Sam Fletcher
Senior Writer
HOUSTON, Dec. -- Energy prices rebounded Nov. 30, recouping most of the previous session's losses, as the US government reported a larger-than-expected drop in crude inventories amid predictions of colder weather in the upper Midwest and the Northeast.
The Energy Information Administration said commercial US crude inventories fell by 4.2 million bbl to 317.6 million bbl in the week ended Nov. 25 (OGJ Online, Nov. 30, 2005). Gasoline stocks dipped by 500,000 bbl to 199.9 million bbl, but distillate fuel inventories jumped by 3.4 million bbl to 127.9 million bbl. In the 4 weeks through Nov. 25, US gasoline demand averaged 9.2 million b/d, up by 2.1% from October figures and 1.3% from the same time last year.
Natural gas escalates
The January contract for natural gas shot up by 85.1¢ to $12.59/MMbtu Nov. 30 on the New York Mercantile Exchange, "as a weather system that covered the northern plains with snow and cold spread over the Midwest," said analysts at Enerfax Daily.
"The region from the central and northern plains to New England will be colder than normal during December, according to a private forecaster," the analysts reported. "Heating demand in the Northeast is forecast to be 18% above normal through Dec. 7."
On Dec. 1, EIA reported a withdrawal of 49 bcf of natural gas from US underground storage during the week ended Nov. 25. That compared with withdrawals of 8 bcf the previous week and 5 bcf during the same period last year and was within the consensus expectations of Wall Street analysts. After the first month of the 2005 winter heating season, US natural gas storage now stands at 3.2 tcf, down by 75 bcf from a year ago but 190 bcf above the 5-year average for this time of year.
Other energy prices
The January contract for benchmark US sweet, light crudes rose by 82¢ to $57.32/bbl Nov. 30 on NYMEX. The February contract jumped by 94¢ to $58.23/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., increased by 82¢ to $57.33/bbl. Gasoline for December delivery gained 2.98¢ to $1.42/gal on NYMEX. Heating oil for the same month inched up by 0.67¢ to $1.62/gal.
In London, the January contract for North Sea Brent crude gained 73¢ to $55.05/bbl on the International Petroleum Exchange. However, gas oil for December lost $4.25 to $492.50/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes dipped by 9¢ to $49.69/bbl on Nov. 30.
Lowered price prediction
Despite the latest upturn in crude prices, Banc of America Securities LLC, New York, said Dec. 1 it lowered its fourth quarter estimate of the WTI average spot crude price to $58.50 bbl from $70/bbl previously. It also reduced its average price forecast for natural gas to $10.50/MMbtu from $12/MMbtu in the same period. The bank cited subsequent destruction of industrial and commercial demand for fuel by Hurricanes Katrina and Rita, plus a warmer-than-normal start of the heating season in November.
"Temperatures have so far been nearly 15% warmer than normal (based on gas home heating customer-weighted heating degree days)," said Robert S. Morris at Banc of America Securities. "In the past 2 years, November was 6-7% warmer than normal, although in both years the overall winter ended up averaging close to normal."
The bank's 2006 spot market price forecasts remain unchanged, however, at $55/bbl for WTI and $7.75/MMbtu for natural gas.
The US Minerals Management Service said Nov. 30 that crews have not yet returned to 1 offshore drilling rig and 132 production platforms in the Gulf of Mexico that were evacuated months ago because of a series of hurricanes. Officials said 547,223 b/d of crude and 2.97 bcfd of natural gas remain shut in. Cumulative production lost from federal leases in the Gulf of Mexico since Aug. 26 as the result of hurricanes now totals 95.9 million bbl of crude and 495.3 bcf of natural gas, said MMS officials.
Contact Sam Fletcher at [email protected].
