margin. The increasing tendency for monthly crude oil and natural gas
prices to diverge supports this argument. A more stable price difference in the 1990s was
broken with a few short-lived periods when prices either diverged sharply or tended to
converge.