By OGJ editors
HOUSTON, May 13 -- Crude oil futures prices in New York and London ended lower Monday while natural gas prices in New York reached a 2-month high upon inventory concerns and also a report of a nuclear power plant outage in South Carolina.
Iran's Oil Minister Bijan Namdar-Zanganeh said Tuesday that the Organization of Petroleum Exporting Countries has yet to decide whether to trim production quotas at its June 11 meeting in Doha, Qatar.
OPEC will continue working to keep oil prices within a price band of $22-28/bbl, he assured reporters in Tehran.
Breaking news about explosions in Western citizens' housing compounds in Saudi Arabia prompted NYMEX crude oil futures to move higher in electronic ACCESS trading early Tuesday. Reports indicated an undetermined number of people were killed and wounded when as many as four bombs exploded Monday at the compounds in Riyadh.
The blasts happened hours before US Secretary of State Colin Power was expected to arrive in Riyadh.
Global oil supply pressure
Merrill Lynch Global Securities Research & Economics Group analyst Michael Rothman said the global oil balance appears to face more supply pressure than his firm previously estimated. His comment was based upon inventory numbers from the International Energy Agency.
"The IEA's revised figures for end-February placed storage at the lowest level ever relative to normal since we begin tracking the data in 1984. . . . For end-March, the IEA's first pass at inventories places stocks at their second lowest level ever (relative to normal)," Rothman said in a research note Tuesday.
He listed an end-March inventory deficit at 183 million bbl, which was 60 million bbl below the Merrill Lynch forecast published a month ago.
"The storage data flies in the face of most market pundits who posit a view that we're facing a 'super glut' of crude," Rothman said. "April's production for the OPEC 10 countries stands roughly 800,000 b/d above the recently adjusted quota which, if maintained, hardly comes close (to) putting a major dent in the now huge inventory deficit, particularly given our own supply-demand projections and the underlying call for OPEC crude for the (second quarter) period."
Energy prices
The June contract for benchmark US light, sweet crudes dropped by 37¢ to $27.35/bbl Monday on the New York Mercantile Exchange. The July contract lost 24¢ to $27.09/bbl. Unleaded gasoline for June delivery declined by 1.99¢ to 81.40¢/gal. Heating oil for the same month was down 1.07¢ to 70.82¢/gal.
The June natural gas contract rose 17.7¢ to settle $5.983/Mcf Monday on NYMEX after reaching above $6.10/Mcf in early trading for the first time since March.
Analysts at Enerfax Daily reported Tuesday that "the morning charge upward simply ran out of buyers." Analysts said the technical rally was boosted by concerns over low storage levels.
South Carolina Electric & Gas Co. reported that its Summer nuclear power unit was shut down unexpectedly Monday for repairs involving voltage regulators. Although the outage was expected to last only 1-2 days, the outage prompted support to a market already worried about other nuclear plant outages in Florida, South Carolina, and Texas, traders said.
In London, the June contract for North Sea Brent oil declined 21¢ to $24.89/bbl Monday on the IPE. The June natural gas contract held steady at the equivalent of $2.67/Mcf on IPE.
