MARKET WATCHEnergy prices decline in 'wait-and-see' markets

Energy futures prices declined Thursday with traders in a wait-and-see mode for any fundamental market changes.

Dec. 12, 2003

2 min read

Sam Fletcher
Senior Writer

HOUSTON, Dec. 12 -- Energy futures prices declined Thursday with traders in a wait-and-see mode for any fundamental market changes.

Although the US Energy Information Administration early Thursday reported a larger-than-expected withdrawal of 111 bcf of natural gas withdrawn from US underground storage during the week ended Dec. 5, it failed to trigger the usual knee-jerk price increase on the New York Mercantile Exchange.

Natural gas
"Some traders say the unexpectedly large weekly draw could indicate that flowing gas is tight when heating demand kicks in, but others said high prices last week made sales from storage more attractive, a factor that could play into next week's estimates because [the spot] cash [market] firmed even more this week," said analysts Friday at Enerfax Daily

The January contract for natural gas lost 9.6¢ to $6.62/Mcf Thursday on NYMEX "despite a morning spike after a bullish weekly inventory report, undermined by a steady stream of profit taking after recent gains."

Previous buying that pushed January gas to a new contract high of $7.55/Mcf on Wednesday was fueled "by forecasts for a cold weekend and another spell of frigid air before the Christmas holiday, despite the midweek warm-up in the Northeast and Midwest [US] that slowed spot demand," analysts said.

"[US] natural gas inventories are still near 3 tcf, a cushion that should be enough to meet heating demand even during a cold winter," they noted.

Other energy prices
The January contract for benchmark US light, sweet crudes dipped by 3¢ to $31.85/bbl Thursday on NYMEX, while the February contract slipped by 1¢ to $31.75/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., lost 3¢ to $31.85/bbl.

Heating oil for January delivery was down by 0.36¢ to 88.48¢/gal on NYMEX. Unleaded gasoline for the same month declined by 0.35¢ to 86.38¢/gal.

In London, the January contract for North Sea Brent oil fell by 9¢ to $29.57/bbl Thursday on the International Petroleum Exchange. Gas oil for January delivery lost $2.25 to $261.25/tonne. The January natural gas contract was down by 5.2¢ to the equivalent of $5.77/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes dropped by 22¢ to $29.42/bbl Thursday.

Contact Sam Fletcher at [email protected]