Sam Fletcher
Senior Writer
HOUSTON, Jan. 29 -- Energy prices rebounded, closing above $55/bbl for crude and $7/MMbtu for natural gas Jan. 26 on the New York futures market as demand rallied with freezing temperatures in the US Northeast and renewed tensions in the Middle East.
The temperature dropped to 9° F. Jan. 26 in New York City, the lowest level in 2 years. That sparked a rally in heating oil prices.
However, crude prices were lower in early trading Jan. 29 on rumors that Saudi Arabia last week vetoed an emergency meeting of the Organization of Petroleum Exporting Countries, said analysts in the Houston office of Raymond James & Associates Inc. The Saudis apparently support an average price of $50/bbl as high enough without hurting the global economy and reducing demand, analysts said.
The Societe Generale said short and medium-term prospects for demand are improving, with demand "now back in line with seasonal norms," and US temperatures expected to remain well below normal for the next 10 days.
Meanwhile, Jacques Rousseau, senior energy analyst at Friedman, Billings, Ramsey Group Inc., Arlington, Va., is forecasting "a 10% decline in refined product inventories over the next 2 months." He said, "Strong gasoline and diesel demand in the first few weeks of 2007, coupled with refinery maintenance and a negative Europe-US East Coast arbitrage spread (limiting imports), indicate that inventories could fall 10% over the next 2 months."
Rousseau said, "Historically, refinery maintenance season has occurred during the February-March and late September-early November periods. However, given the drop off in utilization rates to 87% over the past few weeks (vs. the January average of 90% over the past 5 years), it appears refinery turnarounds have started ahead of the traditional schedule in 2007." That is especially true on the Gulf Coast and the West Coast, he said.
Energy prices
The March contract for benchmark US light, sweet crudes jumped by $1.19 to $55.42/bbl Jan. 26 on the New York Mercantile Exchange. The April position advanced by $1.13 to $56.25/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., increased by $1.84 to $55.43/bbl. Heating oil for February delivery escalated by 4.23¢ to $1.59/gal on NYMEX. The February contract for reformulated blend stock for oxygenate blending (RBOB) gained 3.93¢ to $1.48/gal.
The February natural gas contract climbed 27¢ to $7.18/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., lost 15.5¢ to $7/MMbtu, however.
In London, the March IPE contract for North Sea Brent crude gained $1.17 to $55.29/bbl. But the February gas oil contract lost $1.75 to $494/tonne.
The average price for OPEC's basket of 11 benchmark crudes declined to $50.95/bb Jan. 29 from a revised Jan. 28 price of $51.18/bbl. The average price for OPEC's basket of crudes thus far this year is $50.61/bbl, compared to an average $61.08/bbl for all of 2006.
Contact Sam Fletcher at [email protected].
