MARKET WATCH: Crude prices decline in volatile trading

Sam Fletcher
Senior Writer

HOUSTON, Dec. 21 -- Energy prices declined Dec. 20 as the New York market was pulled between profit-taking and reports that crude exports from the Organization of Petroleum Exporting Countries will decline this month.

Prices fell early as traders sold positions to lock in profits from the previous session's rally triggered by an Energy Information Administration report that US crude inventories dropped to the lowest level since February 2005 (OGJ Online, Dec. 20, 2007). But the market recouped somewhat when Oil Movements, a British firm that tracks oil tanker traffic, said OPEC members were scheduled to load 24.2 million b/d of crude in the month ending Jan. 5, down from 24.3 million b/d in the month ended Dec.8.

"Both oil and natural gas posted modest declines on the day," said analysts in the Houston office of Raymond James & Associates Inc. "Natural gas fell due to a surprisingly bearish storage withdrawal, nearly 10% below consensus expectations. As holiday vacations begin in earnest, look for trading to be lighter than usual."

Energy prices
The February contract for benchmark US light, sweet crudes traded at $90.57-92.25/bbl Dec. 20 on the New York Mercantile Exchange prior to closing at $91.06/bbl, down 18¢ for the day. The March contract lost 22¢ to $90.96/bbl. On the US spot market, West Texas Intermediate was down 8¢ to $90.97/bbl. Heating oil for January delivery lost 0.84¢ to $2.59/gal on NYMEX. The January contract for reformulated blendstock for oxygenate blending (RBOB) dipped 0.43¢ to $2.33/gal.

The January natural gas contract dropped 4.2¢ to $7.14/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., rose 1¢ to $7.18/MMbtu.

In London, the January IPE contract for North Sea Brent crude dropped 60¢ to $90.88/bbl. The January gas oil contract gained $7 to $821/tonne.

The average price for OPEC's basket of 12 reference crudes increased 12¢ to $87.50/bbl on Dec. 20.

This feature will appear next on Dec. 26, 2007.

Contact Sam Fletcher at samf@ogjonline.com.

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