"US crude inventory levels are currently 5% above the 5-year average," said analysts in the
Robert S. Morris, Banc of America Securities LLC, New York, said, "Oil prices started the week on a downward trend after supply fears that had stoked the market at the end of the prior week—when Saudi Arabia arrested 172 militants and thwarted a terrorist plot targeting its oil fields and oil infrastructure—eased." Otherwise, Morris said, "Last week"s US crude and product inventory report was largely in line with expectations while the Department of Energy suspended refilling the US Strategic Petroleum Reserve until at least the end of the summer driving season because recent bids were "too high and not a reasonable value for taxpayers.""
Meanwhile, Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland, noted, "The main fundamental [crude market] change this year vs. 2005 or most of 2006 has been the re-creation of the Organization of Petroleum Exporting Countries" spare capacity through quota reduction." He said, "When OPEC production was operating at full capacity, producers had little incentive to hedge; whereas nowadays the incentive is to hedge more of the production on flat price increases in order to front run any potential OPEC cheating. The resurgence of producer hedging will play a greater flat-price capping role than in the 2 previous years and was probably a factor in the failure of crude to break the resistance lines in the higher $60/bbl level."
Energy prices
The June contract for benchmark
The June natural gas contract dipped by 0.9¢ to $7.94/MMbtu on NYMEX. On the
"Also, despite a higher-than-expected natural gas storage injection figure last week, and with the traditionally weak seasonal shoulder period upon us, natural gas futures prices also seem to be looking ahead with the official start of both the Atlantic Basin hurricane season and summer less than a month away," he said. "Most prognosticators are calling for a more active-than-normal hurricane season and a warmer-than-normal summer."
In
The average price for OPEC"s basket of 11 benchmark crudes declined by 12¢ to $62.99/bbl on May 12. So far this year, OPEC"s basket of benchmark crudes has averaged $56.97/bbl vs. $61.08/bbl for all of 2006.
PIN/OGJ.COM
Your Comment