By OGJ editors
HOUSTON, Mar. 22 -- Declining US petroleum inventories, indicating a more rapid economic recovery than originally expected, helped boost energy futures prices in international markets Thursday.
Proposed peace talks aimed at curtailing violence in the Middle East probably eased fears among traders of possible oil supply disruptions, said some analysts. But escalation of terror bombings and military response in Israel may have had the opposite effect.
The May contract for benchmark US light, sweet crudes gained 66¢ to $25.61/bbl on the New York Mercantile Exchange, while the June contract was up 57¢ to $25.67/bbl. In after-hours electronic trading, both pulled back to $25.51/bbl and $25.60/bbl, respectively.
Unleaded gasoline for April delivery jumped 1.01¢ to 82.92¢/gal Thursday on the NYMEX. Heating oil for the same month was up 0.57¢ to 67.14¢/gal.
The April natural gas contract kicked up 32¢ to $3.43/Mcf, although an earlier report by the American Gas Association of withdrawals from US underground storage fell below Wall Street's expectations.
AGA said 50 bcf of gas were withdrawn from storage last week, down from 140 bcf the previous week. During the same period a year ago, withdrawal totaled 24 bcf.
US natural gas storage now is nearly 1.6 tcf, up 874 bcf from year-ago levels, and is still on track to exit this winter at a record high, said Robert S. Morris, an analyst with Salomon Smith Barney Inc.
"We believe that the roughly 4 bcfd of 'lost demand' due to fuel switching has already returned to natural gas," he said in his weekly exploration and production report.
"Despite the recent rebound in natural gas prices, we do not expect a significant amount of US ammonia production capacity to be shut-in over the next several months," said Morris. However, he cautioned that such shut-ins "could be more prevalent" if gas prices remain at current levels beyond the second quarter.
Meanwhile, Morris said, "The recent strength in natural gas prices has not yet resulted in increased LNG imports. In fact, the US has yet to receive a spot cargo this year, compared to nine spot cargoes received during the first 2 months of 2001."
In London, stale long positions were shaken out of the North Sea Brent oil futures market in early trading Thursday, opening the way for an afternoon rally on the International Petroleum Exchange.
The May Brent contract gained 76¢ to $25.42/bbl Thursday. Brokers predicted that IPE oil futures prices would probably consolidate around $25.50/bbl, pending fresh news.
The April natural gas contract dropped 3.2¢ to the equivalent of 42.17/Mcf on the IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes rose 73¢ to $23.71/bbl Thursday.
