MARKET WATCHEnergy prices retreat with profit taking

By OGJ editors

HOUSTON, May 27 -- Energy futures prices generally retreated Wednesday, with traders taking profits as they shrugged off conflicting reports of US inventories of crude and petroleum products.

The US Energy Information Administration reported Wednesday that commercial US crude stocks remained virtually unchanged at 298.9 million bbl during the week ended May 21, while US gasoline stocks dipped by 700,000 bbl to 203 million bbl, with the peak summer driving season to open Monday on the Memorial Day holiday in the US. Distillate stocks decreased by 500,000 bbl to 108.7 million bbl, EIA said.

However, the American Petroleum Institute subsequently reported US crude stocks grew by 764,000 to 299.9 million bbl in the week ended May 21. Gasoline stocks were up by 1.7 million bbl to 197.9 million bbl, API said, while distillate stocks decreased by 666,000 bbl to 105.5 million bbl.

Analysts said market prices are likely to remain volatile in the short run. Wednesday's trading pattern indicated that the market is oversold, they said, with too much of a speculation element in prices that are not supported by fundamentals.

Energy prices
The July contract for benchmark US light, sweet crudes fell by 44¢ to $40.70/bbl Wednesday on the New York Mercantile Exchange, while the August position lost 30¢ to $40.38/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by 43¢ to $40.70/bbl.

Heating oil for July delivery slipped by 0.77¢ to $1.0196/gal Wednesday on NYMEX, but gasoline for the same month inched up by 0.27¢ to $1.4192/gal. The expiring July natural gas contract dipped by 0.4¢ to $6.68/Mcf on NYMEX, "ahead of typically soft holiday weekend demand and milder weather forecasts for next week," said analysts Thursday at Enerfax Daily.

"The Memorial Day holiday is typically a low-demand period," they said. However, analysts said, "News early this week of three unexpected nuclear plant outages in New Jersey, Ohio, and Virginia helped underpin the [natural gas spot] cash market, even as temperatures moderated." Those nuclear plants remained shut down Wednesday.

Early Thursday, EIA reported 89 bcf of natural gas were injected into US underground storage during the week ended May 21, compared with injections of 85 bcf the previous week and 95 bcf a year ago. US natural gas storage now stands at almost 1.5 tcf, up by 392 bcf from the same time a year ago but 2 bcf below the 5-year average for that time of year.

In London, the July contract for North Sea Brent crude lost 36¢ to $37.08/bbl Wednesday on the International Petroleum Exchange. Gas oil for June delivery gained $2.25 to $325.75/tonne. The June natural gas contract lost 2.8¢ to the equivalent of $3.89/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes declined by 37¢ to $36.99/bbl Wednesday.