Sam Fletcher
Senior Writer
HOUSTON, Mar. 14 -- Energy prices climbed with a Mar. 11 report by the International Energy Agency in Paris that boosted its 2005 estimate of world demand for oil for the third consecutive month.
IEA hiked its global demand forecast by 330,000 b/d to 84.3 million b/d for 2005, primarily as the result of "very cold weather in late February and early March, a more robust view of US economic growth, and the impact of this and other factors on China's oil demand growth prospects" (OGJ Online, Mar. 11, 2005).
It also "suggested that the current high oil prices are fundamentally supported with the reality that oil consumption has caught up with refining capacity," said Robert S. Morris, Banc of America Securities, New York. That report "overshadowed" an earlier "bearish US crude-plus-product inventory report," he said.
Meanwhile, ministers of the Organization of Petroleum Exporting Countries are not expected to make production changes or to establish a new target price band at their Mar. 16 meeting in Isfahan, Iran, said Morris.
Energy prices
The April contract for benchmark US light, sweet crudes climbed by 89¢ to $54.43/bbl Mar. 11 on the New York Mercantile Exchange, while the May contract was up by 86¢ to $55.12/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., gained 88¢ to $54.43/bbl. Gasoline for April delivery increased by 3.44¢ to $1.52/gal on NYMEX, and heating oil for the same month escalated by 3.36¢ to $1.54/gal. The April natural gas contract inched up by 0.4¢ to $6.77/MMbtu, "buoyed by a sharp rally in the crude oil market after being weighed down early by a weak cash market," said analysts at Enerfax Daily.
"With 4 weeks left in the traditional [natural gas winter] withdrawal season and given temperatures last week and forecasts for this week, we still expect storage to exit this winter at around 1.3 tcf," said Morris. He further projected that US underground storage will be refilled to 3.3 tcf at the start of the next winter season, about where it was at the start of this winter. But that's assuming "a normal summer, no hurricane interruptions, normal nuclear power supplies, current forecasts for hydro power supplies, and 3.8% US gross domestic product growth this year," Morris said.
In London, the April contract for North Sea Brent crude gained 44¢ to $53.10/bbl on the International Petroleum Exchange.
The average price for OPEC's basket of seven benchmark crudes slipped by 20¢ to $49.20/bbl on Mar. 11. For the week as a whole, however, the basket price averaged $48.80/bbl, up by $2.21 from the previous week.
So far this year, OPEC's basket price has averaged $42.30/bbl, up from an average $36.05/bbl for all of 2004.
Contact Sam Fletcher at [email protected]