Market watch: US energy futures prices increase in nervous trading
By the OGJ Online Staff
HOUSTON, Jan. 17 -- Energy futures prices closed generally higher in volatile trading Wednesday on the New York Mercantile Exchange that reflected market uncertainties about possibilities for economic recovery and whether producers will reduce oil output.
The February contract for benchmark sweet, light crudes dipped 4¢ to $18.86/bbl, while the March contract increased the same amount to $19.48/bbl in regular trading on the NYMEX. In after-hours electronic trading, however, both positions advanced to $18.93/bbl and $19.55/bbl, respectively.
Home heating oil for February delivery gained 1.14¢ to 53.21¢/gal Wednesday. Unleaded gasoline for the same month was up 0.65¢ to 55.85¢/gal.
The February natural gas contract increased 10.3¢ to $2.39/Mcf following a report by the American Gas Association that 137 bcf of gas was withdrawn from US underground storage last week, exceeding the expectations of Wall Street analysts. That compares to withdrawals of 190 bcf the previous week and 103 bcf during the same period a year ago.
US temperatures last week generally were 10% higher than a year ago, 17% higher than the 10-year average, and 24% higher than the previous week. But an Arctic air mass may push into the eastern US late next week.
Meanwhile, US hydropower supplies are above year-ago levels and could reduce demand for natural gas in the Pacific Northwest and western regions of the country, said Robert Morris, energy analyst for Salomon Smith Barney Inc.
The National Oceanic & Atmospheric Administration recently forecast a possible El Niño event early this year that could affect US weather next fall and winter.
Both El Niño and increased use of hydropower could impact natural gas prices this year, said Morris. But gas supplies for the North American market will remain tight over the long run, he said.
In London, North Sea Brent crude futures temporarily broke through support at $19/bbl Wednesday on the International Petroleum Exchange in reaction to the American Petroleum Industry's report late Tuesday that US oil inventories increased by 4.1 million bbl last week.
That was more than twice the amount expected and triggered almost panic selling before a technical correction created a rebound, said London brokers.
The February Brent contract closed at $19.36/bbl, down 34¢ for the day after trading in the range of $18.94-$19.44/bbl Wednesday on the IPE. Brokers cautioned, however, that any further erosion of confidence in the ability of the Organization of Petroleum Exporting Countries and other nonmember producers to curb world oil supplies could spark another price drop.
The February natural gas contract also increased 9.2¢ Wednesday to the equivalent of $3.70/Mcf on the IPE.
The average price for OPEC's basket of seven benchmark crudes lost 22¢ to $17.75/bbl.