Market watch, Nov. 10

Energy futures prices rose strongly in trading Thursday on the New York Mercantile Exchange as forecasts of colder-than-normal winter weather in the United States rekindled traders' concerns about heating oil and other energy supply shortages. A report by the International Energy Agency in Paris, restating current concerns about the home heating oil stock situation, was quoted by analysts as the main reason for the upward move in heating oil futures.


Energy futures prices rose strongly in trading on the New York Mercantile Exchange Thursday as forecasts of colder-than-normal winter weather in the United States rekindled traders' concerns about heating oil and other energy supply shortages.

The December contract for benchmark light, sweet crude advanced by 68� to settle at $33.92/bbl on the NYMEX, while the January contract stood at $32.98, up by 70�.

Refined petroleum products also closed higher on the NYMEX, with December home heating oil rising by 5.66� to finish at $1.0159/gal, while unleaded gasoline for the same month edged up by 0.25� to rest at 87.66�.

NYMEX natural gas for December delivery improved by 10.7� to end at $5.45/Mcf of gas.

Heating oil led the market as it shot up on concerns about possible shortages during the winter season.

A report by the International Energy Agency in Paris, restating current concerns about the home heating oil stock situation, was quoted by analysts as the main reason for the upward move in heating oil futures.

Meanwhile, in London Thursday, North Sea Brent crude oil futures also improved on the International Petroleum Exchange, moving in sympathy with the rise in heating oil and natural gas prices on the NYMEX due to colder US weather.

Brokers said the weather provided the fresh bullish news the market had been looking for to spur prices. They noted that the focus of attention had returned to the historically low level of stocks of heating oil and the difficulty the US would have in maintaining adequate supplies without price spikes, even with rising imports.

On Thursday, IPE December Brent futures settled sharply higher at $32.16/bbl, up by 84� from the previous close. On the IPE, the December natural gas contract settled at the equivalent of $3.91/Mcf, up 7�.

However, the brokers said the rally in crude prices could soon falter, with prices falling back below $32/bbl on the strength of any surprise bearish news. That prediction came true Friday when futures slipped to test support at $32/bbl during morning trading on IPE due to a lack of buying interest. Prices drifted, but support appeared to be holding at midday.

Brokers said the direction of the market would likely be dictated by the sentiment expressed on the NYMEX, when floor trading resumed Friday. Follow-through selling on the NYMEX could easily break support and prices could drop quickly to around $31.50/bbl, they added.

Today, IPE December Brent futures were being traded at $32.04/bbl, down by 12� from Thursday's close.

The price of the Organization of Petroleum Exporting Countries' basket of seven crudes stood at $30.79/bbl Thursday, compared with $30.49 the previous day.

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