Natural-gas futures rally nearly 3% on weather forecast
By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures extended losses Monday, as worries over the strength of the U.S. economic recovery fueled concerns about energy demand.
Light, sweet crude oil for July delivery CL1N -0.80% declined 65 cents, or 0.7%, to $99.55 a barrel on the New York Mercantile Exchange.
Last week’s disappointing U.S. economic data prompted a tepid start to the week for most assets and renewed questions about global energy demand.
“There’s growing concern about the economy here [and] the economy in [Europe and Japan],” said Bill O’Neill, a principal with Logic Advisors in New Jersey. “There’s demand concern underlying the market.”
Oil markets are also technically weak, he said. Funds have started to turn bearish on oil and price rallies “are not holding,” O’Neill added.
U.S. data have been overwhelmingly negative, including last week’s jobs and manufacturing data.
Investors have kept an eye on the meeting of the Organization of the Petroleum Exporting Countries, which starts Wednesday in Vienna. The cartel decided whether to alter production levels . Read more about OPEC’s upcoming meeting.
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Most analysts expect the cartel to maintain production quotas or increase them slightly.
“In terms of output, it does not really matter. But, psychologically it could make a difference. In some respects, we could see a showdown between Saudi Arabia and Iran at the meeting,” analysts at Cameron Hanover said in a note to clients. “Iran does not want to sanction higher Saudi output levels, so it would be against raising quotas.”
Production cuts in Libya and geopolitical turmoil across the oil-rich Middle East are among the factors OPEC will consider when it meets.
Tensions continued to simmer in parts of the region over the weekend. In Yemen, thousands of people hailed the departure of President Ali Abdullah Saleh to Saudi Arabia for medical treatment over the weekend, while in Syria, a general strike was observed in the city of Hama, after dozens were killed by government forces. Read more about unrest in Yemen and Syria.
Other energy products were mixed Monday. Natural gas for July delivery rallied 13 cents, or 2.9%, to trade at $2.99 per million British thermal units.
Weather forecasters are tracking a storm heading toward the Gulf of Mexico, and warmer-than-normal temperatures for the eastern U.S. in the next three to four days “are also a near-term support for prices,” said Tim Evans, an analyst at Citigroup’s Citi Futures Perspective.
July gasoline retreated 1 cent, or 0.3%, to $2.98 a gallon. July heating oil declined 2 cents, or 0.7%, to $3.03 a gallon.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Virginia Harrison is a MarketWatch reporter based in Sydney.
