MARKET WATCHNatural gas, crude futures prices fall

Nov. 21, 2005
Natural gas prices fell Nov. 18, ending a brief rally in the New York futures market, while US crude futures slipped to a 5-month low.

Sam Fletcher
Senior Writer

HOUSTON, Nov. 21 -- Natural gas prices fell Nov. 18, ending a brief rally in the New York futures market, while US crude futures slipped to a 5-month low because of mild weather in the first 3 weeks of the winter heating season, continued recovery from earlier hurricane damage along the Gulf Coast, and uncertainties about demand destruction.

The US Minerals Management Service said 145 of the Gulf of Mexico production platforms evacuated ahead of three hurricanes in late summer were still without crews as of Nov. 18. That was one fewer than the previous day. MMS reported 702,556 b/d of crude and 3.6 bcfd of natural gas production were still shut in. Cumulative production lost since Aug. 26, when Hurricane Katrina was approaching the Gulf Coast, totaled 88.5 million bbl of crude and 456.7 bcf of natural gas through last week.

There is "still a lot of uncertainty in the data regarding the ultimate impact on Gulf of Mexico production and 'demand destruction' following the hurricanes," said Robert S. Morris, Banc of America Securities LLC, New York, in a Nov. 21 report. However, he said US weather is the main variable expected to have the greatest influence on energy commodity prices.

Enerfax Daily reported one private forecaster expects the coldest weather so far this winter along the East Coast this week, hiking Northeast demand for heating oil 15% higher than normal.

Representatives from the European Union and the Organization of Petroleum Exporting Countries met Nov. 21 in Vienna for a discussion of oil market developments.

Energy prices
The December contract for benchmark US light, sweet crudes slipped by 20¢ to $56.14/bbl Nov. 18 on the New York Mercantile Exchange, but the January position inched up by 6¢ to $57.21/bbl. On the US spot market, West Texas Intermediate lost 20¢ to $56.15/bbl. Heating oil for December delivery dipped by 0.08¢ to $1.696/gal on NYMEX. However, gasoline for the same month inched up by 0.25¢ to $1.462/gal. The December natural gas contract plunged by 52.8¢ to $11.41/MMbtu.

In London, the January contract for North Sea Brent crude inched up by 3¢ to $54.88/bbl on the International Petroleum Exchange. However, gas oil for December fell by $13.75 to $509.50/tonne.

The average price for OPEC's basket of 11 benchmark crudes dropped 62¢ to $49.49/bbl on Nov. 18.

Contact Sam Fletcher at [email protected].