MARKET WATCHEnergy futures prices decline as Ivan's threat decreases

Sam Fletcher
Senior Writer

HOUSTON, Sept. 9 -- Energy prices declined Wednesday, with the October natural gas contract hitting a new low for this year on the New York Mercantile Exchange, as Hurricane Ivan moved eastward away from the primary oil and gas production areas in the Gulf of Mexico.

Because of the storm, Venezuela suspended crude exports from Maracaibo, which accounts for roughly 40% of the country's exports of 2.2 million b/d, but shipments were likely to resume Thursday, analysts said. Atlantic LNG Co. of Trinidad & Tobago Ltd., the largest exporter of LNG to the US market, resumed loadings Wednesday that had been suspended Tuesday as the storm approached Trinidad and Tobago.

Valero Energy Corp., San Antonio, said Thursday its 280,000 b/d Aruba refinery sustained no damage from the storm's high winds and had begun start-up operations. It is expected to be back to normal operations within 48 hrs.

US inventories
The US Energy Information Administration said Thursday that in the week ended Sept. 3, US commercial crude inventories fell by 1.4 million bbl to 285.7 million bbl, the lowest level since Mar. 12. US gasoline stocks dropped by 2.5 million bbl to 204.1 million bbl. However, distillate fuels increased by 200,000 bbl to 126.6 million bbl, with a gain in heating oil making up for a loss in diesel fuel.

Crude input into US refineries averaged 16.1 million b/d last week, up by 102,000 b/d from the previous week for the fourth largest weekly average ever. Refineries increased operations to 96.5% of capacity, yet gasoline production fell and distillate production remained flat, EIA officials said.

US imports of crude averaged 10.7 million b/d last week, the third highest weekly average ever. "It appears that imports from Iraq were particularly large," EIA reported. Total US imports of gasoline averaged nearly 1.2 million b/d, the sixth highest weekly average ever.

EIA reported 80 bcf of gas injected into US underground storage during the week ended Sept. 3, down from 81 bcf the previous week and 99 bcf during the same period a year ago. That boosted US gas storage to nearly 2.8 tcf, apparently well on its way to exceed 3.2 tcf by the start of winter, analysts said.

Energy prices
The October contract for benchmark US sweet, light crudes fell by 54¢ to $42.77/bbl Wednesday on NYMEX, while the November position lost 47¢ to $42.84/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by 57¢ to $42.78/bbl.

Gasoline for October delivery slipped by 0.25¢ to $1.1817/gal, and heating oil for the same month declined by 0.24¢ to $1.1612/gal. The October natural gas contract plunged by 15.9¢ to $4.63/Mcf on NYMEX.

In London, the October contract for North Sea Brent crude decreased by 37¢ to $40.39/bbl on the International Petroleum Exchange. Gas oil for September delivery advanced by $4 to $377.50/tonne. The October natural gas contract dipped by 1.6¢ to the equivalent of $4.97/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes inched up by 6¢ to $38.19/bbl Wednesday.

Contact Sam Fletcher at [email protected]