By OGJ editors
HOUSTON, Feb. 4 -- Energy prices declined Feb. 3 as traders reacted to a lower-than-expected withdrawal of natural gas from US underground storage.
The Energy Information Administration said 188 bcf of gas was withdrawn from US underground storage in the week ended Jan. 28. That was below the previous consensus of Wall Street analysts and down from draws of 230 bcf the previous week and 236 bcf during the same period a year ago. US gas storage now stands at 2.1 tcf, up by 188 bcf from a year ago and 273 bcf above the 5-year average (OGJ Online, Feb.3, 2005).
Meanwhile, ministers of the Organization of Petroleum Exporting Countries said they are prepared to cut crude supplies if inventories increase too much during the second quarter. Abdullah bin Hamad al-Attiyah, Qatar's oil minister, told Dow Jones Newswire, "We don't want to see a collapse in (oil) prices."
Energy prices
The March contract for benchmark US light, sweet crudes dropped 24¢ to $46.45/bbl Feb. 3 on the New York Mercantile Exchange, while the April contract was down by 27¢ to $46.88/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., lost 24¢ to $46.46/bbl. Gasoline for March delivery fell by 2.51¢ to $1.27/gal on NYMEX, while heating oil for the same month dropped by 2.05¢ to $1.28/gal.
The March natural gas contract fell by 22.7¢ to $6.15/MMbtu on NYMEX, "the lowest level since mid-January," said analysts at Enerfax Daily. "The path of least resistance is clearly downward, but the market's speculative position still holds a very large net short position [an excess of open sales over open purchases], which has historically fueled significant rallies."
Analysts also noted, "Private forecasters expect the Midwest to be incredibly mild over the next week, with New York also gradually warming, possibly into the 50s by midweek next week."
In London, the March contract for North Sea Brent crude lost 26¢ to $43.85/bbl on the International Petroleum Exchange.
The average price for OPEC's basket of seven benchmark crudes was down by 43¢ to $40.19/bbl on Feb. 3.