Sam Fletcher
Senior Writer
HOUSTON, Jan. 5 -- Natural gas futures prices plummeted Jan. 4 on the New York market in anticipation of a small draw of fuel from US storage because of warmer-than-normal weather.
Crude and petroleum product prices continued to climb, however, despite the lack of any apparent stimulation. In an interview with Dow Jones Newswires, Edmund Daukoro, Nigeria's oil minister and the new president of the Organization of Petroleum Exporting Countries, said that group won't need to cut production when it meets at the end of this month if crude prices remain "in the high $50s or low $60s."
US energy stocks
The consensus among Wall Street analysts was that the next Energy Information Administration report would show the withdrawal of 58-62 bcf of gas from storage. Instead, EIA reported Jan. 5 a build in US gas storage with the injection of 1 bcf during the week ended Dec. 30. That compares with draws of 162 bcf the previous week and 151 bcf during the same period in 2004. More than a third of the way through the official winter heating season, US gas storage now stands at 2.6 tcf, down by 79 bcf from year-ago levels but up 168 bcf above the 5-year average.
"Temperatures last week, based on gas home-heating customer-weighted heating degree days, were roughly 32% warmer than last year, roughly 34% warmer than the 10-year average, and almost 34% warmer than the prior week," said Robert S. Morris at Banc of America Securities LLC, New York. "Winter to date, which accounts for roughly 37% of the total heating degree days in the average winter, temperatures this year have been 1.1% colder than the 10-year average."
EIA reported commercial US crude inventories declined by 1 million bbl to 321.6 million bbl in the last week of December. Gasoline stocks gained 1.4 million bbl to 204.3 million bbl, and distillate fuel inventories rose by 2.1 million bbl to 128.9 million bbl, with an increase in diesel fuel more than compensating for a slight decrease in heating oil.
Imports of crude into the US declined by 131,000 b/d to 10.1 million b/d in the same period. But the input of crude into US refineries increased by 155,000 b/d to more than 15.2 million b/d, with units operating at 89.9% of capacity.
Energy prices
The February contract for benchmark US sweet, light crudes increased by 28¢ to $63.42/bbl Jan. 4 on the New York Mercantile Exchange, while the March contract gained 21¢ to $64.20/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., dipped by 2¢ to $63.43/bbl on NYMEX. Gasoline for February delivery bumped up by 3.4¢ to $1.78/gal on NYMEX. Heating oil for the same month increased 2.13¢ to $1.82/gal.
The February natural gas contract dropped 42.9¢ to $10.20/MMbtu on NYMEX. "The National Weather Service said in its most recent forecast that nearly all of the US will average above-normal temperatures, extending a mild spell that has cut demand for heating oil and natural gas," said analysts at Enerfax Daily.
In London, the February contract for North Sea Brent crude increased by 33¢ to $61.68/bbl on the International Petroleum Exchange. However, gas oil for January fell by $8 to $534.75/tonne.
The average price for OPEC's basket of 11 benchmark crudes gained 78¢ to $56.38/bbl on Jan. 4.
Contact Sam Fletcher at [email protected].
