MARKET WATCH
Energy prices dip in volatile market

Sam Fletcher
Senior Writer

HOUSTON, Apr. 16 -- Energy prices dipped Apr. 13, resulting in roughly a 1% loss on the front-month crude contract in volatile trading during several sessions in the New York market.

Meanwhile, US Sec. of Energy Samuel Bodman said he is not worried about the availability of crude, but he is concerned about the rising price of gasoline.

"The US gasoline crack is taking back its driving position. Demand is holding well," said analysts at the Société Générale Group (SGG). "Geopolitics moved to the back-seat despite the recent terrorist attack in Algeria." They said, "It's summer in Europe, but the market will be much-impressed by the snow storm in New York." A fierce nor'easter dumped record rainfall and some snow on the Northeast US on Apr. 15-16, knocking out power over a large area.

Members of the Organization of Petroleum Exporting Countries won't increase supply until crude prices climb above $70/bbl, said SGG. The utilization rate of US refineries should now increase, but there is still heavy maintenance planned for the second quarter, those analysts said.

"It is not often that a single refinery outage has a material impact on the US oil market, but that is precisely what has happened in the wake of the fire at the Sunray, Tex., refinery," said analysts at Raymond James & Associates Inc. "The temporary glut of crude oil at Cushing, Okla., has kept the price of West Texas Intermediate stagnant year-to-date, even as global oil prices surged higher," they said. Valero Energy Corp.'s 158,000 b/d Sunray refinery in the Texas Panhandle is expected to restart later this month. Once that happens, Raymond James analysts said, "We believe that WTI prices could rise by up to 10% within the next 6 weeks."

Energy prices
The May contract for benchmark US light, sweet crudes fell 22¢ to $63.63/bbl Apr. 13 on the New York Mercantile Exchange. The June contract slipped by 1¢ to $66.33/bbl. Heating oil for May delivery dipped by 0.54¢ to $1.90/gal on NYMEX. The May contract for reformulated blend stock for oxygenate blending (RBOB) lost 1.21¢ to $2.18/gal. The May natural gas contract dropped 12.3¢ to $7.80/MMbtu.

In London, the expiring May IPE contract for North Sea Brent crude gained 25¢ to $68.97/bbl. The May gas oil contact escalated by $8 to $604/tonne.

The average price for OPEC's basket of 11 benchmark crudes jumped by $1.05 to $64.71/bbl Apr. 13. So far this year OPEC's basket price has averaged $55.68/bbl, compared with an average price of $61.08/bbl for all of 2006.

Contact Sam Fletcher at samf@ogjonline.com.

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