MARKET WATCH: Crude price slips below $40/bbl

Crude prices continued to slip lower Feb. 9, breaking through the apparent $40/bbl floor on the New York market, while natural gas prices continued to climb.

Sam Fletcher
Senior Writer

HOUSTON, Feb. 10 -- Crude prices continued to slip lower Feb. 9, breaking through the apparent $40/bbl floor on the New York market, while natural gas prices continued to climb.

Meanwhile, members of Nigeria's union for white-collar oil field workers went on strike at Total SA offices in that country to protest lack of security against armed rebels in the Niger Delta. The walkout came after a union executive said a proposed strike would be suspended as talks continued with the blue-collar union. It was not immediately apparent if the strike may spread to other companies or affect Nigeria's oil production.

In Houston, analysts at Raymond James & Associates Inc. said oil prices were up in premarket trading Feb. 10 on hopes that a US economic stimulus package will boost demand.

In New Orleans, analysts at Pritchard Capital Partners LLC noted that members of the Organization of Petroleum Exporting Countries have postponed 35 drilling projects in various stages of development until oil price recovers (OGJ Online, Feb. 9, 2009). Paris-based International Energy Agency said $80 billion worth of oil drilling projects have been delayed or canceled in non-OPEC nations, compared with $20 billion worth in OPEC countries.

Pritchard Capital analysts said the sizeable US decline in horizontal drilling (down 30 rigs last week) along with sizeable and widespread budget cuts and other indicators are reducing natural gas volumes.

Energy prices
The March contract for benchmark US light, sweet crudes lost 61¢ to $39.56/bbl Feb. 9 on the New York Mercantile Exchange. The April contract dropped 31¢ to $45.84/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 61¢ to $39.56/bbl. Heating oil for March delivery declined 0.75¢ to $1.35/gal on NYMEX. The March contract for reformulated blend stock for oxygenate blending (RBOB) slipped by 0.36¢ but closed virtually unchanged at $1.25/gal.

Natural gas for the same month continued to climb, up 3.3¢ to $4.81/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., gained 4¢ to $4.76/MMbtu.

In London, the March IPE contract for North Sea Brent dropped 19¢ to $46.02/bbl. The February contract for gas oil escalated by $21.75 to $436/tonne.

The average price for OPEC's basket of 12 benchmark crudes increased 55¢ to $43.85/bbl on Feb. 9.

Contact Sam Fletcher at samf@ogjonline.com.

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