By OGJ editors
HOUSTON, Mar. 20 -- Crude oil prices on the New York Mercantile Exchange declined sharply on Mar. 19 on inventory reports of weakening US oil demand coupled with reports of a strengthening US dollar compared with other currencies.
The Energy Information Administration reported Mar. 19 commercial US crude inventories increased just 200,000 bbl to 311.8 million bbl in the week ended Mar. 14, down from a 6.2 million bbl jump the previous week (OGJ Online, Mar. 19, 2008).
Raymond James & Associates Inc. analysts in Houston expect that the global market will be undersupplied for the year—a situation that would maintain elevated oil prices. Raymond James analysts forecast the 2008 NYMEX oil price will average $91.43/bbl.
A $100/bbl average was forecast for 2009. Analysts said they based their forecast on various anticipated international supply disruptions, for example in Nigeria, and continued high geopolitical risk, especially involving Iran.
Minimal excess production capacity for the Organization of Petroleum Exporting Countries is likely to cause increased volatility and higher average oil prices, Raymond James analysts said in a Mar. 19 research note.
Traders said reports of a slightly stronger US dollar on Mar. 19 contributed to lower oil prices, which had surged in past weeks. A weak dollar gives foreign buyers more purchasing power and more flexibility in bidding up commodity prices.
Energy prices
Benchmark US light, sweet crudes for April delivery plunged $4.94 to $104.48/bbl Mar. 20 on NYMEX. The May contract dropped by $5.96 to $102.54/bbl.
On the US spot market, West Texas Intermediate at Cushing, Okla., was down $4.94 to $104.48/bbl. The April contract for reformulated blend stock for oxygenate blending (RBOB) lost 9.9¢ to $2.56/gal on NYMEX. Heating oil for the same month dropped by 12¢ to $3.0167/gal.
The April natural gas contract dipped 39¢ to $9.02/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., rose 2¢ to $9.11/MMbtu.
In London, the May IPE contract for North Sea Brent crude decreased $4.84 to $100.72/bbl. The April gas oil contract dropped by $18.25 to $957.00/tonne.
OPEC's office will be closed Mar. 20, 21, and 24 because of a holiday, so no average price was available for OPEC's basket of 13 reference crudes.
