By the OGJ Online Staff
HOUSTON, Aug. 9 -- Futures prices for oil and refined products dropped in international markets Wednesday, wiping out the previous day's gains in most cases.
Declines in US inventories of crude and unleaded gasoline that the American Petroleum Institute reported Tuesday were not enough to sustain a rally, analysts said.
The September contract for benchmark US light, sweet crudes fell by 40¢ to $27.54/bbl Wednesday on the New York Mercantile Exchange, where the October contract also was down 39¢ to $26.96/bbl. In after-hours electronic trading, the September contract inched up to $27.55/bbl, while the October contract dipped to $26.95/bbl.
Unleaded gasoline for September delivery dropped 0.96¢ to 76.89¢/gal, and home heating oil for the same month lost 0.37¢ to 73.06¢/gal on the NYMEX.
However, the September contract for natural gas rebounded 6.5¢ to $3.04/Mcf.
The near-month natural gas contract has waffled around the $3/Mcf mark in recent weeks, despite the fact that injections into underground gas storage facilities since mid-May have continued at a rapid rate some 4-5 bcfd in excess of last year's injections.
The American Gas Association reported 80 bcf were injected last week, up from 77 bcf the previous week and 65 bcf during the same period a year ago. US gas storage levels now stand at 2.28 tcf, or 298 bcf more than this time last year.
If the current pace of injections continues, the US will have a record 3.4 tcf of natural gas in storage by November, up from nearly 2.75 tcf at the start of the winter heating season last year, said Robert S. Morris, an energy industry analyst at Salomon Smith Barney Inc.
Moreover, second quarter results posted by 36 of the 40 largest publicly traded producers "confirm our prior assessment that domestic natural gas production will be up around 3.5% this year over 2000," Morris said.
In London, the futures price for North Sea Brent crude again dropped below the $26/bbl level Wednesday on the International Petroleum Exchange. The September Brent contract lost 38¢ to $25.70/bbl, the bottom of its trading range for the day.
The September natural gas contract also lost 6.9¢ to the equivalent of $2.38/Mcf on the IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes declined by 26¢ to $24.73/bbl.
