Sam Fletcher
Senior Writer
HOUSTON, Nov. 8 -- Futures prices fell for crude and petroleum products Nov. 7, but natural gas futures prices rebounded, wiping out the previous day's loss, despite warm weather that has persisted through the first week of the winter heating season.
"US demand for heating oil is expected to be about 42% below normal this week as temperatures in the Northeast remain mild, according to the National Weather Service," said analysts at Enerfax Daily. "Total US natural gas heating demand will be about 48.4% below normal during the week ending Nov. 12, while electric-heat demand will be about 55.2% below normal."
The US Northeast is the major market for 80% of US heating oil. The Midwest is the primary winter market for natural gas.
'Gradual' recovery
Meanwhile, US Sec. of Energy Samuel Bodman said Nov. 7 that the gradual post-hurricane recovery of oil and natural gas operations is expected to extend through "the next 2-3 months" into 2006.
The US Minerals Management Service said crews had not returned to 5 drilling rigs and 201 production platforms in the federal waters of the Gulf of Mexico as of Nov. 7. MMS officials said 51.4% of crude production from the gulf, 773,097 bbl, and 44.8% of natural gas production, 4.48 bcfd, are still shut in.
Cumulative production lost from offshore federal leases since Aug. 26 when Hurricane Katrina was approaching the Gulf Coast now totals 80.5 million bbl of crude and 414.3 bcf of natural gas. That's equivalent to 14.7% of annual oil production and 11.4% of annual gas production from gulf waters.
Shell Exploration & Production Co. said Nov. 7 it is committed to returning to permanent offices in New Orleans, "assuming the city is fully restored and able to support full operating needs" after Katrina. Since the storm in late August, Shell E&P employees have been working out of temporary offices in Robert and Baton Rouge, La., and in Houston where Shell Oil Co. is headquartered. That had sparked speculation among some observers that Shell E&P might move out of New Orleans, probably to Houston.
Energy prices
The December contract for benchmark US light, sweet crudes dropped by $1.11 to $59.47/bbl Nov. 7 on the New York Mercantile Exchange. The January position retreated by 97¢ to $60.53/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by $1.11 to $59.48/bbl. Gasoline for December delivery fell by 5.19¢ to $1.56/gal on NYMEX. Heating oil for the same month lost 1.01¢ to $1.79/gal.
The December natural gas contract escalated by 45.8¢ to $11.87/MMbtu on NYMEX, "on a rally driven by short-covering [of excess open sales contracts vs. open purchases among traders] after sinking near $11[/MMbtu] early, even as the cash [spot] market continued lower," said Enerfax analysts.
In London, the December contract for North Sea Brent crude declined by $1.21 to $58.04/bbl on the International Petroleum Exchange. Gas oil for November lost $14.75 to $524/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes fell by $1.39 to $52.86/bbl on Nov. 7.
Contact Sam Fletcher at [email protected].
