MARKET WATCHCrude, gas futures end year on upswing
Sam Fletcher
Senior Writer
HOUSTON, Jan. 2 -- After a bumpy ride through the year, crude and natural gas futures ended 2006 on the rise Dec. 29 on the New York market, up from earlier losing streaks.
For the final trading week of the year, however, composite spot gas prices registered an 8.5% drop while West Texas Intermediate on the spot market was down by 1.5%. "Persistent mild weather across much of the country overshadowed potential geopolitical tensions after the UN imposed economic sanctions on Iran, which defiantly responded that it would step up its uranium enrichment activities," said Robert S. Morris, Banc of America Securities LLC, New York.
"Also, a larger-than-expected draw in US crude oil inventories failed to rally oil prices since it was attributed to weather delays in the Houston shipping channel and refiners minimizing crude holdings to reduce year-end tax obligations, while some speculated that the data was misreported. At the same time, the slight build in distillate inventories was in line with expectations, while gasoline inventories increased much more than expected," Morris said.
Energy prices
The February contract for benchmark US light, sweet crudes continued its climb up from a former 4-day losing streak, rising 52¢ on Dec. 29 to $61.05/bbl on the New York Mercantile Exchange. The March contract increased by 60¢ to $62.38/bbl. On the US spot market, WTI at Cushing, Okla., was up 52¢ to $61.06/bbl. Unleaded gasoline for January delivery continued its fall, however, down by 4.02¢ to $1.54/gal on NYMEX. Heating oil for the same month lost 2.52¢ to $1.60/gal.
The February natural gas contract was still climbing, up 5.1¢ to $6.30/MMbtu on NYMEX. On the spot market, however, gas at Henry Hub, La., dropped 9¢ to $5.48/MMbtu. "Given the warmer-than-normal temperatures and the Christmas holiday last week, after [the next] storage figure is reported [this week], we project that US natural gas storage will end the year at around 3.05 tcf, which compares to a 5-year average of 2.6 tcf and a previous end-of-year high of just under 3 tcf in 2001," Morris said. "In the meantime, most forecasts are still calling for warmer-than-normal weather across the northern two-thirds of the country for January through March."
In London, the February IPE contract for North Sea Brent crude increased by 19¢ to $60.86/bbl. Gas oil for January, however, fell $4 to $516.50/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes lost 12¢ to $56/bbl on Dec. 29. OPEC's basket price averaged $61.08/bbl through 2006, up from an average price of $50.64/bbl in 2005.
Contact Sam Fletcher at [email protected]