By the OGJ Online Staff
HOUSTON, May 8 -- Energy futures prices retreated Monday on the New York Mercantile Exchange, with expectations among traders that the American Petroleum Institute will report a continued buildup of US oil and petroleum products inventories.
The API report of the previous week's stocks is scheduled for release after the NYMEX closes Tuesday.
On Monday, the June contract for benchmark US light, sweet crude lost 59¢ to $27.77/bbl, while the July contract declined 42¢ to $28.54/bbl.
Unleaded gasoline for July delivery pulled back by 2.27¢ to $1.0616/gal, while home heating oil for the same month dropped 1.85¢ to 74.72¢/gal.
The June natural gas contract fell 25.1¢ to $4.24/Mcf on the NYMEX.
Natural gas prices have subsided for the last 3 consecutive weeks as the industry has ramped up seasonal storage injections, said Robert Morris, chief energy analyst at Salomon Smith Barney Inc.
For the first 4 weeks of the current season, US gas storage injections have averaged 7 bcfd higher than during the same period a year ago, Morris said. That strong level of injections is expected to continue, exerting a downward pressure on natural gas prices for the near term, he said in his weekly exploration and production report Monday.
However, Morris said, "We still believe that the supply/demand dynamics will balance out in a price range of $4-$5/MMBtu longer term."
He said crude prices would be underscored primarily by how quickly refiners are able to replenish US gasoline inventories prior to the Memorial Day weekend, which marks the start of the summer driving season.
The International Petroleum Exchange was closed for a public holiday Monday.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes dipped by 1¢ to $25.68/bbl.
Meanwhile, worldwide drilling activity continues at a strong pace. Officials at Baker Hughes Inc. reported 1,206 rotary rigs were working in the US and its waters during April. That's 42 more than in March and up by 402 from April 2000.
Canada had a total 217 rigs drilling during April, down by 228 from March as the spring thaw hampered rig movements, but up by 71 rigs from the same period a year ago.
In other international markets, Baker Hughes reported a total of 742 rigs working during April, up 20 from March and 140 from the previous year.
Worldwide, there were a total 2,165 rotary rigs drilling during April, said Baker Hughes officials. That was down by 166 from March as a result of the seasonal decline in Canada, but it marked an increase of 613 rigs from April 2000.