Save Article Instructions
Close 

MARKET WATCH
Profit-taking pulls back energy futures prices

Sam Fletcher
Senior Writer

HOUSTON, Dec. 10 -- Energy futures prices declined as profit taking Tuesday rolled back a portion of the large price spikes from the previous session that were triggered by heavy weekend snowfalls in the Northeast US markets.

However, analysts said Wednesday that energy prices would likely rebound in the face of forecasts of another wave of severe winter weather across the US and expectations of reports this week of large declines in US inventories of oil and natural gas.

Oil stocks plunge
Indeed, the US Energy Information Administration said early Wednesday that US oil stocks plunged by 6.4 million bbl to 277.9 million bbl during the week ended Dec. 5. US commercial inventories of crude have fallen by a total 16.1 million bbl during the last 3 weeks and are now 25.2 million bbl below the 5-year average, said EIA officials.

US inventories of distillate fuel increased by 1 million bbl to 132.1 million bbl last week, with diesel fuel accounting for most of that gain. Nevertheless, distillate stocks are still 3.8 million bbl below the 5-year average for this period, EIA said. US gasoline stocks also increased for the second consecutive week, up by 3.4 million bbl to 200.5 million bbl.

Crude inputs into US refineries increased by 213,000 b/d to an average 15.7 million b/d last week. "Almost all of the increase was seen on the East Coast and in the Midwest," EIA reported.

Oil imports into the US increased by 403,000 b/d to an average 9.5 million b/d last week. Virtually all of that gain was along the US Gulf Coast. "It appears that crude oil imports from Saudi Arabia and Nigeria were relatively high last week," EIA said.

Energy prices
The January natural gas contract lost 18¢ to $6.72/Mcf Tuesday on the New York Mercantile Exchange after hitting $6.944/Mcf in overnight trading Monday, the highest level since March for a front-month gas contract "and just shy of the contract high of $6.945[/Mcf], said analysts Wednesday at Enerfax Daily.

"The market was due for a pullback after a 40% surge [in gas prices] over the last week, despite still-bullish technical that clearly point higher," said analysts. However, they said, "Forecasts for a colder weekend after a brief midweek warm-up limited selling."

The decline in natural gas prices had a negative impact on other energy commodities, analysts reported. Heating oil for January delivery lost 1.88¢ to 88.66¢/gal Tuesday on NYMEX. Unleaded gasoline for the same month declined by 0.88¢ to 86.46¢/gal. The January contract for benchmark US light, sweet crudest fell by 34¢ to $31.76/bbl on NYMEX, while the February position retreated by 40¢ to $31.60/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., dropped to $31.78/bbl Tuesday from Monday's corrected closing of $32.13/bbl.

In London, the January contract for North Sea Brent oil lost 35¢ to $29.63/bbl Tuesday on the International Petroleum Exchange. December gas oil was down by $2 to $265/tonne. The January natural gas contract plunged by 16.4¢ to the equivalent of $5.79/Mcf on IPE.

However, the average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes continued to rise above its targeted range Tuesday, up by 26¢ to $29.73/bbl.

Contact Sam Fletcher at samf@ogjonline.com


To access this Article, go to:
http://www.ogj.com/content/ogj/en/articles/2003/12/market-watchbrprofit-taking-pulls-back-energy-futures-prices.html