Sam Fletcher
Senior Writer
HOUSTON, Jan. 27 -- Energy futures prices were mixed Jan. 26 as crude rose after 3 consecutive days of declines and natural gas briefly fell below $8/MMbtu for the first time since July.
The Energy Information Administration reported the withdrawal of 81 bcf of natural gas from US underground storage during the week ended Jan. 20. That compared with withdrawals of 46 bcf the previous week and 230 bcf in the same period last year. US gas storage now stands at 2.5 tcf, up by 191 bcf from a year ago and 445 bcf above the 5-year average (OGJ Online, Jan. 26, 2006).
Several traders and analysts see that as signaling a surplus of natural gas in North America this winter and into the summer. In a Jan. 24 report, however, analysts at Friedman, Billings, Ramsey & Co. Inc., Arlington, Va., said, "We see the building of depleted chemical inventories, fuel-switching, and price-sensitive demand growth putting upward pressure on natural gas prices. These all suggest that the near-term outlook is somewhat bullish, though offset by high storage levels and the approaching shoulder season."
Energy outlook
EIA earlier reported commercial US crude inventories fell by 2.3 million bbl to 319.1 million bbl in the week ended Jan. 20. However, gasoline stocks rose by 3.2 million bbl to 214.8 million bbl, while distillate fuel inventories increased by 1.8 million bbl to 136.5 million bbl (OGJ Online, Jan. 25, 2005). Those increases show "the continuation of record-high import levels, resulting in higher inventories," said Jacques Rousseau at Friedman, Billings, Ramsey & Co. "However, demand growth remains positive, and we look for the market to tighten with increased refinery downtime related to the completion of low-sulfur diesel projects and the removal of methyl tertiary butyl ether from the gasoline pool."
Ministers of the Organization of Petroleum Exporting Countries are to meet Jan. 31 in Vienna. "Although some member countries have signaled an interest in reducing the cartel's production output target of 28 million b/d due to concerns of oversupply, a reduction is unlikely, in our view, given the current high crude oil prices, which have gained $5/bbl this year primarily as a result of a geopolitical risk in Iran and Nigeria," Rousseau said.
Nigeria is mobilizing troops to secure and protect oil facilities from militant attacks in the Niger Delta (OGJ Online, Jan. 25, 2006).
Gulf of Mexico
Meanwhile, the US Minerals Management Service said Jan. 25 that 98 offshore platforms were still idle in the federal sector of the Gulf of Mexico as a result of damage from Hurricanes Katrina and Rita. It said 373,407 b/d of crude and 1.7 bcfd of natural gas are still shut in on federal leases. That amounts to 24.9% of the crude and 16.6% of the natural gas previously produced daily from those waters.
Cumulative production lost from federal leases during Aug. 26-Jan. 25 totaled 119.4 million bbl of crude and 609.3 bcf of natural gas. That's equivalent to 21.8% of the crude and 16.7% of the natural gas produced annually from the federal sector of the gulf.
Energy prices
The March contract of benchmark US light, sweet crudes rebounded by 41¢ to $66.26/bbl Jan. 26 on the New York Mercantile Exchange. The April contract gained 51¢ to $66.99/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., rose by 88¢ to $66.24/bbl.
Gasoline for February delivery increased by 1.97¢ to $1.68/gal on NYMEX. Heating oil for the same month lost 1.26¢ to $1.78/gal. The February natural gas contract fell to $7.75/MMbtu in intraday trading on NYMEX before recovering to close at $8.23/MMbtu, down by 23.1¢ for the day.
In London, the March contract for North Sea Brent crude gained 69¢ to $64.92/bbl on the International Petroleum Exchange. Gas oil for February increased by $3.25 to $549.75/tonne.
The average price for OPEC's basket of 11 benchmark crudes slipped by 18¢ to $59.30/bbl on Jan. 26.
Contact Sam Fletcher at [email protected].
