Sam Fletcher
Senior Writer
HOUSTON, Jan. 4 -- Energy prices fell heavily Jan. 3 during the first floor-trading session of the new year on the New York market as warm weather continued to undermine winter demand.
"Weather continues to be the name of the game, as crude oil prices continue their slide from yesterday in early morning trades today," analysts in the Houston office of Raymond James & Associates Inc. said Jan. 4.
"That said, the latest 2-week weather forecast for the US shows cold weather beginning to set into the Lower 48 states by the latter half of the month, and natural gas has rallied on the news in early morning trading. However, a warm winter till now has prompted us to take a more cautious stance on winter-ending natural gas storage and near-term North American drilling activity," the analysts said.
Meanwhile, the US Energy Information Administration said Jan. 4 that commercial US crude inventories fell by 1.3 million bbl to 319.7 million bbl during the week ended Dec. 29. That was far less than the 8.1 million bbl drop of the previous week when thick fog along the Houston Ship Channel hampered imports (OGJ Online, Dec. 20, 2006). However, fog was again predicted for the Houston area on Jan. 5.
US gasoline stocks rose by 5.6 million bbl to 209.5 million bbl during the same period, while distillate fuel inventories increased by 2 million bbl to 135.6 million bbl, with gains in both fuel oil and diesel.
Imports of crude into the US increased by 997,000 b/d to 10.1 million b/d in the same week. However, the input of crude into US refineries was down by 96,000 b/d to 15.5 million b/d with facilities operating at 91% of capacity. Gasoline production declined slightly to 9.3 million b/d while distillate fuel production increased slightly to 4.3 million b/d.
Energy prices
The February contract for benchmark US sweet, light crudes closed at $58.32/bbl, down by $2.73 for the day after trading as low as $57.72/bbl Jan. 3 on the New York Mercantile Exchange. The Wall Street Journal said the decline represented the largest 1-day percentage drop in the price of a front-month crude contract in that market since April 2005. The March contract fell $2.97 to $59.41/bbl.
On the US spot market, West Texas Intermediate at Cushing, Okla., lost $2.73 to $58.33/bbl. Heating oil for February delivery fell 6.01¢ to $1.59/gal on NYMEX. The February contract for reformulated blendstock for oxygenate blending (RBOB), essentially incomplete reformulated gasoline lacking only the addition of an oxygenate, fell by 6.74¢ to $1.55/gal. January is the last month that the old unleaded RFG futures contract will be traded on NYMEX, and traders have migrated to the new RBOB contract through 2006.
The February natural gas contract lost 13.6¢ to $6.16/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., gained 8¢ to $5.51/MMbtu.
In London, the February IPE contract for North Sea Brent crude fell by $2.48 to $57.96/bbl. The January gas oil contract dropped $16.50 to $501.75/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes lost 69¢ to $55.39/bbl Jan. 3, wiping out the previous day's small gain.
Contact Sam Fletcher at [email protected].
