Market watch, Sept. 21

Energy futures prices closed mixed in trading on the New York Mercantile Exchange Wednesday.

The October contract for benchmark light, sweet crude jumped by 69� to settle at $37.20/bbl for October delivery, while the November contract stood at $35.24, up by 23�.

The NYMEX reacted bullishly to inventory numbers released by the American Petroleum Institute after Tuesday's trading session that stated US crude stocks fell by 2.04 million bbl to 286.58 million bbl during the previous week. That reaction also bolstered crude oil futures in London on the International Petroleum Exchange.

Refined petroleum products ended mixed, with October home heating oil losing 0.12� to rest at $1.0179/gal, while unleaded gasoline for the same month rose by 2.12� to finish at 98.45�. NYMEX natural gas for October delivery declined by 4.5� to settle at $5.32/Mcf of gas.

The API's weekly report came as a surprise to traders, who were expecting a slight increase in stocks during this period.

Distillate stocks, which include home heating oil, rose by 1.25 million bbl, while gasoline inventories declined by 21,000 bbl during the period. The nation's refinery production also fell as plants worked at 94.7% of capacity, compared with 95.5% during the previous week.

In London Wednesday, North Sea Brent crude oil futures settled higher on the IPE, largely due to the bullish reaction of the NYMEX market to the US oil stocks' report.

Brokers had been expecting a smaller fall, or even a slight build in crude stocks and a bigger increase in distillates than what appeared in the report.

Meanwhile, the October natural gas contract on the IPE jumped the equivalent of 27�, closing at $3.31. IPE November Brent futures settled at $34.74/bbl, up by 11� from the previous close and with $35 looking an achievable target if sufficient buying continues.

On the Singapore Exchange, Brent crude was down 54� to $33.74/bbl for November delivery, while the December contract fell 66� to $33.25.

An International Energy Agency report released Wednesday that estimated OPEC's spare production capacity at just over 2 million b/d, was also seen as a bullish sign by some players, since the market had pegged the organization's spare capacity at closer to 3 million b/d.

The price of the OPEC monthly basket of seven crudes rose from $27.94/bbl in July to $28.30 last month, according to the OPEC monthly oil market report.

Other highlights featured in this month's report include OPEC's global oil demand estimate for 2000, which now stands at 75.87 million b/d, revised downwards by 180,000 b/d from the previous report. The world demand figure for 2001 is projected at 77.33 million b/d, down by 180,000 b/d.

OPEC's balance of supply and demand in 2000 is expected to remain unchanged at 27 million b/d. For 2001, the figure is estimated at 27.50 million b/d. Non-OPEC supply for 2000 forecast is estimated at 45.95 million b/d, down 200,000 b/d from the last report.