Sam Fletcher
Senior Writer
HOUSTON, Nov. -- Energy futures prices fell Monday, as most of the US basked in spring-like weather with forecasts for similar mild temperatures over the next few days.
The December contract for natural gas plunged by 18.8¢ to $4.71/Mcf Monday on the New York Mercantile Exchange, wiping out its gain of 18.3¢/Mcf in Friday's session. "There was no reason to rally last Friday, so the market corrected that yesterday," said analysts Tuesday at Enerfax Daily.
Natural gas futures prices were pressured Monday by lower cash prices in the spot gas market and some technical selling after an attempted rally early in that session ran into resistance at the key level of $5/Mcf, analysts said. With spot gas still priced lower by roughly 70¢/Mcf, any potential upside for the gas futures market remains limited, they said. Analysts are expecting the US Energy Information Administration to report Thursday continued injections of 40-50 bcf of natural gas into US underground storage for the week ended Oct. 31, compared with a withdrawal of 20 bcf during the same period a year ago.
Heating oil for December delivery dropped 1.49¢ to 78.55¢/gal Monday on NYMEX. Unleaded gasoline for the same month was down by 0.81¢ to 78.72¢/gal. The December contract for benchmark US sweet, light crudes declined by 21¢ to $28.90/Mcf, while the January position retreated by 11¢ to $28.74/bbl.
On the US spot market for oil, West Texas Intermediate at Cushing, Okla., declined by 16¢ to $28.93/bbl Monday.
In London, the December contract for North Sea Brent oil plummeted by 98¢ to $26.72/bbl on the International Petroleum Exchange. However, brokers said that fall appeared to have been overdone and likely to spark a technical correction soon above $27/bbl.
Gas oil for November delivery lost $1.50 to $250.25/tonne on IPE. However, the December natural gas contract shot up by 31.4¢ to the equivalent of $5.64/Mcf on the London market.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes inched up by 2¢ to $27.19/bbl Monday.
Libya wants higher quota
At the Oil & Money conference in London, Libya's Prime Minister Shokri Ghanem said Monday his country wants a larger oil production quota within OPEC.
"Libya's quota is much below what we should be getting, and of course this will be discussed by OPEC" at its Dec. 4 meeting, he said. "Many countries are urging that their quotas should also be readjusted."
In deciding the production quotas of its 11 member, OPEC considers each country's current production capacity, its potential production capacity, reserves, economic strength, and population.
Ghanem said Libya now is the process of recovering lost oil production as a result of United Nations bans on trade with that country imposed in 1991 and 1992 and broadened in 1993 because of the involvement of Libyan terrorists in the bombings of the Pan Am airliner over Lockerbie, Scotland, in 1988 and of another airliner over the Ténéré desert in Niger in 1989. The trade sanctions were suspended in 1999 after Libya handed over to the UN two suspects for trial in The Hague under Scottish jurisdiction.
Now Libya expects its oil production to increase as more international oil companies invest in that country. He said the Libyan government is offering attractive incentives to encourage investment in oil and gas exploration and development, both onshore and offshore, as well as investment in pipelines and refineries.
In 1982, the US imposed a full trade embargo against Libya because of its support for the Islamic revolution in Iran, for extremist movements in the Middle East, and for destruction of the American embassy in Tripoli. However, US oil companies were allowed to continue operating in Libya at that time.
In 1985, the US extended its embargo to Libya's financial holdings abroad. This was followed by US air strikes against Tripoli and Benghazi in 1986 and the withdrawal of US oil companies from Libya in June 1986, leaving behind investments worth $ 2 billion. The US trade bans are still in effect.
Contact Sam Fletcher at [email protected]
