MARKET WATCHEnergy prices up despite mixed indicators

Energy prices rebounded again July 26 in a market that apparently can't decide whether it's pessimistic about future supplies or optimistic because the escalating conflict between Israel and Lebanon has not yet engulfed more of the Middle East.

July 27, 2006

2 min read

Sam Fletcher
Senior Writer

HOUSTON, July 27 -- Energy prices rebounded again July 26 in a market that apparently can't decide whether it's pessimistic about future supplies or optimistic because the escalating conflict between Israel and Lebanon has not yet engulfed more of the Middle East.

The US Energy Information Administration's report that gasoline stocks plunged by 3.2 million bbl to 211 million bbl in the week ended July 21 triggered traders' supply worries in the face of strong demand. Commercial inventories of US crude remained unchanged at 335.5 million bbl during the same week (OGJ Online, July 26, 2006).

Meanwhile, Royal Dutch Shell PLC said it shut in another 180,000 b/d of production in Nigeria because of a pipeline leak.

Natural gas futures prices also escalated to a 5-week high in the New York market as the August contract neared expiration amid predictions of continued hot weather and expectations of a small build in US gas storage.

Instead, EIA reported the withdrawal of 7 bcf of natural gas from US underground storage in the week ended July 21, compared with an injection of 59 bcf the previous week and a revised injection of 39 bcf in the same period last year.

Energy prices
The August gas contract jumped by 47.8¢ to $6.89/MMbtu July 26 on the New York Mercantile Exchange. The September contract for benchmark US sweet, light crudes increased by 19¢ to $73.94/bbl, while the October contract gained 28¢ to $74.99/bbl.

On the US spot market, West Texas Intermediate crude at Cushing, Okla., was up by 54¢ to $73.95/bbl. Heating oil for August delivery increased by 1.59¢ to $1.96/gal on NYMEX. Gasoline for the same month rose by 1.13¢ to $2.30/gal.

In London, the September IPE contract for North Sea Brent crude climbed by 72¢ to $74/bbl. Gas oil for August escalated by $9 to $631.25/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes lost 44¢ to $68.27/bbl.

Contact Sam Fletcher at [email protected].