Market watch: Prices generally decline with profit taking
By the OGJ Online Staff
HOUSTON, Feb. 12�Energy futures generally declined on international markets Friday as traders moved to lock in profits ahead of the weekend.
That sell-off followed 2 days of strong gains on the New York Mercantile Exchange that some analysts claimed were based on ill-founded perceptions of increased future demand. The lack of supply-and-demand fundamentals couldn�t support that rally, they said.
In his weekly report on independent exploration and production companies, however, Robert Morris, an analyst with Salomon Smith Barney Inc., said Monday that crude prices were essentially unchanged last week although US oil inventories remain only 2.5% above a 25-year low level.
�Meanwhile, natural gas prices have been quite schizophrenic this entire winter, often battered about by changing weather forecasts. In fact, a recent study indicated that the near-month NYMEX contract has exhibited an average daily movement of nearly 6% over the past 2 months,� he said.
The March contract for benchmark US sweet, light crudes lost 56� to $31.03/bbl Friday on the NYMEX, while the April contract was down 57� to $30.74/bbl. However, both inched up in after-hours electronic trading to $31.05/bbl and $30.80/bbl, respectively.
Unleaded gasoline for March delivery fell 2.86� to 90.11�/gal, while heating oil for the same month dropped 1.94� to 82.24�/gal.
However, the March natural gas contract gained 5.2� to $6.21/Mcf on the NYMEX.
In London, predictions of severely cold weather for key consuming regions of the US sparked a rise in oil futures prices early Friday on the International Petroleum Exchange. But profit-taking later triggered a sell-off.
As a result, the March contract for North Sea Brent crude settled at $29.25/bbl, down 59� for the day. The natural gas contract for the same month lost 13� to the equivalent of $3.70/Mcf.
That market remains bullish, however, with good support for a possible further rally, analysts said. Although resistance to $30/bbl has been strong on the IPE�s Brent crude market, they said, it might be broken if severe weather in the US triggers heavy buying of heating oil.
Some IPE investors are concerned about continued political problems in the Middle East and recent support for additional production cuts among some members of the Organization of Petroleum Exporting Countries, they said.
The average price for OPEC�s basket of seven crudes lost 69� to $26.98/bbl on Friday.
