OGJ Senior Writer
HOUSTON, Dec. 23 -- The February contract for benchmark US light, sweet crudes gained 11¢ to $30.30/bbl Friday, the highest closing price in 9 weeks for a near-month oil contract on the New York Mercantile Exchange.
"With little prospect of a resolution to the ongoing Venezuela general strike and the ongoing market focus on Iraq and the build up to potential military intervention in early 2003, we believe oil prices could increase to $35/bbl in the near term," reported Matthew Warburton on Monday for UBS Warburg LLC.
In a separate report Monday, Robert Morris of Salomon Smith Barney Inc., noted that spot market prices for light, sweet West Texas Intermediate crude "approached a 2-year high" last week, as the Venezuelan strike essentially shut off exports of heavy Venezuelan oil to US Gulf Coast refineries, along with refined products from that country.
"Although OPEC may postpone its announced cut in production beginning Jan. 1 if oil prices continue to rise, it would not fully offset the 'lost' barrels from Venezuela, if the strike persists," he said.
Morris reported the near-month natural gas futures contract price hit a 20-month high early last week, before retreating as a result of profit taking and a rise in US weather temperatures.
"However, the composite spot price, which had recently trailed the NYMEX futures contract, continued to rise, reaching $4.69/MMbtu at week's end," he said.
That supports Morris' earlier projection that fourth quarter cash flow per share among the US independent producers he follows will be up more than 10% sequentially and more than 35% from last year because of the recent rise in commodity prices.
"Quarter-to-date, WTI spot crude oil prices have averaged roughly $27.70/bbl, or a 35% increase from the $20.45/bbl year-ago fourth quarter average. Also, we believe crude oil prices are likely to retain their 'war premium' through the first half of next year," he reported Dec. 20. "Quarter-to-date, composite spot natural gas prices have averaged $3.85/MMbtu, or a roughly 70% uptick from last year's $2.26/MMbtu average."
The March contract for benchmark US crudes gained 3¢ to $29.63/bbl Friday on NYMEX. Heating oil and Unleaded gasoline for January delivery inched up 0.11¢ to 87.92¢/gal. Heating oil for the same month declined by the same amount, 0.11¢, to 85.95¢/gal.
The January natural gas contract increased 14¢ to $5.18/Mcf Friday. "The market's heavy winter premium pumped in by speculators over the last few weeks began to leak away Thursday as the market failed to generate new highs even with a huge storage withdrawal," analysts at Enerfax Daily said Monday.
"The National Weather Service tempered the (Friday market's) enthusiasm with a forecast of above-normal weather for the next 2 weeks, forcing traders to resort to a mix of defensive positioning upward and late short covering at the close ahead of (this) week's expiration." The January gas contract expires at the end of this week.
In London, the February contract for North Sea Brent oil gained 12¢ to $28.34/bbl on the International Petroleum Exchange. However, the January natural gas contract declined by 6.5¢ to the equivalent of $3.81/Mcf on the IPE.