By OGJ editors
HOUSTON, Oct. 16 -- Energy futures prices declined Tuesday on the New York Mercantile Exchange in a wave of profit taking from the previous day's rally.
Traders couldn't resist locking in gains from the previous session, leading to a weakening of prices, analysts said. However, the overall result of the combined 2 days was a moderate price gain in each category.
Following the close of trading Tuesday, the American Petroleum Institute reported a drop in US oil inventories that was more bearish than expected, down 9.4 million bbl to 282.7 million bbl last week. However, US gasoline stocks dropped 5.9 million bbl to 200.1 million bbl during the same period; US distillate stocks declined by 3.6 million bbl to 124 million. US refineries were operating at 81.3% of capacity last week, down from 84.7% the previous week and 92.3% a year ago, API said.
Meanwhile, ChevronTexaco Corp. said Tuesday it still has Gulf of Mexico production shut in—totaling 58,000 b/d of oil and 360 MMcfd of natural gas—as a result of Hurricane Lili, which blew through central gulf waters off Louisiana a week ago. The US Minerals Management Service said Wednesday that two CheveronTexaco production platforms on Eugene Island Block 252 are "leaning" as a result of the storm.
"We have had a number of reports of damage to various production platforms and some drilling rigs, but in general, the extent of the damage to the infrastructure is not significant," MMS Director Johnnie Burton said Wednesday. "Of the 800 facilities which were subjected to the full force of the hurricane, only 6 older platforms and 4 exploration rigs received substantial damage from the storm," she said. There are more than 4,000 offshore facilities operating in federal waters in the gulf.
"There were no fatalities or injuries to offshore workers, there were no fires, and there was no major pollution caused by the hurricane," Burton added. "Considering that there were more than 25,000 workers evacuated, and that 800 structures were located in the direct path of Lili during the most intense period of the storm, it is remarkable that the impact to this important domestic energy production infrastructure was quite limited."
MMS officials said 94% of the oil and gas production that was shut in prior to the storm is back online as of Wednesday. They said many platforms, pipelines, and onshore facilities received minor damage, and several of these will require repairs that may take several months. Some production will continue to be shut in to effect these repairs.
The November contract for benchmark US sweet, light crudes declined by 31¢ to $29.72/bbl Tuesday on NYMEX, and the December position lost 21¢ to $29.76/bbl. Unleaded gasoline for November delivery was down 0.97¢ to 83.99¢/gal. Heating oil for the same month retreated 0.91¢ to 79.98¢/gal.
The November natural gas contract gave up 5.6¢ to $4.25/Mcf in a session of "back-and-forth profit taking mixed with locals short-covering, as marketers returned to rally selling," analysts at Enerfax Daily reported Wednesday. "If the weather forecast switches back to cold, the market may go higher," they said.
In London, the November contract for North Sea Brent oil settled unchanged at $28.50/bbl on the International Petroleum Exchange, after trading in a range of $28.26-28.78/bbl Tuesday. The November natural gas contract continued its rally, up 12.3¢ to the equivalent of $3.62/Mcf on IPE.
The average price of the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes gained 5¢ to $28.21/bbl Tuesday.
