Market watch: Energy futures fall again

After a short recovery Tuesday, energy futures prices on the New York Mercantile Exchange fell Wednesday. Trading was mostly in reaction to a bearish inventory report released by the American Petroleum Institute after the end of the Tuesday trading session.

Nov. 29, 2001

2 min read

By the OGJ Online Staff

HOUSTON, Nov. 29 -- After a short recovery Tuesday, energy futures prices on the New York Mercantile Exchange fell Wednesday.

The January contract for light, sweet crude, the US benchmark, fell 26¢ to rest at $19.22/bbl, while the February contract fell 14¢ to close at $19.50/bbl. In after-hours electronic access trading, the January contract brought $19.30/bbl and the February contract $19.58.

Refined petroleum products also closed lower, with December home heating oil losing 0.85¢ to rest at 53.09¢/gal, while unleaded gasoline for the same month declined by 1.03¢ to end at 52.78¢/gal.

NYMEX natural gas for December delivery gave back 2.9¢ to end at $2.32/Mcf.

Trading was mostly in reaction to a bearish inventory report released by the American Petroleum Institute after the end of the previous trading session.

API estimated that domestic distillate stocks, which include home heating oil, increased by 4.98 million bbl during the previous week, while gasoline inventories rose by 1.98 million bbl.

The stocks' rise was unexpectedly high, leading to selling by short-term traders.

Analysts stated that their only hope for the longer term recovery of the market lay in an agreement between Organization of Petroleum Exporting Countries and non-OPEC countries to cut production.

On a brighter note, Russia has pledged to cooperate with non-OPEC producers to stabilize oil prices, said Iranian petroleum minister Bijan Namdar Zangeneh Wednesday.

However, so far Russia has agreed to cut production by 50,000 b/d in January, only 20,000 b/d more than its previous pledge. Zangeneh said the Russian government can consider deeper cuts.

Meanwhile, in London Wednesday, oil prices were also hit by the unexpectedly bearish US stocks' report, coupled with forecasts of warmer weather in the key consuming areas.

Brokers said prices tested support at $18.50/bbl, which held, but would probably break in the near term.

On the International Petroleum Exchange, North Sea Brent crude for January settled at $18.69/bbl, down by 33¢ from the previous close. The day's high was $19.05 and the low $18.50.

Also on the IPE, the December natural gas contract fell 2¢ to close at the equivalent of $3.56/Mcf.

OPEC's basket of seven crudes stood at $17.61/bbl Wednesday, compared with $17.60 the previous day.