MARKET WATCHEnergy prices retreat in expectation of bearish inventory report
By OGJ editors
HOUSTON, Apr. 14 -- Energy prices retreated Tuesday amid market expectations that the US Energy Information Administration would report Wednesday a bearish increase in commercial US inventories of crude.
Those expectations prompted a selloff of futures contracts of crude and petroleum products, dampening the recent rally.
The May contract for benchmark US light, sweet crudes fell by 63¢ to $37.21/bbl Tuesday on the New York Mercantile Exchange, while the June contract lost 56¢ to $36.68/bbl. On the US spot market, West Texas Intermediate was down by 60¢ to $37.23/bbl.
After hitting a 10-year high on Monday (OGJ Online, Apr. 13, 2004), gasoline for May delivery lost 2.43¢ to $1.156/gal Tuesday on NYMEX. Heating oil for the same month was down by 1.27¢ to 92.97¢/gal. The May natural gas contract plunged by 22.1¢ to $5.79/Mcf Tuesday after touching a new high on Monday. "The rally seemed to run out of steam above $6/Mcf," said analysts Wednesday at Enerfax Daily. "The fundamentals, near-term, just don't justify these prices since storage is in good shape and there is little hot or cold weather around," they said.
In London, the May contract for North Sea Brent crude slipped by 15¢ to $33.19/bbl as the International Petroleum Exchange resumed trade Tuesday after being closed Friday and Monday for public holidays. Gas oil for May delivery gained $3.50 to $286.25/tonne. The May natural gas contract fell 9.5¢ to the equivalent of $3.69/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes fell by 32¢ to $32.60/bbl Tuesday. OPEC's basket price has remained above that group's avowed target of $22-28/bbl since Dec. 5, prompting some analysts to declare the cartel's price band mechanism as effectively defunct. That mechanism calls for members to adjust production quotas up or down by 500,000 b/d for each $1/bbl that the basket price remains above or below the group's targeted price level for 20 consecutive trading days.