MARKET WATCH
NYMEX gasoline futures price rally provides support for oil prices

OGJ editors
HOUSTON, Dec. 24 -- Energy futures prices closed mixed on the New York Mercantile Exchange Tuesday with gasoline futures rallying. Crude oil futures climbed on the momentum associated with the climbing gasoline prices, traders said.

Unleaded gasoline for January delivery climbed 1.91¢ Tuesday to settle at 89.08¢/gal. That compared with Monday's trading session when gasoline futures plunged 3.52¢.

Gasoline futures provided support for heating oil, but the latter still declined slightly. Heating oil for January ended Tuesday's trading session at 89.20¢/gal, down by 0.21¢.

Iraq exports, production
On the international front, Iraqi Oil Minister Ibrahim Bahr al-Uloum told Reuters that his country still anticipates resuming pipeline exports early next year, despite ongoing sabotage attacks on its northern oil network.

"Sabotage is the challenge facing the Iraqi oil industry. Our cadres have the experience and capacity to overcome it," he said.

Stephen Smith Energy Associates of Natchez, Miss., issued a Dec. 23 research note saying that the pace of Iraqi oil production will continue to be the focus of the Organization of Petroleum Exporting Countries, oil traders, and other market participants going into early 2004.

Iraq's oil production has almost tripled in 4 months to 1.90 million b/d in November, Smith noted.

"Despite this strong Iraqi production ramp-up, and odds favoring more of the same in 2004, fourth quarter oil prices have been stronger than most observers expected at the start of the quarter," he said.

Other energy prices
The February contract for benchmark sweet, light crudes on NYMEX Tuesday gained 8¢ to $31.95/bbl. The increase came after the price settled on Monday down $1.15/bbl for the trading session. The March contract Tuesday rose by 5¢ to $31.57.

On the US spot market, West Texas Intermediate at Cushing, Okla., settled at $31.85/bbl Tuesday, down 13¢.

The January natural gas contract dropped 18.1¢ to $6.143/Mcf Tuesday, "as mild weather across much of the nation continued to pressure prices," Enerfax Daily analysts said Wednesday.

"Despite predictions for another shot of arctic air in early January, mild weather now and sluggish industrial demand during the Christmas and New Year's holidays helped crater both cash and futures prices this week," Enerfax analysts added.

Many manufacturing plants are shut down for 2 weeks during the holiday season, they noted.

In London, the February contact for North Sea Brent oil gained 5¢ to $29.04/bbl Tuesday on the International Petroleum Exchange. Gas oil for January delivery was $262.00/tonne, down $3.50/tonne. The January natural gas contract held steady at the equivalent of $5.80/Mcf on IPE.


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