Sam Fletcher
Senior Writer
HOUSTON, Jan. 18 -- After hitting a 20-month low of $50.28/bbl in intraday trading, the February crude futures contract rebounded above $52/bbl Jan. 17 on the New York market as traders triggered a late rally as they scrambled to cover short positions.
A forecast of slightly warmer weather at the end of January caused a loss for February natural gas futures, however.
"The downward momentum of oil prices has not been broken yet," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland. "However we note that this is the first time in 18 trading days (almost a calendar month) that we have, apart from [Jan. 12's] short covering, a clear positive close." Furthermore, he said, "Two consecutive failed attempts to close between $50-51/bbl will now make $50/bbl a stronger support."
Energy reports
The US Energy Information Administration reported Jan.18 that, after falling in previous weeks, US commercial crude inventories jumped by 6.8 million bbl to 321.5 million bbl during the week ended Jan. 12. US gasoline stocks escalated by 3.5 million bbl to 216.8 million bbl during the same period. Distillate fuel inventories increased by 900,000 bbl to 141.9 million bbl, with gains in both heating oil and diesel fuel.
Imports of crude into the US increased by 1.6 million b/d to 11.1 million b/d during the same week. Input of crude into US refineries, however, dropped by 502,000 b/d to 15.1 million b/d, with facilities operating at 87.9% of capacity. Gasoline production declined to 9.1 million b/d; distillate fuel production fell to 4 million b/d.
EIA also reported the withdrawal of 89 bcf of natural gas from US underground storage in the week ended Jan. 12. That was above the consensus of Wall Street analysts and compared with withdrawals of 49 bcf the previous week and 46 bcf in the same period last year. Gas storage is now at 2.9 tcf, up by 354 bcf from a year ago and 491 bcf above the 5-year average.
Meanwhile, the International Energy Agency in Paris reduced its estimate of fourth quarter 2006 global demand for oil products by 450,000 b/d following large US data revisions, unseasonably mild temperatures, fuel switching, and lower apparent demand in the former Soviet Union. "Some of these factors, together with a lower US gross domestic product assumption, contribute to a reduction in forecast global demand growth to 1.6%," or a total of 85.8 million b/d in 2007 (85.8 million b/d), IEA reported.
IEA also estimated December production by the Organization of Petroleum Exporting Countries fell by 155,000 b/d to 28.76 million b/d. IEA cut its estimate of non-OPEC oil production to 52.3 million b/d, 300,000 b/d less than previously expected. Most of that production loss was among Norway, Mexico, Canada, Cuba, and Ecuador.
Energy prices
The February contract for benchmark US sweet, light crudes closed at $52.24/bbl, up by $1.03 for the day on the New York Mercantile Exchange. The March contract escalated by $1.17 to $53.13/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up by $1.03 to $52.25/bbl Jan. 17. The February contract for reformulated blend stock for oxygenate blending (RBOB) increased by 0.93¢ to $1.38/gal on NYMEX. Heating oil for the same month rose by 1.95¢ to $1.50/gal.
"Product cracks have weakened in the crude rebound, but heating oil has found a strong support and should continue to do so with the change of the US Northeast weather being confirmed to normal or colder than normal for the balance of the month," said Jakob.
The February natural gas contract fell, however, down 40.4¢ to $6.23/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La, lost 20.5¢ to $6.57/MMbtu.
In London, the March IPE contract for North Sea Brent crude fell by $1.16 to $52.78/bbl. The February gas oil contract was unchanged at $470.25/tonne.
The average price for OPEC's basket of 11 benchmark crudes lost 65¢ to $47.92/bbl on Jan. 17.
Contact Sam Fletcher at [email protected].
