Market watch: Low gasoline supply hikes energy futures prices
Concerns over tight US gasoline supplies at the start of the summer driving season triggered jumps in international energy futures prices Thursday. The June contract for benchmark US sweet, light crudes shot up $1.15 to $28.44/bbl on the New York Mercantile Exchange.
By the OGJ Online Staff
HOUSTON, Apr. 27 -- Concerns over tight US gasoline supplies at the start of the summer driving season triggered jumps in international energy futures prices Thursday.
The June contract for benchmark US sweet, light crudes shot up $1.15 to $28.44/bbl on the New York Mercantile Exchange, while the July contract rose 90¢ to $28.69/bbl. However, the June contract eased back to $28.41/bbl during after-hours electronic trading with the July position unchanged.
Unleaded gasoline for May delivery jumped 2.39¢ to $1.1042/gal Thursday on the NYMEX. Home heating oil for the same month increased 2.32¢ to 77.62¢/gal. But the May natural gas contract dropped 9¢ to $4.89/Mcf.
In London, North Sea Brent oil futures rallied strongly on the International Petroleum Exchange in response to the tightening US gasoline market. As prices pushed past $27/bbl in that market, technical buying procedures were triggered, increasing the rise.
The June Brent oil contract settled at $27.60/bbl Thursday, up 78¢ for the day, after trading in the range of $26.90-$27.95/bbl.
With strong demand for gasoline pulling the market, analysts said $28/bbl is a realistic target for Brent crude.
The May natural gas contract gained 4¢ to the equivalent of $3.35/Mcf on the IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes increased by $1.32 to $25.69/bbl Thursday.
Still, the UN Conference on Trade and Development (UNCTAD) in Geneva predicted that world demand for oil will ease over the next 12 months and that the average price might fall below $20/bbl this year, barring any supply disruptions.
In its annual trade and development report, UNCTAD noted that, while oil stocks have increased, they are still at relatively low levels, contributing to continued market fragility and price volatility.
World oil prices still depend primarily on OPEC's production policies. "With the exception of Kuwait, Saudi Arabia, and the United Arab Emirates, whose combined spare production is estimated to be about 3-4 million b/d, all other countries have been producing at full capacity," UNCTAD officials reported.
They called for bolder policies and cooperation among all the major economies.