Market watch: Energy prices continue rally on futures markets
By the OGJ Online Staff
HOUSTON, Mar. 6�Braced by brisk winter weather in the Northeastern US, energy prices continued their renewed rally on international markets Monday.
Some traders also were concerned that severe fog lingering in the Gulf of Mexico might slow lightering of supertankers and constrict production of refined products, making it difficult to rebuild historically low inventories. The American Petroleum Institute�s weekly report, scheduled for release Tuesday after the New York Mercantile Exchange closes, is expected to show only a small increase in US oil stocks last week.
However, some analysts said the market bulls are only using the weather as an excuse to move prices out of their recent narrow range. Skeptics doubt that the late winter weather will last long enough to boost demand significantly.
Based on compilations of heating degree days, US temperatures last week were 35% lower than during the same period a year ago and 12% below the 10-year average. Temperatures in the eastern half of the US are expected to remain below normal for the rest of the week, with western temperatures ranging from normal to above.
The April contract for benchmark US light, sweet crudes jumped 76� to $28.60/bbl Monday on the NYMEX, as the May contract moved up 68� to $28.59/bbl. Both contracts continued to climb in after-hours electronic trading to $28.64/bbl and $28.62/bbl, respectively.
Home heating oil for April delivery also surged by 1.56� to 74.08�/gal in anticipation of increased demand, while the April contract for unleaded gasoline rose 0.78� to 88.17�/gal. Natural gas for the same month increased by 6.6� to $5.34/Mcf on the NYMEX.
Robert Morris at Salomon Smith Barney Inc. predicted the American Gas Association would report withdrawals last week of 75-90 bcf of gas from US underground storage on top of the outtake of 101 bcf the previous week. �Consequently, the year-over-year storage deficit should narrow to 375 bcf, or around 32% below last year, with 4 weeks left in the withdrawal season,� he said.
In London, North Sea Brent crude futures rallied in late trading on the International Petroleum Exchange behind the increased NYMEX activity. The April Brent contract gained 71� to $26.71/bbl Monday. However, the April natural gas contract lost 2� to the equivalent of $3.41/Mcf.
On the Singapore exchange, the April contract for Brent crude rose 71� to $26.70/bbl. The May contract rose 60� to $26.68/bbl.
The average price for the Organization of Petroleum Exporting Countries� basket of seven crudes rose by 50� to $24.52/bbl Monday.
But OPEC officials said the basket�s average price for last week declined to $24.07/bbl from $24.79/bbl the previous week. So far this year, the basket price has averaged $24.66/bbl, down from $27.60/bbl for 2000 overall.
