Market watch, Nov. 29

World energy futures plummeted Tuesday amid new predictions of warmer weather for both the United States and Europe next week, and reassurances from Iraq that it does not intend to disrupt exports under its oil-for-food program.


World energy futures plummeted Tuesday amid new predictions of warmer weather for both the United States and Europe next week, and reassurances from Iraq that it does not intend to disrupt exports under its oil-for-food program.

Fast moving fronts that dispelled previous expectations of colder weather triggered aggressive selling, especially on the New York Mercantile Exchange, analysts said. Traders reportedly seized upon the change in weather forecasts to get more movement into otherwise stagnant markets.

The January contract for benchmark US light, sweet crudes plunged $1.16 to $34.22/bbl on the NYMEX, as the February contract dropped $1.08 to $33.21/bbl. Both contracts continued to decline in after-hours electronic trading, down to $33.99/bbl and $32.99/bbl respectively, as the American Petroleum Institute reported increases in oil and distillates over last week.

In its report issued after the close of regular trading, the API said US distillate stocks, including home heating oil, increased by 1.63 million bbl last week. Crude stocks also expanded by 1.83 million bbl, while gasoline inventories were down 21,000 bbl.

Market analysts report inventories of home heating oil in the United States and gasoil in Europe remain at historic lows.

Nevertheless, in earlier trading on the NYMEX, the January contract for home heating oil dropped 6.15� to $1.0237/gal Tuesday, while unleaded gasoline for the same month was down 2.68� to 87.91�/gal.

The December contract for natural gas fell 35.2� to $6.02/Mcf on the NYMEX. Gas showed more volatility because Tuesday marked the last day of trading for that contract, analysts said. NYMEX officials also announced a raise in margins on its Henry Hub gas contracts at the close of business Tuesday.

In London, the January contract for North Sea Brent crude lost 87� to $32.19/bbl on the International Petroleum Exchange. The December natural gas contract also was down 10� to the equivalent of $4.20/Mcf on the IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes also lost $1.03 to $30.58/bbl.

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