By OGJ editors
HOUSTON, Jan. 10 -- Energy futures prices rebounded Thursday as United Nations weapons inspectors' complaints of lack of cooperation by Iraqi officials overrode traders' previous euphoria over the upcoming meeting of oil ministers from the Organization of Petroleum Exporting Countries.
Although UN inspectors said they've not yet found evidence that Iraq is stockpiling weapons of mass destruction, their reports of interference by Iraqi officials fanned concerns of imminent military action by US-led forces.
The February contract for benchmark US light, sweet crudes jumped by $1.43 to $31.99/bbl Thursday on the New York Mercantile Exchange, regaining most of the cumulative $2.52/bbl lost during the first three trading sessions this week. The March position gained $1.22 to $31.28/bbl. Unleaded gasoline for February delivery shot up 5.74¢ to 89.25¢/gal on NYMEX. Heating oil for the same month escalated by 4.29¢ to 87.5¢/gal.
The February natural gas contract rose 14.3¢ to $5.30/Mcf on NYMEX. Traders evidently ignored the US Energy Information Administration's report Thursday of the smallest withdrawal from gas storage 9 weeks to concentrate on forecasts of coming cold weather, explained analysts at Enerfax Daily. "However, with storage inventories near the 5-year average volume, the cold weather had better arrive or the market could experience a real washout," they said. "This market is treacherous, and can turn without warning."
Meteorologists at Salomon Smith Barney Inc. are predicting a "significant" drop in temperatures through the central and eastern US within the next few days as the first of four separate Arctic air masses move into the country. "These air masses are associated with intense arctic air that has been hovering over Siberia for the last 6-7 weeks, and each successive one is expected to be colder than the last," Salomon Smith Barney analyst Robert Morris reported Thursday.
He said, "Thus far this winter, underground natural gas storage withdrawals have outpaced last winter's by about 7.2 bcfd, including a 6.1 bcfd uptick due to colder temperatures." US weather in November and December "was nearly 23% colder than the corresponding period" the previous year, he said.
In London, the February contract for North Sea Brent oil gained 85¢ to $29.64/bbl on the International Petroleum Exchange. However, the February natural gas contract continued to fall, plunging 17.2¢ to the equivalent of $3.44/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes increased by 65¢ to $29.51/bbl Thursday.
