MARKET WATCH: Crude ends week at a loss on NYMEX

Energy prices continued to fluctuate, with crude falling below $76/bbl to the lowest closing for a week, culminating in a 2% loss through Aug. 3 after hitting record-high prices earlier in the week.

Sam Fletcher
Senior Writer

HOUSTON, Aug. 6 -- Energy prices continued to fluctuate, with crude falling below $76/bbl to the lowest closing for a week, culminating in a 2% loss through Aug. 3 after hitting record-high prices earlier in the week.

The front-month crude contract "managed to print a new historical high but it was followed by a quick reversal that brought West Texas Intermediate down for the first week of the last 8" on the New York market, said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland.

As of the end of the week on Aug. 3, the crude contract was down $1.54/bbl, reversing the gains of the previous week, while North Sea Brent crude was down for the second week in a row, losing $1.51/bbl during the week. Reformulated blend stock for oxygenate blending (RBOB) was down for the fourth consecutive week, and heating oil posted a loss for the third week in a row, Jakob reported.

Analysts blamed the downturn in energy prices on profit taking following the recent rally. Meanwhile, they said, long-running geopolitical tensions in such oil-producing countries as Venezuela, Nigeria, Iran, and Iraq are keeping crude prices near record-high levels despite US inventories continuing near 9-year highs and the lowest US retail gasoline prices in more than 3 months.

In other news, there was a fire at a naphtha pretreater near the coker unit at Valero Energy Corp.'s 325,000 b/d Port Arthur, Tex., refinery the evening of Aug. 5. Company officials said the plant's emergency response team and units from the Port Arthur fire department quickly brought the fire under control with no injuries and no danger to the community. An investigation into the cause of the fire and an assessment of damage are under way, they reported Aug. 6.

Energy prices
The September contract for benchmark US light, sweet crudes traded at $75.04-77.36/bbl Aug. 3 before closing at $75.48/bbl, down $1.30 for the day on the New York Mercantile Exchange. The October contract lost $1.18 to $75.37/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down $1.38 to $75.49/bbl. Heating oil for September delivery dropped 4.06¢ to $2.03/gal on NYMEX. The September RBOB contract slipped by 0.72¢, also to $2.03/gal.

The September natural gas contract dipped 1.6¢ to $6.09/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., fell 19.5¢ to $6.11/MMbtu. Price volatility "caught the attention of most spectators of the natural gas market this week," said analysts at the Société Générale Group in Paris on Aug. 3. "Almost every day was a reversal from the previous day. It came down to two basic weather-related factors. First, renewed bullishness entered into the market because of the development of tropical systems, one of which was in the northern part of the Gulf of Mexico. The other weather variable was excessive heat in some parts of the US," they said.

In London, the September IPE contract for North Sea Brent crude dropped $1.01 to $74.75/bbl. Gas oil for August fell $7.25 to $640.75/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 11 reference crudes lost 16¢ to $72.01/bbl on Aug. 3. So far this year, OPEC's basket price has averaged $61.68/bbl, up from an average price of $61.08/bbl for all of 2006.

Contact Sam Fletcher at samf@ogjonline.com.

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