MARKET WATCHPolitical concerns boost energy futures prices
By OGJ editors
HOUSTON, Mar. 5 -- Energy futures prices increased Thursday as Venezuela's political crisis deepened and US Sec. of Energy Spencer Abraham expressed the administration's concern over current high prices of gasoline.
In testimony Thursday before a congressional committee, Abraham seemed to indicate that the administration expects a further increase in gasoline prices this summer.
Meanwhile, Venezuela's ambassador to the United Nations resigned in protest over the policies of the country's government. There have been riots in Venezuela since the government election commission said citizen petitions lacked enough legal signatures to force a recall referendum against President Hugo Chávez.
Energy prices
The April contract for benchmark US sweet, light crudes gained 84¢ to $36.64/bbl Thursday on the New York Mercantile Exchange, while the May position advanced by 76¢ to $35.81/bbl.
On the US spot market, West Texas Intermediate at Cushing, Okla., gained 80¢ to close at $36.63/bbl. Wednesday's spot market closing price for WTI crude was corrected Thursday to $35.83/bbl from $35.73/bbl, the Wall Street Journal reported (OGJ Online, Mar. 4, 2004).
Heating oil for April delivery jumped by 2.46¢ to 92.31¢/gal on NYMEX. Gasoline for the same month gained 0.95¢ to $1.11/gal.
The April natural gas contract rebounded by 8.2¢ to $5.46/Mcf Thursday on NYMEX after the US Energy Information Administration reported the withdrawal of 96 bcf from US underground storage during the week ended Feb. 27.
That latest EIA weekly report "appears to reflect some incremental 'backed-out' demand compared with the prior week, which is a bit puzzling given that natural gas prices continue to straddle the middle ground between lower-cost residual (No. 6) and higher-cost distillate (No. 2) fuel oil prices, combined with recent economic data, which indicates a pick-up in manufacturing demand," said Robert S. Morris, analyst with Banc of America Securities LLC in New York.
"However, given moderate temperatures in certain regions last week (overall temperatures were 23% warmer than last year and 19% warmer than the prior week), there may not have been significant heating or cooling demand in certain areas, thereby reducing the correlation between weather-related natural gas demand and absolute heating degree days," Morris said.
In London, the April contract for North Sea Brent crude increased by 66¢ to $32.89/bbl Thursday on the International Petroleum Exchange. Gas oil for March delivery gained $4.50 to $279.25/tonne.
The April natural gas contract was up by 4.3¢ to the equivalent of $3.79/Mcf.
Meanwhile, the average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes gained 23¢ to $32.05/bbl Thursday.