June 4, 2010
SPOT MARKET OIL AND GAS PRICES UPDATED

The Friday closing spot market price for West Texas Intermediate (the U.S. benchmark light, sweet crude oil) averaged $72.18 per barrel in May, up 23 percent from May ’09 but down 15 percent from April ’10, the U.S. Energy Information Administration (EIA) reports. Oil prices have trended upward from their bottom in December ’08 but slipped in May, mainly due to a strengthening of the dollar, not a decline in oil demand.

The Friday closing spot market price for Henry Hub natural gas averaged $4.15 per MMBtu in May, 5 percent higher than in April ’10 and 12 percent higher than April ’09, EIA reports. Natural gas prices trended downward during the first quarter of ‘10 but flattened in late March, and have remained in the $4 range since then. The steadying of gas prices may reflect recovery in the industrial sector thus boosting demand for natural gas.

To date, energy production, shipments and prices have not been significantly affected by the oil spill following the April 20 explosion aboard the Deepwater Horizon drilling rig and its subsequent loss in the Gulf of Mexico 50 miles off the Louisiana coast, EIA reports. Markets are focusing more on inventories and economic activity than on any potential for spill-related transportation disruptions.

In its May Short-Term Energy Outlook, the agency forecasts the Henry Hub spot price to average $4.48 per MMBtu in ’10 and $5.34 in ’11, and for WTI to average about $84 per barrel during the second half of this year, rising to $87 by the end of next year.

Patrick Jankowski
Vice President, Research
Greater Houston Partnership
1200 Smith, Suite 700
Houston, Texas 77002
713-844-3616
Check out our website at www.houston.org

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