Market watch, Feb. 8
Energy futures prices surged on international markets Wednesday as traders reacted to an American Petroleum Institute report that US gasoline stocks declined by 3.2 million bbl last week. Some analysts said the market overreacted, however, since the industry still has months to build inventory before the summer driving season.
By the OGJ Online Staff
HOUSTON, Feb. 8�Energy futures prices surged on international markets Wednesday as traders reacted to an American Petroleum Institute report that US gasoline stocks declined by 3.2 million bbl last week.
Buyers apparently disregarded other sections of that report, issued late Tuesday, that said distillate fuel stocks declined only 120,000 bbl while crude stocks were up more than 3 million bbl.
The March contract for unleaded gasoline jumped 3.55� to 92.25�/gal, while home heating oil for the same month gained 1.82� to 82.74�/gal on the New York Mercantile Exchange.
Some analysts said the market overreacted to the gasoline data since the industry still has months to build inventory before the summer driving season.
Benchmark US light, sweet crude for March delivery rose 92� to $31.27/bbl and the April contract jumped $1.23 to $30.98/bbl. Both eased back in after-hours electronic trading to $31.18/bbl and $30.82/bbl, respectively.
The March natural gas contract also surged by 47.1� to $6.24/Mcf on the NYMEX.
Such buoyant commodity prices indicate that demand for oil and natural gas remains strong for the foreseeable future, said William D. Sullivan, operations vice president for Andadarko Petroleum Corp., Houston, at a conference sponsored by the International Association of Drilling Contractors in Houston Wednesday.
�It looks like oil prices can�t be beat down with a stick,� he said. �No matter what happens in the market, they keep bouncing back to around $30/bbl.�
In London, North Sea Brent crude futures rose sharply in late trading on the International Petroleum Exchange. The Brent contract for March settled at $29.91/bbl, up $1.21 for the day, after trading at one point for $29.95/bbl.
The bullish market was seeking justification for further rallies, analysts said, but resistance at the $30/bbl level proved too strong.
The March natural gas contract increased by 4� to the equivalent of $3.67/Mcf on the IPE.
The average price for the Organization of Petroleum Exporting Countries� basket of seven crudes increased 53� to $26.90/bbl.
Chakib Khelil, Algeria�s energy minister, said at his weekly press conference Wednesday that it would be �inopportune� for OPEC members to consider any production change at this time.
It would be better to wait and see how the market evolves, said Khelil, who is also OPEC�s conference chairman. He expects world demand for oil to fall in the second quarter but rise again in the third quarter.
In a speech Tuesday in Sanderstolen, Norway, Ali I. Naimi, oil minister for Saudi Arabia, said $25/bbl is the right price for OPEC�s oil basket.
�We realize, however, that this cannot, or should not, be fixed for all times. In truth, the market decides what the price of oil will be at any given day and moment,� he said.