Sam Fletcher
Senior Writer
HOUSTON, Feb. 8 -- Crude futures prices increased modestly Feb. 7, ending a sharp 2-day decline on the New York market.
The turnaround came after Royal Dutch Shell PLC said it was curtailing through March 130,000 b/d of crude exports from Nigeria, pending repair of a pipeline damaged by rebel forces (OGJ Online, Feb. 7, 2008). Just a day earlier, Total SA was reported to have shut in production of 280,000 b/d of oil equivalent from the North Sea.
The crude futures price on the New York market "managed to rebound on the strong $86/bbl support, but it is still facing a few hurdles," said Olivier Jakob at Petromatrix, Zug, Switzerland. However, he said, "The previous rebound from $86/bbl ended up in a failed rally, so new inputs will need to be generated for the same pattern not to be repeated again."
Meanwhile at the Feb. 1 meeting of the Organization of Petroleum Exporting Countries in Vienna, several ministers "threw around price targets in the $80/bbl range, and one delegate hinted most would even find a floor of $70/bbl too low," said analysts in the Houston office of Raymond James & Associates Inc.
Energy prices
The March crude contract of benchmark US light, sweet crudes closed at $88.11/bbl, up 97¢ for the day, after trading at $86.24-88.40/bbl Feb. 7 on the New York Mercantile Exchange. The April contract regained 98¢ to $88.20/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 97¢ to $88.12/bbl. Heating oil for March delivery advanced 3.97¢ to $2.46/gal on NYMEX. The March contract for reformulated blend stock for oxygenate blending RBOB increased 2.79¢ to $2.27/gal.
The March natural gas contract price was still climbing, up 10.8¢ to $8.10/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated 6.5¢ to $7.99/MMbtu. The Energy Information Administration reported the withdrawal of 200 bcf from US underground natural gas storage in the week ended Feb. 1. US gas storage now stands at 2 tcf, down 317 bcf from year-ago levels and 62 bcf above the 5-year average for this time of year.
Raymond James analysts said, "Short-term weather forecasts now predict colder weather over much of the Northeast in the coming days, and each blast of freezing weather puts the squeeze on the net 100,000 short positions, which has built significantly over the past few weeks" on the New York futures market. Longer term, they said, arctic cold will be necessary for the rest of winter to keep the year-over-year storage deficit from dissipating.
In London, the March IPE contract for North Sea Brent increased 73¢ to $88.51/bbl. Gas oil for February gained $4 to $788.75/tonne.
The average price for OPEC's' basket of 12 benchmark crudes dipped 6¢ to $84.81/bbl on Feb. 7.
Contact Sam Fletcher at [email protected]
