Sam Fletcher
Senior Writer
HOUSTON, Feb. 13 -- Natural gas futures prices jumped Thursday on the New York Mercantile Exchange after the US Energy Information Administration reported a larger-than-expected withdrawal of 224 bcf of natural gas from underground storage during the week ended Feb. 6.
That amount exceeded the consensus of 192-198 bcf among Wall Street analysts for that period and a withdrawal rate of 150 bcf during the same period a year ago. However, it was down from 236 bcf during the previous week. US underground gas storage now stands at 1.6 tcf, up by 232 bcf from a year ago, but 38 bcf below the 5-year average, said EIA officials.
Natural gas prices
The March natural gas contract gained 19.1¢ to $5.45/Mcf on NYMEX as IEA's bullish weekly inventory caused traders to shrug off a lackluster spot market and forecasts of moderate weather, said analysts Friday at Enerfax Daily.
"It was a much bigger withdrawal than expected, and the market took off on it," they said. "But many traders are still in the sell-the-rally mode until they see [US gas spot market prices] better supported."
Analysts said, "The approaching end to winter and the near 10¢[/Mcf spot market] premium to futures have led to a rush to get volumes out of storage and has softened the physical market over the last few days. Mostly normal or above-normal temperatures have dominated New York this week, with expectations of a return to near seasonal reading after a cold holiday weekend. Forecasters also moderated their outlook for Chicago next week, with predictions for some above normal temperatures after the long weekend."
NYMEX will be closed Monday for the US holiday, Presidents' Day.
Other commodity prices
Other energy commodities were mixed Thursday, with trading following no particular pattern, analysts said.
The March contract for benchmark US light sweet crudes slipped by 2¢ to $33.98/bbl on NYMEX, but later months traded up, with the April contract gaining 17¢ to $33.38/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., dipped by 15¢ to $33.93/bbl.
Heating oil for March delivery gained 0.78¢ to 91.91¢/gal Thursday on NYMEX. But gasoline for the same month lost 0.26¢ to $1.0056/gal.
In London, the March contract for North Sea Brent crude increased by 20¢ to $30.07/bbl on the International Petroleum Exchange. However, brokers said that market appeared to be overbought and that a technical correction downward is likely. Gas oil for March delivery gained 25¢ to $254/tonne. However the March natural gas contract was unchanged at the equivalent of $4.10/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes lost 17¢ to $28.96/bbl Thursday. Earlier this week, OPEC ministers unexpectedly voted to reduce production by 1 million b/d to 23.5 million b/d of crude, effective Apr. 1, as well as curb its overproduction of 1.5 million b/d.
Purnomo Yusgiantoro, OPEC's conference president, was quoted Thursday as saying that current high prices are not the result of that decision. Instead, he blamed low stocks of crude and petroleum products in the US, increased political tensions in some areas of the world, and market speculation.
Meanwhile, in an article published Friday in Paris-based Arab Oil & Gas magazine, Claude Mandil, executive director of the International Energy Agency in Paris, said he is not reassured by OPEC's proposed rollback of production.
"We at the IEA have been telling them for some time that oil stocks are too low and that it would be a good thing if they put a little more oil onto the market," Mandil said. He said the proposed reduction of OPEC production in April would effectively reduce volumes on world markets in May or June just as seasonal demand picks up with the start of the summer driving season.
Contact Sam Fletcher at [email protected]