Last week's moves

[dan_s]

Week In E&P – Despite a modest gain by the broader markets (S&P +1.3%) last
week, underscored by mostly encouraging U.S. economic data, and a continued
rally in natural gas prices, E&P shares followed oil prices lower with our marketweighted
E&P composite index posting a nearly 1.0% decline. Both the September
ISM manufacturing and non-manufacturing data, although still weak, were better
than expected with U.S. manufacturing activity expanding last month following three
consecutive months of contraction. However, data revealed that manufacturing
activity in Europe contracted for the 14th straight month while China’s manufacturing
sector contracted for the second straight month in September. The week was
capped off by an encouraging U.S. employment report with slightly more jobs than
forecast added in September although this was after upward revisions to the July
and August reports while the unemployment rate fell to 7.8% from 8.1%. Otherwise,
although U.S. construction spending decreased in August, domestic automobile
sales increased in September to the highest level since February 2008.
Meanwhile, it was a roller-coaster week for oil prices with WTI spot prices down
~2.5% for the week while Brent prices were nearly flat. The disappointing economic
data out of Europe and China underscoring concerns of a global slowdown seemed
to outweigh the encouraging U.S. economic data, a bullish U.S. crude plus product
inventory report, a surge in U.S. gasoline prices due to refinery and product pipeline
outages, and mounting Middle East geopolitical tensions with hostilities escalating
between Turkey and Syria. However, natural gas prices continued their counterseasonal
climb on below-average temperature forecasts over the next two weeks in
the Midwest and Northeast, and despite a higher-than-consensus storage injection
figure. Thus, the prompt-month NYMEX natural gas futures contract gained ~2%
climbing to a ten-month high of $3.39/MMBtu while the composite spot cash price
surged ~9% to $3.21/MMBtu.