MARKET WATCH Crude prices continue to climb

Jan. 13, 2005
Energy prices generally increased Jan. 12 amid continued weather interference with crude production from the North Sea.

Sam Fletcher
Senior Writer

HOUSTON, Jan. 13 -- Energy prices generally increased Jan. 12 amid continued weather interference with crude production from the North Sea.

Iraqi oil officials also warned earlier that they will cut southern exports of Basra Light crude by 10% for 5 months starting Feb. 1 because of poor weather conditions and continued attacks by insurgents on oil field infrastructure.

However, the Royal Dutch/Shell Group said Jan. 13 that production from restarted flow stations in the Niger Delta is now up to 65,000 b/d after those units temporarily were seized by local protestors late last year. Shell, the biggest operator in Nigeria, had to declare force majeure on 114,000 b/d of oil that it couldn't deliver on time to customers.

Meanwhile, members of the Organization of Petroleum Exporting Countries are proceeding with plans to meet Jan. 30, which is the same day as the Iraq election. An OPEC official said Jan. 13 that decision was reached by a consensus of all 11 members, although Iraq earlier requested that the meeting be delayed until after the election. OPEC members apparently are worried about a possible collapse in oil prices this spring with a current surplus of heavy, sour crudes on the market.

Energy prices
The February contract for benchmark US light, sweet crudes increased by 69¢ to $46.37/bbl Dec. 12 on the New York Mercantile Exchange, with the March contract up by 65¢ to $46.56/bbl. On the US spot market, West Texas Intermediate gained 69¢ to $46.38/bbl.

Gasoline for February delivery gained 0.81¢ to $1.22/gal on NYMEX, while heating oil for the same month increased by 0.68¢ to $1.30/gal. However, the February natural gas contract fell by 15.2¢ to $5.94/MMbtu. Milder extended private forecasts and a softer Gulf Coast spot market for gas pulled down gas futures prices despite predictions for colder weekend weather, said analysts at Enerfax Daily.

The Energy Information Administration reported Jan. 13 the withdrawal of 88 bcf of natural gas from US underground storage in the week ended Jan. 7. That amount was below the consensus of Wall Street analysts and compared with withdrawals of 151 bcf the previous week and 52 bcf a year-ago. US gas storage now stands at 2.6 tcf, up by 152 bcf from a year ago and 321 bcf above the 5-year average.

In London, the February contact for North Sea Brent crude increased by 56¢ to $43.68/bbl on the International Petroleum Exchange.

The average price for OPEC's seven benchmark crudes gained 36¢ to $39.81/bbl on Jan. 12.

Contact Sam Fletcher at [email protected]