MARKET WATCH Energy futures prices fall in profit taking
By OGJ editors
HOUSTON, Apr. 26 -- Energy futures prices fell Friday as traders took profits from run ups in the previous sessions.
Energy prices soared Apr. 22 as the May gasoline contract hit a record settlement of $1.182/gal after briefly touching a record trading high of $1.193/gal, pulling up other energy commodities on the New York Mercantile Exchange (OGJ Online, Apr. 23, 2004). Although there was no major change in market fundamentals to account for Friday's decline, analysts said, the bigger commodity funds were reluctant to hold over the weekend market positions that obligate them to take delivery.
"However, crude oil price momentum could pick back up this week after suicide bombers attacked an offshore platform and barely missed the loading facilities at the Basra export terminal in Iraq over the weekend," said Robert S. Morris, said Robert S. Morris in a report Monday from Banc of America Securities LLC, New York.
"There was no damage to the loading facilities, although power supply was disrupted and consequently the Basra terminal is not expected to reopen until [Monday]," Morris said. "This is the first time that terrorists [or] insurgents have targeted oil export facilities in Iraq, and this certainly escalates concern that oil shipments from Iraq could again be impacted in the future."
Energy prices fall
The June contract for benchmark US light, sweet crudes dropped 25¢ to $36.46/bbl Friday on NYMEX, while the July position fell by 27¢ to $36.01/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., declined by 30¢ to $37.13/bbl.
Heating oil for May delivery plummeted by 2.42¢ to 91.69¢/gal on NYMEX. Gasoline for the same month lost part of its previous gain, down by 1.74¢ to $1.1646/gal. The May natural gas contract declined by 5.2¢ to $5.57/Mcf, "undermined by modest retreat in crude oil prices and mild weekend weather forecasts that softened the [US natural gas spot] market, said analysts Monday at Enerfax Daily.
In London, the June contract for North Sea Brent crude lost 30¢ to $33.09/bbl Friday on the International Petroleum Exchange. Gas oil for May delivery fell by $5.25 to$286.50/tonne. However, the May natural gas contract inched up by 0.36¢ to the equivalent of $3.56/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes gained 8¢ to $32.50/bbl Friday.
However, Purnomo Yusgiantoro, president of OPEC and Indonesia's energy minister, said Friday he expects that basket price to fall back into the group's price band of $22-$28/bbl before members next meet in June in Beirut.
OPEC has a mechanism intended to keep its basket price within that range by either raising or curtailing production, respectively, if prices remain above or below the targeted price band for 20 consecutive trading days. However, prices have remained significantly above OPEC's price since Dec. 5 without the group taking responsive action.
Meanwhile, proposed legislation was approved last week by the US Senate judiciary committee to make OPEC subject to US antitrust laws. Legislation sponsored by Sen. Mike DeWine (R-Ohio) and Sen. Herbert Kohl (D-Wis) would subject OPEC to legal action by the US Department of Justice and the Federal Trade Commission for setting crude production levels and prices among cartel members.
However, US courts previously have held that OPEC is immune for such prosecution because its actions are "governmental" rather than "commercial."