HOUSTON, Oct. 29 -- Energy prices continued to tumble Thursday with the momentum created by the market's earlier reaction to a larger-than-expected increase in US commercial crude inventories.
The Energy Information Administration reported US stocks of crude increased by 4 million bbl to 283.4 million bbl in the week ended Oct. 22. It said US underground storage of natural gas increased by 26 bcf to more than 3.2 tcf during the same period (OGJ Online, Oct. 28, 2004). That's just 5 bcf below the all-time record high of 3.254 tcf registered in November 2001, said analysts Friday at Enerfax Daily. They expect EIA next week to report an addition of 20-40 bcf, which should set a new natural gas storage record going into this winter's heating season..
Reports that China raised its interest rates to rein in the rapid pace of its economic growth also dampened the energy market. China rarely increases its interest rates, said analysts, and this move is viewed as a serious effort by the Chinese government to prevent its economy from overheating.
Purnomo Yusgiantoro, conference president of the Organization of Petroleum Exporting Countries, said Friday that energy prices likely would continue falling now that world crude supply is again "normal." He said current OPEC production would be sufficient to meet any increased demand in the coming months, but that OPEC ministers would decide whether to hike the group's production ceiling still further at their December meeting in Cairo.
OPEC recently increased its production ceiling to 27 million b/d, effective Nov. 1. However, member countries are reportedly producing 2 million b/d above that level.
The December contract for benchmark US light, sweet crudes fell by $1.54 to $50.92/bbl Thursday on the New York Mercantile Exchange, while the January position lost $1.43 to $50.74/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., also lost $1.54, to $50.93/bbl. Gasoline for November delivery dropped 4.29¢ to $1.29/gal Thursday on NYMEX. Heating oil for the same month retreated by 4.23¢ to $1.45/gal. The new front-month December natural gas contract slipped by 9.1¢ to $8.68/Mcf.
In London, the December contract for North Sea Brent declined by $1.08 to $48.37 on the International Petroleum Exchange.
The average price for OPEC's basket of seven benchmark crudes lost $1.16 to $43.59/bbl Thursday.
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