Prices increased Wednesday in international energy futures markets as traders' concerns over winter inventories outpaced the prospect of increased supplies from the Organization of Petroleum Exporting Countries.
Some traders apparently assumed that the extra oil OPEC said it was already producing might have already found its way into the supply system. So they were surprised when the American Petroleum Institute reported Tuesday�the same day that OPEC's latest hike of 500,000 b/d was effective�that US crude stocks declined by 749,000 bbl last week, instead of showing a slight increase.
Market over-sensitivity to historically low US inventories recently has triggered wide price swings over even minor upsets.
The December contract for benchmark US sweet, light crudes increased 55� to $33.25/bbl Wednesday on the New York Mercantile Exchange, while the January contract was up 43� to $31.98/bbl. However, both declined in after-hours electronic trading to $32.85/bbl and $31.74/bbl respectively.
Unleaded gasoline for December delivery inched up 0.84� to 88.43�/gal on the NYMEX, and the December contract for home heating oil gained 0.51� to 94.09�/gal. The December contract for natural gas advanced 19.6� to $4.69/Mcf.
API reported US gasoline inventories also were down by 4.9 million bbl last week, although distillate fuel stocks�including home heating oil�increased by 1.7 million bbl. Distillate stocks were still 25.8 million bbl below year-ago levels, however.
The American Gas Association reported US gas storage injections totaled 70 bcf last week, at the high end of Wall Street's consensus. With only 1 week yet to be reported in the traditional injection season, US gas storage exceeds 2.7 tcf, which is 283 bcf below year-ago levels.
However, Robert Morris, energy analyst at Salomon Smith Barney Inc., said Wednesday that the near-term trough in gas prices may have passed unless all of November proves unexpectedly warm. Although warm temperatures are expected in the Northeast, colder temperatures are forecast for the western and Mid-continent regions.
In London, the December contract for North Sea Brent gained 55� to $31.31/bbl on the International Petroleum Exchange as traders covered short positions in that market. The December natural gas contract gained 3� to the equivalent of $3.94/Mcf.
The average price for OPEC's basket of seven crudes was up 56� to $30.90/bbl.
