Market watch: Energy futures prices are mixed on international markets

By the OGJ Online Staff

HOUSTON, Aug. 7 -- Energy futures prices were mixed Monday on international markets.

The September contract for benchmark US sweet, light crudes increased 12¢ to $27.74/bbl on the New York Mercantile Exchange, while the October contract rose 13¢ to $27.13/bbl. However, both contracts retreated slightly in after-hours electronic trading to $27.72/bbl and $27.09/bbl respectively.

Unleaded gasoline for September delivery dropped 0.11¢ to 77.54¢/gal Monday on the NYMEX. Home heating oil for the same month was down 0.06¢ to 72.56¢/gal. But the September contract for natural gas rebounded by 5.6¢ to $3.03/Mcf.

In his weekly exploration and production report, Robert Morris of Salomon Smith Barney Inc. estimated the American Gas Association will report injections of 80-90 bcf into US underground storage last week, up from 77 bcf the previous week. That will increase the year-to-year storage surplus to around 305 bcf, or about 15% above last year, compared with a 411-bcf storage deficit at the end of March, he said.

Meanwhile, some Gulf of Mexico production was temporarily shut in as Tropical Storm Barry made landfall along the eastern Gulf Coast over the weekend.

But US temperatures, measured in cooling degree days weighted by gas-fueled home cooling customers, were generally 13% higher last week and up 14% from the 10-year average, Morris reported.

In London, North Sea Brent crude futures prices rose but couldn't break through stiff resistance at the $26/bbl level on the International Petroleum Exchange. Brokers said that market is seeking bullish news to justify continuation of its recent rally.

A surprise drop in US inventories of oil and unleaded gasoline dramatically boosted market prices last week, and some traders are hoping for a repeat performance when the American Petroleum Institute issues its weekly inventory report after the close of trading today. However, some expect an increase in US oil stocks instead.

The September Brent contract closed at $25.83/bbl Monday, up 14¢ for the day after trading in the range of $25.60-$25.88/bbl on the IPE. The September natural gas contract dipped by 0.3¢ to the equivalent of $2.49/Mcf.

Algerian Energy and Mines Minister Chakib Khelil said Monday that the decision by members of the Organization of Petroleum Exporting Countries to increase production by 1 million b/d effective Sept. 1 has already had a positive effect on oil markets.

Khelil, who is also OPEC's conference president, said market speculators are purchasing crude, thereby easing pressures on stock levels and stabilizing prices. As a result, the price for OPEC's basket of seven oils is moving towards its targeted level of $25/bbl, he said.

However, that movement retreated slightly Monday as OPEC's basket price lost 15¢ to $24.33/bbl.