Market watch: International energy prices tumble with economy concerns
International energy futures prices declined Tuesday as traders fretted over Iraq's resumption of crude exports as a weakening US economy dampens demand. After the close of trading, however, the American Petroleum Institute released a bullish report showing declines in US inventories of both oil and gasoline last week.
By the OGJ Online Staff
HOUSTON, Aug. 1 -- International energy futures prices declined Tuesday as traders fretted over Iraq's resumption of crude exports as a weakening US economy dampens demand.
After the close of trading, however, the American Petroleum Institute released a bullish report showing declines in US inventories of both oil and gasoline last week. API reported US oil stocks were down by 3.4 million bbl to a total 311.8 million bbl last week. Gasoline inventories fell by 2.9 million bbl to 212.3 million bbl, while home heating oil stocks increased by 1.4 million bbl to 121.9 million bbl.
The September contract for benchmark US sweet, light crudes lost 28¢ to $26.35/bbl in regular trading Tuesday on the New York Mercantile Exchange, and the October contract was down 29¢ to $25.77/bbl. But following release of the API report, both contracts rebounded in after-hours electronic trading to $26.79/bbl and $26.18/bbl, respectively.
Unleaded gasoline for August delivery lost 1.9¢ to 73.21¢/gal on the NYMEX, while home heating oil for the same month pulled back 0.86¢ to 69.73¢/gal. The September contract for natural gas gave up 5.7¢ to $3.30/Mcf.
Victor Burk, managing partner for the energy group at the Andersen financial firm, formerly Arthur Andersen, said Tuesday the 12-month NYMEX futures strip price for natural gas would have to drop below $2.50/Mcf to curb the strong increase in North American drilling activity that is expected to continue into 2002. "I don't think we'll see that (price drop) anytime soon unless there's a big slowdown in the US economy," he said (OGJ Online, July 31, 2001).
In London, North Sea Brent oil futures declined on the International Petroleum Exchange in a mix of technical selling and mistaken anticipation of a buildup in US inventories. The September Brent crude contract settled at $24.69/bbl, down 27¢ for the day after trading in a range of $24.67-$25.10/bbl. Brokers said that market probably has not bottomed out but that prices could stabilize around $24.50/bbl.
The September natural gas contract gained 1.5¢ to the equivalent of $2.46/Mcf on the IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes declined by 15¢ to $23.48/bbl on Tuesday.