HOUSTON, Feb. 13 -- With ample supplies reported last week, energy prices continued to tumble Feb. 10 ahead of a weekend winter storm that dumped more than 2 ft of snow over large areas of the Northeast and Mid-Atlantic states.
Central Park in New York City measured a record 26.9 in. of snow over the weekend, breaking the previous record set in 1947. That could trigger a market reaction this week, although warmer weather is forecast for the Northeast. Snowstorms are expected in the Midwest, Rocky Mountains, and the Pacific Northwest.
"The one concern that continues to lend support to oil prices though is that Iran might reduce oil exports if economic sanctions are imposed, although Russia and China are still likely to oppose any such action," said Robert S. Morris at Banc of America Securities LLC, New York. The United Nations Security Council isn't likely to take action against Iran before the International Atomic Energy Agency reports on Iran's nuclear program Mar. 6. Later this week, however, Iranian officials are scheduled to meet with Russian authorities to discuss processing Iran's uranium in Russia.
Venezuelan production flat
Meanwhile, with its oil production reported flat or down "virtually every quarter since 2000," Venezuela "is set to be overtaken by Brazil as the number one oil producer in Latin America" for the first time ever, said analysts in the Houston office of Raymond James & Associates Inc.
Venezuela, the world's fifth largest oil exporter and a key member of the Organization of Petroleum Exporting Countries, is one of the "few countries outside the Middle East that have the potential to jolt the oil market," said Raymond James. "Over the past 5 years, Venezuela has been hit by one crisis after another, with repercussions that reverberated across the oil market."
While political strife appears to have moderated over the last year, Venezuela's oil production continues to stagnate, the analysts said. "While a near-term supply disruption from Venezuela does not seem likely, the country's inability to meet its OPEC quota makes the government famously hawkish when it comes to defending an oil price floor for the group," said Raymond James. "This fact, along with a lack of foreign investment in the Venezuelan energy sector, should be seen as bullish factors for global oil prices. We do not see this changing until such time as the government adopts more favorable policies towards foreign oil companies."
The March contract for benchmark US light, sweet crudes dropped 78¢ to $61.84/bbl Feb. 10 on the New York Mercantile Exchange. The April contract lost 73¢ to $62.86/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by 78¢ to $61.85/bbl. Gasoline for March delivery lost 5.22¢ to $1.46/gal on NYMEX. Heating oil for the same month declined by 2.21¢ to $1.64/gal. The March natural gas contact tumbled to a 7-month low, down 16.3¢ to $7.32/MMbtu.
In London, the March contract for North Sea Brent crude fell by $1.11 to $59.64/bbl on the International Petroleum Exchange. Gas oil for February was unchanged at $526.25/tonne.
The average price for OPEC's basket of 11 benchmark crudes declined by 54¢ to $56.63/bbl on Feb. 10. So far this year, OPEC's basket price has averaged $58.26/bbl, compared with an average of $50.64/bbl for all of 2005.
Contact Sam Fletcher at [email protected].