Sam Fletcher
Senior Writer
HOUSTON, Apr. 8 -- Energy prices continued their downward spiral Apr. 7, led by the fall off in gasoline futures prices, which some analysts suspect may have hit a peak for 2005 at the start of this week.
A 3% drop in crude futures prices on Apr. 7 "could be another sign that energy's bubble is losing air in recognition of quickly growing inventories," said analysts at Enerfax Daily. "Spiking oil prices have attracted enough imports in recent months to build stockpile levels to their highest since 2002, when oil prices were around $20/bbl, to counter irrational fears of a imminent global supply shortage. Oil prices have gone up 25% since the year began and are 50% higher than a year ago."
Enerfax analysts predicted, "In reality, prices will likely drop back lower than many expect but not stay put. The next time up, the prices will go quicker and higher."
Meanwhile, Saudi Arabia boosted its sustained oil production to 10.8 million b/d in February from 10.6 million b/d in January and is rushing to bring more fields on line to meet growing world demand, according to Nawaf Obaid, head of the Saudi National Security Assessment Project, an independent consultant quoted Apr. 7 by Dow Jones Newswires.
Saudi Arabia is now pumping 9.5 million b/d but can temporarily surge to 11.2 million b/d, said Obaid. That compares with the country's official production capacity of 11 million b/d. However, Saudi Arabia's addition crude supplies are heavy, sour crudes that fewer refineries can handle.
The US Energy Information Administration on Apr. 7 boosted its estimates of world demand for crude by 100,000 b/d to 83.1 million b/d in the second quarter of 2005 and to 84.6 million b/d in the third quarter. Fourth quarter demand should be up by 200,000 b/d to 86.8 million b/d, said EIA in its monthly market report. The group also raised its demand estimate for the first quarter of 2006 by 300,000 b/d to 86.9 million b/d.
Energy prices
The May contract for benchmark US light, sweet crudes fell by $1.74 to $54.11/bbl Apr. 7 on the New York Mercantile Exchange, while the June contract was down by $1.56 to $55.33/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., retreated by $1.74 to $54.12/bbl. Gasoline for May delivery plunged by 9.12¢ to $1.57/gal on NYMEX. Heating oil for the same month dropped 5.84¢ to $1.53/gal.
The May natural gas contract fell by 19.2¢ to $7.37/MMbtu, "pressured by substantial selling in the crude oil market and an EIA [natural gas] storage report that showed an unexpected inventory build," said Enerfax Daily analysts.
In London, the May North Sea Brent contract fell by $1.23 to $54.04/bbl on the International Petroleum Exchange.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes dipped by 25¢ to $51.85/bbl on Apr. 7.
Contact Sam Fletcher at [email protected]
