Market watch: Energy prices surge in international markets
Energy futures prices surged in international markets Wednesday as traders reacted to an unexpected sharp fall in US gasoline and crude stocks. Benchmark US light, sweet crude for April delivery gained 68� to $29/bbl on the New York Mercantile Exchange, while the May contract climbed 79� to $29.16/bbl.
By the OGJ Online Staff
HOUSTON, Mar. 8�Energy futures prices surged in international markets Wednesday as traders reacted to an unexpected sharp fall in US gasoline and crude stocks.
The American Petroleum Institute reported late Tuesday that US oil inventories fell by 3.9 million bbl last week, while gasoline stocks dropped by 1.1 million bbl. Distillate stocks also were down by 781,000 bbl.
Analysts blamed severe fog over the Gulf of Mexico that prevented tankers from unloading cargoes. But there were also reports that refiners were not buying crude in large quantities now, in expectation of lower prices in the future.
Benchmark US light, sweet crude for April delivery gained 68� to $29/bbl on the New York Mercantile Exchange, while the May contract climbed 79� to $29.16/bbl. In after-hours electronic trading, the two contracts were fetching $29.01/bbl and $29.15/bbl, respectively.
The April contract for unleaded gasoline jumped 2.44� to 91.64�/gal Wednesday. That�s in addition to a 1.02� increase Tuesday when gasoline bucked the downward trend among other NYMEX energy futures on reports of problems at the Tosco refinery in New Jersey.
Home heating oil for April also was up 1.08� to 74.14�/gal Wednesday, while the April natural gas contract rose 3.5� to $5.35/Mcf.
The American Gas Association reported withdrawals from US underground natural gas storage last week totaled 77 bcf, up from 37 bcf a year ago but at the lower end of the Wall Street�s expectations.
US temperatures last week were about 35% lower than a year ago and are expected to remain below normal levels in the east through next week as a new pocket of cold air pushes into that area. That could create an �unusually high late season heating demand,� Robert Morris of Salomon Smith Barney Inc. reported Thursday.
Meanwhile, near-parity between natural gas and fuel oil prices has reduced fuel switching. A significant increase in the spread between natural gas costs and ammonia prices also prompted the restart of most of the idled North American ammonia plants, said Morris.
As a result, he said, US natural gas storage levels �should exit winter at roughly 650-700 bcf compared to approximately 1 tcf last year.� That would buoy natural gas prices this summer as the industry rebuilds that storage.
In London, North Sea Brent crude futures rallied Wednesday on the International Petroleum Exchange in line with the NYMEX. The April Brent contract rose 75� to $27.23/bbl. However, the April natural gas contract lost 6� to the equivalent of $3.26/Mcf on the IPE.
The average price for the Organization of Petroleum Exporting Countries� basket of seven crudes gained 52� Wednesday to $24.88/bbl.