Market watch: Energy prices plummet in pessimistic markets

By the OGJ Online Staff

HOUSTON, Jan. 15 -- Energy futures prices continued to plummet Monday on international markets that are increasingly pessimistic about the ability of the Organization of Petroleum Exporting Countries to curtail oil production.

Unexpectedly warm weather in the key Northeast US market has already created a surplus inventory of home heating oil. Although refiners are moving to curb additional production, market analysts expect the American Petroleum Institute's weekly report, to be released late Tuesday, will show a rise in US inventories of both crude and home heating oil.

If that happens, oil futures prices could fall another 50¢-$1/bbl before stabilizing and perhaps correcting to a somewhat higher level, analysts said.

The February contract for benchmark US sweet, light crudes dropped 79¢ to $18.89/bbl on the New York Mercantile Exchange among "abundant" rumors of overproduction this month by both OPEC and non-OPEC producers. The March contract fell 91¢ to $19.41/bbl.

In after-hours electronic trading, however, both contracts recouped some of that earlier loss to $19.10/bbl and $19.54/bbl, respectively.

Home heating oil for February delivery lost 2.28¢ to 51.66¢/gal Monday on the NYMEX. Unleaded gasoline for the same month was down 2.26¢ to 55.05¢/gal. However, the February natural gas contract gained another 4.6¢ to $2.25/Mcf.

In London, futures prices for North Sea Brent oil fell to the lowest level for a month, following NYMEX's lead in late afternoon trading on the International Petroleum Exchange.

The February Brent contract plunged $1.08 to $19.78/bbl on the IPE. The February natural gas contract also dipped 6.8¢ to the equivalent of $3.74/Mcf on the IPE.

The average price for OPEC's basket of seven benchmark crudes dropped 56¢ to $17.97/bbl Monday.

Oil futures prices fell by more than $1/bbl in overnight trading on the Singapore and Tokyo markets.