By OGJ editors
HOUSTON, Jan. 2 -- Energy futures prices pulled back Tuesday, as traders continued taking profits from the recent rally on the New York Mercantile Exchange.
The February contract for benchmark US light, sweet crudes lost 17¢ to $31.20/bbl in the last trading session of 2002. On Monday, the same contract briefly touched a 2-year high of $33.65/bbl before plummeting to close at $31.37/bbl, down $1.35 for that day (OGJ Online, Dec. 31, 2002).
The March crude contract was down 11¢ Tuesday to $30.59/bbl. Unleaded gasoline for January delivery lost 1.44¢ to 86.48¢/gal on NYMEX. Heating oil for the same month dipped 0.19¢ to 84.25¢/gal.
The February natural gas contract retreated 1.1¢ to $4.79/Mcf Tuesday on NYMEX. "Locals sold the market down early, finding little support from weak first-of-month cash pricing," analysts at Enerfax Daily reported Thursday. "The market hit a low of $4.69(/Mcf), before jumping back up to (a temporary high of) $4.83(/Mcf), boosted in sympathy with crude oil pricing. Volume was thin through the morning session."
In London, the February contract for North Sea Brent oil fell by $1 to $28.66/bbl Tuesday on the International Petroleum Exchange, as traders in that market reportedly "lost confidence" in Venezuela's month-long general strike that has cut that country's oil production to 150,000 b/d from around 3 million b/d previously. The February natural gas contract gained 0.98¢ to the equivalent of $3.70/Mcf on IPE.
IPE's retreat on oil prices was sparked by fears that other members of the Organization of Petroleum Exporting Countries would increase their production by a total 500,000 b/d in reaction to the Venezuelan strike.
However, it would take a bigger increase than that to offset the current loss of Venezuelan oil. Venezuela's oil exports, primarily to US refiners, averaged just over 230,000 b/d in December, down drastically from 2.7 million b/d in November.
Moreover, Venezuela produces heavy oil, which can be processed only by specially designed refineries. Venezuela and Mexico historically have been the two major suppliers of heavy oil to such refineries on the US Gulf Coast. Other sources for heavy oil include Saudi Arabia, Alaska, and California.
The effect of Venezuela's strike on US supplies became more evident this week as the American Petroleum Institute reported US oil stocks fell a whopping 9.1 million bbl to 277.5 million bbl during the week ended Dec. 27. US oil imports dropped by 1.2 million b/d to 7.7 million b/d during that same period, while imports of petroleum products were down 604,000 b/d to 2.3 million b/d.
However, API reported US inventories of distillate fuel oil increased by 2.3 million bbl to 127.8 million bbl during that survey period. US gasoline stocks gained 988,000 bbl to 205.9 million bbl.
US refineries were operating at 90.7% of capacity during that period, up from 88.7% the previous week.
The average price for OPEC's basket of seven benchmark crudes dropped 57¢ to $29.85/bbl Tuesday. But for all of last week, its average price rose $1.74 to $30.50/bbl.
For the year to Dec. 26, 2002, OPEC's basket price has averaged $24.25/bbl, up from $23.12/bbl in 2001.
NYMEX and IPE were closed Wednesday for New Year's Day.