MARKET WATCH Futures prices for oil, petroleum products continue decline
Sam Fletcher
Senior Writer
HOUSTON, Sept. 15 -- Energy futures prices continued to fall Friday amid concerns that US refiners will curtail crude purchases in coming weeks as they shut down for maintenance and repairs of units that were running at near full utilization during the summer driving period.
"Now that summer is over and the seasonal 'shoulder' period is here, we still don't foresee much upside near term for either crude oil or natural gas prices," said Robert S. Morris, Banc of America Securities LLC, New York, in a Monday report.
The disrupted Middle East peace plan "has become background noise" for world oil markets because of assurances from most of the Arab producers that oil will not be welded as a weapon, said analysts at Merrill Lynch Global Securities Research & Economics Group, New York, in a separate report Monday. Several members of the Organization of the Petroleum Exporting Countries have indicated little chance that group will change its present production quotas at their Sept. 24 meeting in Vienna.
Energy prices
The October and November contracts for benchmark US light, sweet crudes lost 55¢ each to $28.27/bbl and $28.40/bbl, respectively, Friday on the New York Mercantile Exchange. Heating oil for October delivery declined by 0.78¢ to 74.77¢/gal Friday, while unleaded gasoline for the same month slipped by 0.12¢ to 84.52¢/gal.
There was downward pressure on prices for both oil and petroleum products as a result of the perceived decline in US demand for gasoline. The recent falloff of cash prices on the gasoline spot market also influenced the futures market, analysts said.
Meanwhile, lower-than-usual inventories of heating oil have not yet lifted the price for that commodity with the winter season approaching.
The October natural gas contract inched up by 2.8¢ to $4.77/Mcf Friday on NYMEX, as many traders were forced to make purchases to cover existing open sales contracts rather than risk over the weekend that powerful Hurricane Isabel might take a turn for the worse and head toward the Gulf of Mexico. However, Isabel now appears headed for the US East Coast and away from oil and gas production in the gulf.
"The [gas futures] market's downside will likely be limited as nuclear power plants go offline for scheduled autumn maintenance in coming days; that will push up demand for natural gas-fired generation," said analysts Monday at Enerfax Daily. "But also at the same time, mild autumn weather in most of the nation is likely to keep a lid on energy demand, making it difficult for prices to move significantly higher."
In London, the October contract for North Sea Brent oil lost 25¢ to $26.77/bbl in profit taking Friday on the International Petroleum Exchange. It was trading slightly lower early Monday; now that the contract has broken through the $27/bbl level in that market, analysts said, it's uncertain where the next level of price support will appear.
The October natural gas contract lost 3.6¢ to the equivalent of $3.09/Mcf Friday on IPE.
The average price for OPEC's basket of seven benchmark crudes dropped 54¢ to $25.94/bbl Friday.
For the whole week, however, OPEC's average basket price plunged by $1.19 to $26.44/bbl. So far this year, that basket price has averaged $28.01/bbl, including an average price of $28.63/bbl during August. It averaged $25.85/bbl during the second quarter and $30.55/bbl during the first quarter of 2003, compared with an average of $24.36/bbl for all of 2002.
Contact Sam Fletcher at [email protected]
