Energy futures prices continued their downward slide Monday in the wake of US President Bill Clinton's plans to release 30 million bbl of crude from the Strategic Petroleum Reserve.
Heating oil prices�the primary justification of the proposed release of SPR emergency stocks�dropped 1.41� to 94.07�/gal Monday on the New York Mercantile Exchange, while gasoline for the same month lost 1.26� to 92.7�/gal.
The November contract for benchmark US light, sweet crude plunged $1.11 to $31.57/bbl, while the December contract lost 84� to close at $31.43/bbl on the NYMEX. However, in after-hours electronic trading, both contracts moved up to $31.74/bbl and $31.55/bbl, respectively.
The October contract for natural gas was up by 14.5� to close at $5.28/Mcf, regaining most of Friday's loss.
In London, North Sea Brent oil futures dropped to the lowest level in a month, with the November contract down by $1.01 to close at $30.24/bbl on the International Petroleum Exchange. The October contract for natural gas gained 6� to the equivalent of $3.24/Mcf.
On the Singapore Exchange, North Sea Brent crude for November fell to $30.24/bbl, and dropped by 85� to $30.35 for the December contract.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes lost 67� to $29.09/bbl.
Analysts expect the futures markets to continue adjustments for the next several days.
Administration officials claim that release of emergency oil supplies is necessary to boost winter stocks of home heating fuel. But officials of the American Petroleum Institute claim that US refineries have been running a nearly full capacity this year to produce record amounts of gasoline and distillates, including home heating oil.
Market analysts acknowledge that the US refining system is so bottlenecked that the additional oil supplies won't likely have much impact on home heating oil stocks this winter.
However, perceptions often outweigh reality in the energy futures market. And the perception of most traders at the moment seems to be a possible glut of oil and petroleum supplies.
