Market watch, Nov. 22

Jitters over available natural gas supplies in the western US and the high cash market for that fuel in southern California pushed gas futures prices to a record Tuesday on the New York Mercantile Exchange. The December gas contract hit $6.51/Mcf on the NYMEX before closing at $6.41/Mcf, up 15.9� from the previous day.


Jitters over available natural gas supplies in the western US and the high cash market for that fuel in southern California pushed gas futures prices to a record Tuesday on the New York Mercantile Exchange, analysts said.

The December natural gas contract hit $6.51/Mcf on the NYMEX before closing at $6.41/Mcf, up 15.9� from the previous day.

The recent wave of slightly colder than normal weather strained gas supplies in several western states, where cold temperatures are again forecast for Thanksgiving weekend, said industry analysts.

The market remains bullish for gas. Robert Morris, senior energy analyst for Salomon Smith Barney Inc., earlier indicated a normal winter could plunge US gas storage levels to 600 bcf next spring, despite a projected 5.8% increase in gas production in 2001.

Even another record warm winter like the last three would leave gas storage near the March level of 1,000 bcf, he said, necessitating another heavy injection program next year. As a result, Morris is forecasting an average composite spot gas price of $4.25/Mcf through the coming year.

Other energy futures were mixed Tuesday. The January contract for benchmark US light, sweet crudes dipped 6� to $35.16/bbl on the NYMEX, while the February contracted was up 3� to $34.19/bbl.

However, both contracts declined to $34.85/bbl and $33.84/bbl, respectively, in after-hours trading following an American Petroleum Institute report of unexpected gains in US petroleum inventories the previous week.

The weekly API report, issued after the NYMEX closed, showed increases of 6.4 million bbl in crude inventories; 65,000 bbl in distillates, including heating oil; and 458,000 bbl in gasoline stocks last week. Many traders anticipated only a slight build in crude inventories and a drop in heating oil stocks because of strong demand, said market sources.

However, the December contract for home heating oil dipped 21� to $1.0941/gal on the NYMEX, while unleaded gasoline for the same month was down 31� to 91.66�/gal Tuesday. Some analysts attributed that decline to profit taking, following significant gains in the previous session.

In London, the January contract for North Sea Brent crude closed at $33.10/bbl, up 3� for the day, after trading as high as $33.48/bbl on the International Petroleum Exchange. The December natural gas contract also was up 23� to the equivalent of $4.53/Mcf on the IPE.

On the Singapore exchange, the January contract for Brent crude edged up 3� to $33.10/bbl; the February contract rose 3� to $32.48/bbl.

The price of the Organization of Petroleum Exporting Countries' basket of seven crudes was down 54� to $31.75/bbl Tuesday.

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