By OGJ editors
HOUSTON, Dec. 8 -- Energy futures prices retreated Friday amid profit taking in New York and London markets, but record snowfalls in parts of the Northwest US over the weekend and forecasts of colder weather in the next few weeks will likely trigger another rally, analysts said Monday.
Winter weather so far this year has been average or slightly warmer than usual, which has helped hold down energy prices. Although US inventories of oil and petroleum products are not critically low, said analysts, they are "low enough" to trigger significant price spikes if supply disruptions occur.
The latest cold snap also could trigger a surge in demand for natural gas and heating oil that could drive up prices, analysts said.
Energy prices
The January contract for benchmark US light, sweet crudes dropped by 53¢ to $30.73/bbl Friday on the New York Mercantile Exchange due to what analysts described as "a strong profit-taking sentiment ahead of the weekend, rather than any fundamental factors." The February position declined by 49¢ to $30.64/bbl. On the US spot market, West Texas Intermediate crude at Cushing, Okla., lost 55¢ to$30.73/bbl Friday.
Heating oil for January delivery plunged by 1.83¢ to 86.36¢/gal Friday on NYMEX. Unleaded gasoline for the same month lost 0.83¢ to 85.13¢/gal. The January natural gas contract fell 20.2¢ to $6.14/Mcf, "pressured by a steady flow of profit taking ahead of the weekend, despite a Northeast storm and bullish technicals, after a near 30% run up [in price] earlier last week," said analysts Monday at Enerfax Daily. "An unexpected cold snap across much of the nation last week helped back the [earlier] rally, which saw prices surge in the previous four sessions as shorts [traders with open sales positions] were forced to cover [through purchases] when a series of technical resistance points were breached."
In London, the January contract for North Sea Brent oil lost 49¢ to $28.74/bbl on the International Petroleum Exchange. Gas oil for December delivery dropped $4.50 to $255.50/tonne. The January natural gas contract dipped by 1¢ to the equivalent of $5.94/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes lost 33¢ to $28.69/bbl Friday. For all of last week, however, that basket price averaged $28.50/bbl, up 3¢ from the previous week.
So far this year, OPEC's basket price has averaged $27.97/bbl, almost at the top of its official target band of $22-28/bbl. That compares to an average price of $24.36/bbl for all of 2002.
