Sam Fletcher
Senior Writer
HOUSTON, Dec. 5 -- Crude futures prices fell Dec. 4, ending a 5-day rally on the New York Market, with a recovery of the US dollar and the National Weather Service's forecast for warmer weather in the northern US next week.
The dollar strengthened from a 20-month low against the euro and a 14-year low against the British pound as much of the nation began to recover from last week's arctic cold front. However, utility crews are still working overtime to restore electrical power in some parts of the country.
"Despite a nearly 12% warmer-than-normal November, the 'optionality' on an eventual severe cold snap appears to be underpinning the recent strength in natural gas price," said Robert S. Morris, Banc of America Securities LLC, New York. "Otherwise, if temperatures for the rest of the winter match the 10-year average, we project that US natural gas storage levels will end next March at about 1.35 tcf vs. this year's record high 1.7 tcf and the 5-year average of 1.2 tcf." But that's assuming that gas remains cheaper than residual fuel oil prices on an adjusted energy equivalent basis through the winter, then shift back between residual and distillate fuel oil prices next summer, he said. "This implies that oil prices, apart from Mother Nature, will largely dictate the course for natural gas prices next year," Morris said.
Meanwhile, talks concerning Iran's nuclear enrichment program and possible sanctions resumed once again with a scheduled Dec. 5 meeting between the six Security Council members. And China—whose increasing demand for oil has helped escalate market prices this year—says it wants to negotiate directly with the Organization of Petroleum Exporting Countries to secure stable oil supplies and a bigger share of the crude market.
Energy prices
The January contract for benchmark US sweet, light crudes dropped 99¢ to $62.44/bbl Dec. 4 on the New York Mercantile Exchange. The February contract lost 98¢ to $64.03/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by 54¢ to $62.90/bbl. Heating oil for January delivery fell by 3.88¢ to $1.81/gal on NYMEX. Unleaded gasoline for the same month slipped by 1.81¢ to $1.67/gal.
The January natural gas contract fell 61.6¢ to $7.81/MMbtu on NYMEX. On the US spot market, natural gas at Henry Hub, La., dropped 42.5¢ to $7.85/MMbtu.
In London, the January IPE contract for North Sea Brent crude retreated by $1.17 to $63.45/bbl. The December gas oil contract lost $9.25 to $553.25/tonne.
However, the average price for OPEC's basket of 11 benchmark inched up by 4¢ to $59.70/bbl on Dec. 4.
Contact Sam Fletcher at [email protected].
