Sam Fletcher
Senior Writer
HOUSTON, Nov. 18 -- Energy prices continued to seesaw Nov. 17. The front-month crude futures contract dropped to a 5-month low in New York, following release of a government report stating that more natural gas is being injected into US storage, providing for an ample supply this winter.
The Energy Information Administration reported the injection of 53 bcf of natural gas into US underground storage during the week ended Nov. 11 (OGJ Online, Nov. 17, 2005). That was above the Wall Street consensus and compared with an injection of 51 bcf the previous week and a withdrawal of 6 bcf during the same period in 2004. US natural gas storage is at nearly 3.3 tcf, down by 179 bcf from a year ago but 40 bcf above the 5-year average for the same time of year.
Market outlook
However, analysts at Enerfax Daily quoted Bob R. Simpson, chairman and chief executive officer of XTO Energy Inc., as saying 5% of previous natural gas production from the US sector of the Gulf of Mexico may be permanently lost because of damage inflicted by three hurricanes this summer to Gulf Coast production and processing facilities. As a result, he said, the US market could see gas prices reach $20/MMbtu this winter.
"The East Coast will see average temperatures of about 2º colder than normal through the winter, despite a mild start to the heating season, a private forecaster predicted in a revised winter outlook," said Enerfax analysts.
The US Minerals Management Service said the number of production platforms still without crews in the Gulf of Mexico dipped by 3 to 146 on Nov. 17. Shut-in gulf crude production slipped to 717,807 b/d, while shut-in natural gas production declined to 3.6 bcfd. The cumulative production lost from federal leases in the gulf since Aug. 26 increased to 87.8 million bbl of crude and 453.1 bcf of natural gas. That amounts to 16% of the crude and 12.4% of the natural gas produced annually from those waters.
Refinery shutdowns along the Gulf Coast totaled 804,000 b/d of capacity as of Nov. 16, said the US Department of Energy in its latest assessment of hurricane damage.
Energy prices
The December contract for benchmark US light, sweet crudes traded at $56.20-58.52/bbl Nov. 17 on the New York Mercantile Exchange before closing at $56.34/bbl, down $1.54 for the day. The January contract lost $1.30 to $57.15/bbl.
On the US spot market, West Texas Intermediate at Cushing, Okla., was down by $1.54 to $56.35/bbl. Heating oil for December delivery fell by 3.22¢ to $1.70/gal on NYMEX. Gasoline for the same month slipped by 2.35¢ to $1.46/gal. The December natural gas contract plunged by 38.7¢ to $11.94/MMbtu on NYMEX.
In London, the January contract for North Sea Brent crude declined by $1.15 to $54.85/bbl on the International Petroleum Exchange. However, gas oil for December gained $4.75 to $523.25/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes increased by 38¢ to $50.11/bbl on Nov. 17.
Contact Sam Fletcher at [email protected].
