By OGJ editors
HOUSTON, July 22 -- Trade in energy futures was mixed Monday, with expiration of the August crude contract adding to the volatility.
Unleaded gasoline for August delivery jumped by 1.05¢ to 93.18¢/gal on the New York Mercantile Exchange, following an explosion and fire at the ConocoPhillips 194,000 b/d refinery in Ponca City, Okla., Monday morning. Two people were injured in that mishap, but officials reported that the fire was contained in less than 2 hours.
In addition, a temporary power outage Monday brought down the crude unit at Valero Energy Corp.'s Houston refinery, triggering "heavy flaring," said company officials. With US inventories of crude and petroleum products at unusually low levels during the peak summer driving season, any potential gasoline supply problem is apt to spark a market reaction.
In fact, analysts were surprised that oil futures prices didn't follow the rise of near-month gasoline futures Monday. Instead, the August contract for benchmark US sweet, light crudes lost 18¢ to $31.78/bbl on NYMEX, while the September position fell 20¢ to $30.83/bbl. August heating oil slipped by 0.54¢ to 79.58¢/gal.
The August natural gas contract gained 8.5¢ to $5.11/Mcf Monday on NYMEX, "advancing on some short-covering (buying by traders who had sold contracts to establish a market position but had not previously closed out their positions through offsetting purchases) and running stops (points set for exiting trade). Also a firm cash market and concerns about an Atlantic storm helped keep prices higher," said analysts Tuesday at Enerfax Daily.
"A lack of fundamentals could keep the market from going much higher. Concerns about a tropical storm that may be headed toward the (US) coast supported physical prices, but interest waned when it failed to develop further," they said.
In London, the September contract for North Sea Brent oil lost 24¢ to $28.69/bbl Monday on the International Petroleum Exchange. The August natural gas contract dipped by 0.65¢ to the equivalent of $2.71/Mcf on IPE.
The loss in IPE's oil price resulted from a growing market perception that futures may be dangerously overbought and that current price levels are not sustainable, brokers said. The long positions built by speculators and investment funds recently attracted to the market have helped keep IPE oil prices near the $30/bbl level, they reported.
Fear that aggressive selling of those long positions could trigger a sharp fall in futures prices prompted some profit-taking Monday, they said.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes lost 25¢ to $27.98/bbl Monday.
