Sam Fletcher
Senior Writer
HOUSTON, Feb. 20 -- Fanned by cold weather in the Northeast US and the promise of more to come, the March natural gas futures price surpassed $6/Mcf to a 2-year high Wednesday on the New York Mercantile Exchange.
That price surge came in anticipation of a government report Thursday of yet another big draw from US underground storage during the week ended Feb. 14.
The US Energy Information Administration said 203 bcf of gas was pulled out of storage last week, exceeding the consensus of Wall Street analysts. That compared with withdrawals of 150 bcf the previous week and 124 bcf during the same period a year ago, officials said. US gas storage now stands at 1.17 tcf, down 868 bcf from year-ago levels and 436 bcf below the 5-year average.
The March natural gas contract closed at $6.13/Mcf Wednesday, up 22.3¢ for the day on NYMEX. "The market opened up and quickly moved higher all morning, reaching a peak of $6.20(/Mcf) right after noon before trading around $6.15(/Mcf) for the rest of the day," said analysts Thursday at Enerfax Daily. "Locals and trade buying sparked the rally, with funds adding to their already hefty 39,000 long positions soon thereafter."
Analysts said, "Although snowbound northeastern states are experiencing a bit of a warming trend, a new Arctic front is expected to blow in on the weekend, pushing heating demand back up. Some profit-taking late in the session is expected to continue Thursday."
Meanwhile, they said, "Many expect storage levels to dip below 1 tcf in next week's report following a storm (this week) that dumped massive amounts of snow on New England and debilitating freezing rain in southeastern states."
Oil prices
The March contact for benchmark US sweet, light crudes gained 20¢ to $37.16/bbl Wednesday on NYMEX, while the April position advanced by 15¢ to $35.66/bbl. Heating oil for March delivery jumped by 3.39¢ to $1.10/gal. Unleaded gasoline for the same month increased by 0.77¢ to $1/gal.
Analysts said traders were concerned about delayed negotiations between government officials and striking oil workers in Nigeria, as well as the potential for military action against Iraq. A warning issued by UK officials that UK citizens should leave Iraq and Kuwait was seen as yet another signal of a pending war.
In London, The April contract for North Sea oil lost 21¢ to $32.33/bbl in profit taking, after trading in a range of $32.05-32.60/bbl Wednesday on the International Petroleum Exchange.
Traders needed to sell and take profits from recent rallies, said brokers, if prices are again to rise strongly in that market. However, with a Middle East war still pending, prices are unlikely to fall much below that level, they said.
The March natural gas contract continued to decline, losing 2.1¢ to the equivalent of $2.75/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes increased by 10¢ to $31.95/bbl Wednesday, wiping out Tuesday's 5¢/bbl loss.
Contact Sam Fletcher at [email protected]
