Sam Fletcher
Senior Writer
HOUSTON, Jan. 14 -- Energy prices soared Jan. 13, led by a rally in natural gas futures as traders, faced with a new wave of cold weather, shrugged off a slightly bearish report on US gas storage and scrambled to cover a large number of open sales contracts.
Meanwhile, Saudi Arabian officials denied earlier reports by some traders that the kingdom is cutting crude exports again in February (OGJ Online, Jan. 13, 2005). Saudi sources said the kingdom will continue to pump 9 million b/d of crude in February, the same level as in January. Saudi Arabia did reduce production by 500,000 b/d as part of a December agreement among members of the Organization of Petroleum Exporting Countries to cut overproduction by a total 1 million b/d effective Jan. 1.
"The world oil market remains adequately supplied with crude, despite supply concerns and the expectation of colder weather in the northern hemisphere," said Adnan Shihab-Eldin, OPEC's acting secretary general, Jan. 14 in Vienna. He attributed the general rise in crude prices since the start of January "to seasonal market characteristics, such as the shift towards colder weather in the northern hemisphere and a related decline in US crude and heating oil inventories." He also noted supply disruptions in the North Sea, Gulf of Mexico, Nigeria, and Iraq.
However, he said, "Global oil supply—particularly OPEC output—remains strong and more than adequate to meet expected demand." OPEC will continue to monitor markets and will examine market fundamentals at its next two scheduled meetings Jan. 30 and Mar. 16, said Shihab-Eldin.
Energy prices
The February natural gas contract jumped by 50.2¢ to $6.45/MMbtu Jan. 13 on the New York Mercantile Exchange. "Some private forecasters have revised their 10-day outlooks to colder, prompting a flood of short-covering despite bearish weekly storage data [from the Energy Information Administration]. Temperatures in both New York and Chicago are expected to remain below normal at least through next week," said analysts at Enerfax Daily.
EIA reported the withdrawal of 88 bcf of natural gas from US underground storage in the week ended Jan. 7 (OGJ Online, Jan. 13, 2005).
The February contract for benchmark US light, sweet crudes soared by $1.67 to $48.04/bbl on NYMEX while the March contract gained $1.63 to $48.19/bbl. On the US spot market, West Texas Intermediate was up by $1.67 to $48.05/bbl. Heating oil for February delivery shot up by 4.07¢ to $1.34/gal on NYMEX. Gasoline for the same month was up by 3.61¢ to $1.25/gal.
In London, the February contract for North Sea Brent crude escalated by $1.53 to $45.21/bbl.
The average price for OPEC's basket of seven crudes advanced by $1.27 to $41.08/bbl Jan. 13.
Contact Sam Fletcher at [email protected]
