By OGJ editors
HOUSTON, Nov. 7 -- Natural gas futures prices dipped again Wednesday just ahead of a government report Thursday of the first withdrawal of gas supplies from US underground storage for this winter season.
The US Energy Information Administration said 27 bcf of gas was withdrawn from US underground storage last week, exceeding Wall Street's expectations. That compares with injections of 11 bcf the previous week and 20 bcf during the same period a year ago. US gas storage now exceeds 3.1 tcf, equating to a deficit of 7 bcf compared with last year's figures but a surplus of 138 bcf over the 5-year average.
Measured by heating-degree days, US weather last week generally was 28% colder than the previous week, 60% colder than a year ago, and 30% colder than the 10-year average.
The December natural gas contract lost 2.9¢ to $3.85/Mcf Wednesday on the New York Mercantile Exchange, wiping out the previous day's gain of 2¢/Mcf. That contract has fallen a cumulative 53.5¢/Mcf in the last five NYMEX trading sessions, including a monster 23.3¢ loss on Oct. 31, and a Nov. 1 drop of 9.6¢. A fall of 19.7¢ took it below the $4/Mcf level on Monday.
Gas futures market prices Wednesday "hovered around early October price levels ahead of today's storage report," analysts at Enerfax Daily said Thursday. "With a technically oversold market, look for more short covering."
A continued collapse of gasoline futures prices pulled down crude and heating oil prices Wednesday on NYMEX.
Previously strong gasoline prices, generated by tight supplies and resilient demand, had helped buoy oil prices in recent weeks. However, traders now expect substantial cargoes of both oil and refined products to reach the US in November to offset demand. Reports of overproduction of oil by members of the Organization of Petroleum Exporting Countries, receding fears of US military action against Iraq, and bearish technical factors also helped push down futures prices for oil and petroleum products.
Unleaded gasoline for December delivery fell 2.29¢ to 71.78¢/gal Wednesday. Heating oil for the same month was down 1.01¢ to 70.79¢/gal. The December and January contracts for benchmark US sweet, light crudes each lost 37¢ to $25.77/bbl and $25.28/bbl, respectively, on NYMEX.
In London, the December contract for North Sea Brent oil fell 42¢ to $23.70/bbl on the International Petroleum Exchange. Brokers said that market remains "technically weak."
However, the December natural gas contract gained 3.5¢ to the equivalent of $3.72/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes dropped 58¢ to $23.81/bbl Wednesday.
