Leveling

As a congressional committee zeroed in on skyrocketing oil prices, leveling accusations of excessive speculation, the Commodity Futures Trading Commission (CFTC) last week announced that its staff has amended the “no-action relief letter” under which ICE Futures Europe is permitted direct access to U.S. customers. The change requires the adoption of equivalent U.S. position limits and accountability levels on its West Texas Intermediate (WTI) crude oil contract, which is linked to the Nymex crude oil contract.

As a congressional committee zeroed in on skyrocketing oil prices, leveling accusations of excessive speculation, the Commodity Futures Trading Commission (CFTC) announced that its staff has amended the “no-action relief letter” under which ICE Futures Europe is permitted direct access to U.S. customers. The change requires the adoption of equivalent U.S. position limits and accountability levels on its West Texas Intermediate (WTI) crude oil contract, which is linked to the Nymex crude oil contract.

Despite softening natural gas prices, the Oklahoma Energy Index (OEI) has been on the rise after leveling off and taking a bit of a breather in recent months. May saw a new record for the index, which was launched in 1995, and expectations are that its upward trend will continue based on strong regional energy patch fundamentals.

Cash prices caught their second wind Wednesday, with across-the-board gains between a dime and a little more than 20 cents generally representing larger increases than those on Tuesday. Storage buying, making up for nuclear plant outages and a slow rebuild of air conditioning load across the South following a cooler-weather dip earlier in the week were again cited as factors in the run-up.

The cash market followed Wednesday’s leveling-off phase with upward movement at nearly all points Thursday. Quotes ranged from flat to up nearly 20 cents, with gains in the range of 5-15 cents being most common. A couple of scattered points saw small losses.

Some traders may have been surprised to see prices leveling off or climbing a few cents higher at most non-western points Thursday. But fundamental weather support was rising, as colder weather either had entered or was due in the Northeast, Gulf Coast production area and Pacific Northwest. Also, the screen was marginally higher during the morning, before turning negative later.

The downhill run for cash prices got a little steeper Wednesday, and any potential leveling off space remained beyond the horizon. Declines tended to range from about a nickel to 15 cents, but most were a dime or more. Once again, Rockies pipes either experienced less softening than the general market or even ranged from flat to a smidgen higher in a few cases as the region remained a bit warmer than most of the nation, although a mild cooling trend was under way.

Despite a leveling off of the general cash market Thursday, inno way did it signify that the recent price slide was coming to anend, sources said. Instead, there was a consensus that weekendnumbers will be performing an ugly swan dive today. Chiefly therewill be the influence of Thursday’s dime-plus screen drop, whichoccurred for the most part after cash business had been completed,several traders said. In addition, quite a few pipelines eitherhave high-linepack OFOs already in place or are expected to issuethem today as storage injection capabilities are highly constrainedon nearly every system. And although it was getting decidedlychillier Thursday in the Midwest and Northeast market areas, theweather still wasn’t cold enough to generate any great amount ofheating load.

The cash market entered one of its leveling-off phases Thursdaywith flat prices prevailing at a majority of points. A little earlystrength on the futures screen helped buoy physical gas at first,but toward the end of the morning cash numbers were following thescreen lower “step for step,” a Gulf Coast producer said. Onceagain there was essentially nothing to influence trading beside thescreen, she added, dismissing the AGA storage report Wednesdayafternoon as a non-event.