Market watch, Aug. 8
Energy futures markets weakened Monday as nervous traders took their profits from the earlier price run-up, prior to the release today of the American Petroleum Institute's report on last week's US stocks.
Energy futures markets weakened Monday as nervous traders took their profits from the earlier price run-up, prior to the release today of the American Petroleum Institute's report on last week's US stocks.
Short-term traders bid up the whole market after the previous API weekly report showed an unexpected drop in US crude stocks. However, the traders apparently were unsure if they could hold onto those gains when the next report is released after the New York Mercantile Exchange closes today.
US stocks of crude, home heating oil, and natural gas are at precarious points as the winter heating season approaches. Inventory numbers are being closely tracked by traders.
Meanwhile, US Energy Sec. Bill Richardson dismissed last week's rise in energy futures prices as a "little spike," rather than a trend.
The September contract for NYMEX crude oil dropped $1.05 to $28.91/bbl Monday, while the October contract pulled back 71� to $28.65/bbl. Both contracts continued to decline in after-hours electronic trading to $28.82/bbl and $28.55/bbl respectively.
The September contract for home heating oil plunged 3.64� to 78.21�/gal, while unleaded gasoline for the same month dropped 2.79� to 84.8�/gal.
However, the September contract for natural gas gained 5.2� to $4.35/Mcf.
In London, fear of a possible increase in US stocks also prompted traders to harvest their profits on the International Petroleum Exchange, bidding down the September contract for North Sea Brent by 85� to $28.52/bbl.
If today's API report shows an increase in US stocks, oil futures could drop another $1/bbl, said London brokers. However, if there is another drop in US stocks as predicted, that market could rally above $29/bbl, they said.
The September gas contract lost 8� Monday to the equivalent of $2.36/Mcf on the IPE.
On the Singapore exchange, the September contract for Brent crude oil closed at $28.44/bbl, and the October position was at $27.54.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes lost 74� Monday to $26.61/bbl.
