MARKET WATCHGasoline futures price hits record high on NYMEX

Sam Fletcher
Senior Writer

HOUSTON, Apr. 27 -- Energy markets were mixed Wednesday at the expiring May gasoline contract hit a new record settlement of $1.2268/gal, up by 2.01¢ for the day after touching a record trading high of $1.242/gal on the New York Mercantile Exchange.

It marked the fourth record-high closing price for that contract in five consecutive trading sessions, starting Apr. 22 when the soaring gasoline market fueled a rally among energy commodities on NYMEX (OGJ Online, Apr. 23, 2004). This week marked the first time ever that gasoline futures prices exceeded $1.20/gal, analysts said.

"Gasoline remains the key to the market, and at the moment the data suggest that the risk of a major price spike is growing, and that the spike will be from the base of what is already an all-time high," said Paul Horsnell, head of energy research at Barclays Capital Inc., London.

Wednesday's price hike occurred after the US Energy Information Administration reported a 3.2 million bbl jump in US crude inventories to 298.8 million bbl during the week ended Apr. 23. US gasoline stocks increased by 900,000 bbl to 200 million bbl in the same period (OGJ Online, Apr. 26, 2004). However, EIA data indicated a 5.5% drop in US inventories of reformulated gasoline vs. market expectations of an increase, analysts said. That and continued attacks on US-led coalition forces in Iraq triggered buying by traders and speculators.

Energy prices
Heating oil for May delivery inched up by 0.12¢ to 94.33¢/gal Wednesday on NYMEX. natural gas for the same month gained 6.1¢ to $5.94/Mcf.

The June contract for benchmark US sweet, light crudes dipped by 7¢ to $37.46/bbl Wednesday on NYMEX, while the July position retreated by 6¢ to $37.17/bbl. Crude futures prices would have risen in tandem with petroleum product prices if not for a surge of profit taking at the end of the trading session, analysts said. On the US spot market, West Texas Intermediate at Cushing, Okla., declined to $37.48/bbl Wednesday from a corrected closing of $37.53/bbl Tuesday.

In London, the June contract for North Sea Brent crude closed at $34.31/bbl, up by 3¢ for the day after hitting $34.90/bbl in trade Wednesday on the International Petroleum Exchange. Gas oil for May delivery gained $1.75 to $302.75/tonne. The May natural gas contract was up by 2¢ to the equivalent of $3.63/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes increased by 35¢ to $33.67/bbl Wednesday.

Meanwhile, Barclays Capital increased its 2004 price forecasts by $2.50 to $34.50/bbl for benchmark US crudes and by $2.10 to $31.40/bbl for Brent on the basis of the continued conflict in Iraq and supply and demand imbalances in crude markets. "Either demand is still being underestimated, or non-OPEC supply is still being overestimated, or third-party estimates are suggesting that OPEC is producing far more than it really is," Horsnell said.

He noted, "The crude oil price curve has moved to record levels, with every delivery month from 3 to 22 months out hitting an all-time high on [Tuesday]."

Contact Sam Fletcher at [email protected]