By OGJ editors
HOUSTON, July 8 -- Although gasoline continued to climb on the New York market, most energy futures prices fell in renewed profit taking Wednesday, as Total SA announced a compromise among union leaders, government officials, and company representatives to avert a pending strike by Nigerian oil workers.
Total shut down its production in Nigeria on Tuesday after workers threatened to strike. An ExxonMobil Corp. unit in Nigeria also faced a possible strike by oil workers, officials said (OGJ Online, July 7, 2004).
The market also was comforted when Saudi Arabian Oil Minister Ali al-Naimi said Wednesday that the Organization of Petroleum Exporting Countries wouldn't backtrack on its decision to raise its production quota by another 500,000 b/d on Aug. 1. Whether that will result in an actual increase in production is yet to be seen, however. Traders were rattled when Al-Naimi earlier said OPEC no longer needed to adjust its total production quota now that prices have reached a "fair" level (OGJ Online, July 2, 2004).
After projecting for months that US crude futures prices would begin declining to about $30/bbl in 2005, the US Energy Information Administration in a major shift Wednesday said prices for benchmark US crude will likely average about $37/bbl through next year. That change is based on the failure of industrialized countries to sustain increases in petroleum inventories in recent weeks despite increased production by countries like Saudi Arabia.
"Growth in global oil demand in excess of 2 million b/d is expected for 2004 and 2005 and is likely to keep spot crude oil prices near current levels through next year," said EIA. "Chances for even a gradual, sustained decline in crude oil prices through 2005 . . . seem to have diminished."
Energy prices
The August contract for benchmark US sweet, light crudes lost 57¢ to $39.08/bbl Wednesday on the New York Mercantile Exchange, while the September contract was down by 52¢ to $39.20/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., also lost 57¢ to $39.08/bbl.
Gasoline for August delivery inched up by 0.14¢ to $1.2735/gal Wednesday on NYMEX. However, heating oil for the same month lost 1.4¢ to $1.0791/gal. The August natural gas contract fell by 5.4¢ to $6.37/Mcf, "despite a gain in spot [market] prices as traders vacillated on how seriously to take expectations by some meteorologists of an increase in temperatures next week," said analysts Thursday at Enerfax Daily.
"Warmer Midwest and Northeast [US] forecasts for next week, coupled with concerns about a tropical wave off the coast of Africa helped trigger some buying, particularly since it was still early in the hurricane season for tropical waves to start developing," analysts said. "But many traders remain skeptical of the upside near-term, with mostly seasonal weather this week, industrial plant shutdowns during a holiday-shortened week, and plenty of nuclear power generation to temper any buying."
In London, the August contract for North Sea Brent oil dropped 57¢ to $36.61/bbl Wednesday on the International Petroleum Exchange. Gas oil for July delivery fell by $8.25 to $342.75/tonne. The August natural gas contract dipped by 0.19¢ to the equivalent of $4.05/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes slipped by 1¢ to $35.47/bbl Wednesday.
