Sam Fletcher
Senior Writer
HOUSTON, Jan. 17 -- Crude prices dropped below $52/bbl Jan. 16, but natural gas futures continued to climb with a winter storm that stretched from Mexico to Maine as an Arctic cold front collided with wet air from the Gulf of Mexico, coating much of the nation with ice.
In Austin, ice and sleet forced the Texas governor's inauguration ceremony to move indoors for the first time in 50 years. It also caused the State Department of Public Safety to close 300 miles of the US Interstate 10 highway from Fort Stockton in the Permian basin of West Texas to San Antonio. While no major disruptions of oil and gas production or surface transportation of fuel have yet been reported, North Texas and especially Oklahoma were blanketed by ice, sleet, and snow. McAlester, Okla., was reported without electrical power for 4 days. Although predicted ice storms failed to appear, much of the upper Texas Gulf Coast experienced freezing temperatures.
However, oil markets shrugged off the cold weather that should increase energy demand and could decrease energy supplies and focused instead on comments by Ali al-Naimi, Saudi Arabia's energy minister, who denied any need for an emergency meeting of the Organization of Petroleum Exporting Countries and said his country will push ahead with long-term investments to expand output, regardless of "short-term" price declines. Near-month crude futures were below $51/bbl in early trading Jan. 17. "The last time prices were this low was in May 2005," said analysts in the Houston office of Raymond James & Associates Inc. Meanwhile, they said, markets will be looking for direction from separate reports due Jan. 18 from the US Energy Information Administration and the International Energy Agency in Paris.
Energy prices
The February contract for benchmark US light, sweet crudes fell by $1.78, closing at $51.21/bbl after trading as low as $50.53/bbl Jan. 17 as the New York Mercantile Exchange resumed full operations after a 3-day holiday. The March contract dropped $1.91 to $51.96/bbl. On the US spot market, West Texas Intermediate was down by $1.78 to $51.22/bbl. The February contract for reformulated blendstock for oxygenate blending (RBOB) lost 6.27¢ to $1.37/gal on NYMEX. Heating oil for the same month was down 2.33¢ to $1.48/gal.
However, the February natural gas contract increased by 3.7¢ to $6.64/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., shot up by 77¢ to $6.77/MMbtu. "Natural gas futures have risen slightly since the beginning of the year based on the cold weather sweeping across much of the US," said Raymond James analysts.
In London, the February IPE contract for North Sea Brent crude lost 86¢ to $52.26/bbl. The February gas oil contract dropped $3.50 to $470.25/tonne.
The average price for OPEC's basket of 11 benchmark crudes declined by 66¢ to $48.57/bbl on Jan. 16, wiping out gains from the previous session.
Contact Sam Fletcher at [email protected].
