Sam Fletcher
Senior Writer
HOUSTON, Jan. 15 -- Energy prices climbed Jan. 12 ahead of an arctic cold front pushing into the western US and a 3-day weekend holiday commemorating civil rights leader Martin Luther King Jr.
Nevertheless, the front-month contract for benchmark US light, sweet crudes traded as low as $51.56/bbl during that session on the New York futures market, where it finished the week $3.32/bbl below the Jan. 5 closing price, amid rumors that ministers of the Organization of Petroleum Exporting Countries are contemplating action to defend crude prices from further erosion.
"We have read many comments that the flat price drop was due to the warm weather pattern seen in the first half of January both in the US Northeast and Europe. However, the product cracks have not weakened but instead have risen," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland.
"This was a crude rather than product-led correction; a pattern quite different to the August correction," said Jakob. "Refinery margins are well maintained in the US, in Europe, and in Asia. Straight-run products such as naphtha and fuel oil are lagging in the correction and bringing the simple refinery margin back to the higher band of the multiyear history. The petroleum products are not following the crude path, indicating that the crude correction has been overdone," he said.
Energy prices
The February contract for benchmark US crude rebounded by $1.11—more than half of the previous day's loss of $2.13/bbl—to $52.99/bbl Jan. 12 on the New York Mercantile Exchange. The March contract regained $1.03 to $53.84/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up by $1.11 to $53/bbl. The February contract for reformulated blendstock for oxygenate blending (RBOB) escalated by 4.15¢ to $1.43/gal, more than making up the previous day's loss on NYMEX. Heating oil for the same month increased by 2.32¢ to $1.50/gal.
The February natural gas contract regained 30.9¢ to $6.60/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., dropped 15¢ to $6/MMbtu.
In London, the February IPE contract for North Sea Brent crude gained $1.25 to $52.95/bbl. The February gas oil contract, on the other hand, fell by $15.50 to $470.75/tonne.
The average price for OPEC's basket of 11 benchmark crudes lost 48¢ to $48.65/bbl Jan. 12. So far this year, OPEC's basket price has averaged $51.92/bbl, compared with $61.08/bbl for all of 2006.
Contact Sam Fletcher at [email protected].
