International energy futures prices dipped Friday as major traders took their profits from last week's rally in a normal safeguard against any bad news over the weekend.
While profit-taking may have ended that rally, it won't stem the upward trend of energy prices in the face of declining US inventories, analysts said. The market remains strong on basic fundamentals.
US heating oil stocks are off almost 40% from year-ago levels. Concerns are mounting that the industry may not be able to replenish those inventories before the start of the winter heating season, said Robert S. Morris, senior analyst at Salomon Smith Barney Inc.
On the New York Mercantile Exchange, the September contract for benchmark US light, sweet crudes ended the week at $31.02/bbl, down 32� from the previous close. The October contract lost 29� to $30.58/bbl. In after-hours electronic trading, both contracts declined to $30.95/bbl and $30.44/bbl respectively.
The September contract for home heating oil pulled back 0.46� to 85.82�/gal on the NYMEX, while unleaded gasoline for the same month was down 1.45� to 91.19�/gal.
Natural gas for September delivery edged up 0.7� to $4.48/Mcf, amid above-normal summer temperatures in the Midwest and northeastern US. Gas injections remain well below the pace required to refill storage prior to the start of winter, Morris reported.
Profit-taking also affected the International Petroleum Exchange in London, where the September contract for North Sea Brent crude settled at $30.57/bbl, down 31� from the previous close. That contract traded as high as $31.44/bbl and as low as $30.50/bbl on Friday.
By midday Monday, the September contract for North Sea Brent had recovered Friday's loss. London analysts said they expect that market to strengthen and move above $31/bbl in the absence of a marked increase in world oil production.
The September gas contract was up 10� to the equivalent of $2.30/Mcf on the IPE.
Oil prices also dipped in overnight trading on the Singapore exchange, with the September contract for North Sea Brent down 39� to $30.57/bbl. But analysts said product prices are on an upswing as demand increases in the Asian market.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes dipped 23� to $27.94/bbl on Friday.
OPEC's basket price averaged $27.22/bbl last week, up from $25.64/bbl the previous week. So far this year, the cartel has collected an average price of $26.47/bbl for its basket of crudes, up from $17.47/bbl in 1999.
