By the OGJ Online Staff
HOUSTON, Mar. 1�International energy futures markets faltered Wednesday with the bearish reaction among traders to the latest report on US petroleum stocks.
The April contract for light, sweet crude dropped 74� to $27.39/bbl on the New York Mercantile Exchange, while the May contract was down 63� to $27.50/bbl. However, both contracts improved in after-hours electronic trading to $27.46/bbl and $27.54/bbl respectively.
Unleaded gasoline for March delivery plunged 4.7� to 79.33�/gal on the NYMEX. Home heating oil for the same month fell 1.63� to 73.34�/gal. The April natural gas contract lost 4.3� to $5.236/Mcf.
The American Gas Association reported 101 bcf of gas was withdrawn from US underground storage during the week ended Feb. 23, up from 81 bcf the previous week and 74 bcf during the same period a year ago.
US natural gas storage now stands at 859 bcf, or 335 bcf lower than a year ago, said Robert Morris, senior energy analyst at Salomon Smith Barney Inc., in his weekly report. US temperatures last week were roughly 58% lower than a year ago. Temperatures are expected to be below normal across much of the central and eastern US this week, followed by a moderating trend across much of the country next week.
Meanwhile, Morris said, most of the idled North American ammonia plants have restarted because of the significant improvement in the spread between ammonia prices and implicit natural gas costs.
�Conservatively assuming 5 bcfd of lost demand due to fuel switching and other factors, and normal temperatures for the remainder of this winter, storage levels should exit March around 700-750 bcf versus 1 tcf last year,� Morris said. That should buoy gas prices this summer as the industry replenishes underground storage.
In London, North Sea Brent crude futures were trading at more than $26/bbl until midday Wednesday, when the bearish NYMEX market triggered a like reaction on the International Petroleum Exchange. The April Brent contract finished at $25.57/bbl, down 45� from the previous close after trading in the range of $25.50-$26.42/bbl.
Brokers said the previous small recovery to near $26.50/bbl had been precarious anyway. There is now some support at $25.50/bbl in that market, but it could be quickly broken, they said.
The April natural gas contract lost 8� to the equivalent of $3.35/Mcf on the IPE.
The average price for OPEC�s basket of seven crudes dipped 18� to $23.81/bbl on Wednesday.