Sam Fletcher
Senior Writer
HOUSTON, Mar. 7 -- Energy futures prices fell Mar. 6, virtually wiping out gains from the two previous trading sessions, as traders were reassured of sufficient supplies.
Even before the International Atomic Energy Agency issued its report on Iran's nuclear research program Mar. 6 to the 35-member United Nations Security Council, IAEA Chief Mohamed El-Baradei expressed hopes that talks with Iran would resume and an agreement might be reached soon.
Meanwhile, more officials of the Organization of Petroleum Exporting Countries indicated that group is unlikely to reduce its production quota of 28 million b/d when they meet Mar. 8.
"Oil is above $62[/bbl] and should remain there on the terms that OPEC looks unlikely to cut production tomorrow. Therefore, OPEC output is likely to remain at a two-decade high due to the fear factor of violence in Nigeria taking out more production and the possibility of sanctions imposed on Iran," said analysts at Raymond James & Associates Inc.
"During February, front-month oil slipped from the high $60s to the low $60s as concerns of oversupply gradually crept into the picture. Oil prices still incorporate a substantial premium for geopolitical risks such as the escalation of Iran's nuclear program and continued militant attacks in Nigeria," said Wayne Andrews in Raymond James's Houston office.
"Depressed by warmer-than-normal weather, front-month natural gas fell precipitously from approximately $9/Mcf to below $7/Mcf during the month. Gas prices remained well below btu parity with oil," Andrews said.
Energy prices
Gasoline led the falloff in energy prices, with the April contract down by 8.71¢ to $1.66/gal on the New York Mercantile Exchange. Heating oil for the same month dropped 5.51¢ to $1.76/gal. The April contract for benchmark US sweet, light crudes lost $1.26 to $62.41/bbl Mar. 6 on NYMEX. The May contract dropped $1.31 to $64.05/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by $1.27 to $62.41/bbl.
The April natural gas contract fell 24.3¢ to $6.55/MMbtu on NYMEX, "as mild weather across much of the nation and extremely high storage levels continued to drive demand and prices down," said analysts at Enerfax Daily.
In London, the April IPE contract for North Sea Brent crude dropped $1.84 to $62.34/bbl. The March gas oil contract dipped by 50¢ to $560/tonne.
The average price for OPEC's basket of 11 benchmark crudes lost 44¢ to $58.64/bbl on Mar. 6.
Contact Sam Fletcher at [email protected].
