Market watch: Oil futures prices surged prior to Easter holiday
By OGJ editors
HOUSTON, Apr. 1 -- Energy futures prices surged again Thursday, ending a short but eventful week as traders vacated New York and London markets over the long Easter holiday weekend.
"Starting out (last) week, oil price momentum looked to be waning after Vice-Pres. [Dick] Cheney's tour of the Middle East failed to win overwhelming support for military action against Iraq," said Robert Morris, an energy industry analyst for Salomon Smith Barney Inc., in a report Monday.
Cheney's efforts apparently were undercut by a diplomatic campaign by Iraq to forestall a potential US offensive by pledging never to invade Kuwait again. UN representatives are scheduled to meet with Iraqi officials Apr. 18-19 for a second round of discussions of the return of weapons inspectors to that country.
Meanwhile, Morris said, "Oil prices climbed to a new 6-month high later in the week after a much larger-than-expected draw in US crude oil and product inventories [even though imports were hampered by fog at the Houston Ship Channel] and after a Commerce department report showed that the US economy expanded more than previously thought in the fourth quarter of last year."
The May contract for benchmark US light, sweet crudes rose 44¢ Thursday to $26.31/bbl on the New York Mercantile Exchange, while the June contract gained 40¢ to $26.37/bbl.
Analysts reported that traders bought with zeal, apparently expecting the bullish trend to continue this week. There was no after-hours electronic trading because of the Easter holiday. Both the NYMEX and the International Petroleum Exchange in London were closed Friday for the public holiday.
Unleaded gasoline for April delivery was up 0.44¢ to 82.49¢ on NYMEX. Heating oil for the same month edged up 0.17¢ to 66.89¢/gal. But the May natural gas contract dipped 0.7¢ to $3.28/Mcf.
Overall, Morris said, "Natural gas prices edged higher [last] week despite a lower-than-expected storage withdrawal. Consequently, with only 1 week left to be reported in the traditional withdrawal season, storage will conclude this winter with its highest mark ever at the end of March."
He predicted in a separate report Monday that the American Gas Association later this week will report withdrawal of 35-45 bcf of gas from US underground storage during the week just ended. That would leave some 830 bcf more gas in storage than at the end of March 2001.
In London, the May contract for North Sea Brent gained 48¢ to $25.92/bbl Thursday after testing resistance at $26/bbl on IPE. However, the May natural gas contract lost 6.5¢ to the equivalent of $2/Mcf.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes gained 49¢ to $24.36/bbl.