Sam Fletcher
Senior Writer
HOUSTON, Dec.19 -- Energy prices fell Dec. 18 as traders put more faith in forecasts of warmer-than-normal weather over most of the US during the next 2 weeks than in the promise of the Organization of Petroleum Exporting Countries to cut crude production to 25.8 million b/d, effective Feb. 1.
Industry sources claim OPEC has curtailed only 800,000 b/d of the 1.2 million b/d that its members promised in October to reduce, effective Nov. 1. "OPEC's latest announcement of a production cut has had little impact in the marketplace as the world still waits for full compliance on the previous production cut," said analysts in the Houston office of Raymond James & Associates Inc. However, the new production target "maintains the cartel's resolve to defend $60/bbl as the price floor for crude," they said.
Instead of crude supplies, markets now worry that warm weather across the US will temper demand for heating oil. "US heating oil inventories have fallen nearly in line with the 5-year average, well below last year's levels, after building to over 15% above the 5-year average level during September," said Raymond James analysts.
Energy prices
The January contract for benchmark US light, sweet crudes fell by $1.22/bbl to $62.21/bb Dec. 18 on the New York Mercantile Exchange. The February contract was down $1.30 to $62.79/bbl. On the US spot market, West Texas Intermediate lost $1.22 to $62.22/bbl. Heating oil for January delivery dropped 6.1¢ to $1.72/gal on NYMEX. Unleaded gasoline for the same month lost 2.41¢ to $1.66/gal.
The January natural gas contract fell by 33.4¢ to $7.08/MMbtu on Nymex. On the US spot market, gas at Henry Hub, La., lost 36¢ to $6.54/MMbtu.
In London, the February IPE contract for North Sea Brent crude dropped $1.36 to $62.13/bbl. The January contract for gas oil fell by $7.25 to $543.75/tonne.
The average price for OPEC's basket of 11 benchmark crudes inched up by 1¢ to $58.40/bbl.
Contact Sam Fletcher at [email protected].
