MARKET WATCHEnergy prices mixed in uneventful market

Energy prices were mixed Friday, with crude futures prices rising early in the New York market in what was described as a major buying spree among well-funded speculators only to be undercut when gasoline futures prices tumbled late in that trading session, analysts said.

July 19, 2004

3 min read

By OGJ editors

HOUSTON, July 19 -- Energy prices were mixed Friday, with crude futures prices rising early in the New York market in what was described as a major buying spree among well-funded speculators only to be undercut when gasoline futures prices tumbled late in that trading session, analysts said.

"Oil prices initially got a lift from the International Energy Agency, which increased its 2004 global crude oil demand forecast for the ninth straight month, to 3.2% from 2.9%," said Robert S. Morris in a report this week for Banc of America Securities LLC, New York. As a result, he said, spot market prices for West Texas Intermediate "ended the week at their highest settlement since June 1."

Last week's decision by the Organization of Petroleum Exporting Countries to cancel its July 21 meeting (OGJ Online, July 16, 2004) and to proceed with the planned 500,000 b/d production quota increase to 26 million b/d effective Aug. 1 was "largely symbolic since the organization's output is already nearly 2 million b/d above this new target," Morris said. "Overall though, crude oil prices rallied further at the end of last week on growing concerns that global crude oil supply and demand are much tighter than previously thought, leaving the world much more vulnerable to any major supply disruptions."

Production above OPEC's official quota will remain that group's "unofficial policy" while crude prices remain near record-high levels, said Ahmad Fahad Al-Ahmad Al-Sabah, Kuwait's energy minister, Monday. "All of us are trying to do the overproduction, and Kuwait is overproducing about 300,000 b/d. We are doing this just to (ensure) the stability of the market," he said in an interview with Dow Jones Newswires.

Energy prices
The August contract for benchmark US light, sweet crudes gained 48¢ to $41.25/bbl Friday on the New York Mercantile Exchange, while the September contract was up by 37¢ to $41.30/bbl. On the US spot market, WTI at Cushing, Okla., gained 25¢ to $41.03/bbl.

However, gasoline for August delivery plummeted by 1.97¢ to $1.3005/gal Friday on NYMEX. Heating oil for the same month lost 0.27¢ to 1.0959/gal. The August natural gas contract gained 4.1¢ to 5.89/Mcf, "managing a modest recovery after Thursday's big loss, but still ending 4.1% lower for the week," said analysts Monday at Enerfax Daily. "The resurgent oil complex was the driving force more than any improvement in the fundamentals for natural gas itself."

In London, the September contract for North Sea Brent crude gained 52¢ to $38/bbl Friday on the International Petroleum Exchange. Gas oil for August delivery increased by $4.75 to $352.75/tonne. And the August natural gas contract was up by 2.1¢ to the equivalent of $4.11/Mcf on IPE.

The average price for OPEC's basket of seven benchmark crudes inched up by 23¢ to $36.81/bbl Friday. So far this year, OPEC's basket price has averaged $32.80/bbl.