Oil Futures Continue to Fall; Natural Gas Prices Still Soar
It was another day of good news, bad news for consumers watching volatile energy prices, as U.S. crude oil futures plunged more than $2 a barrel to seven-month lows Wednesday while natural gas briefly approached its recent all-time high.
At the New York Mercantile Exchange, crude oil futures for February delivery slumped $2.19 to $25.77 a barrel.
But natural gas for January delivery rose 22.4 cents to $9.326 per million British thermal units, the standard measure for large trades, also on the Nymex. Prices during the session rose as high as $9.75, close to the intraday record of $9.86 reached Dec. 11.
January gasoline ended 4.40 cents lower at 72.64 cents a gallon. Heating oil for January delivery also fell, dropping 5.94 cents to 85.66 cents a gallon, as news of growing inventories offset continuing worries about harsh winter weather in the Northeast.
The sliding prices for oil and its distillates come as the Organization of Petroleum Exporting Countries considers cutting output when the cartel meets Jan. 17 in Vienna. U.S. President-elect George W. Bush, however, said Wednesday that he wants to work with OPEC to increase the cartel’s oil production.
“The quickest impact on the price of . . . crude oil will be to work with OPEC nations and to foster relations so that they may be convinced to open up their spigots to keep the pressure off prices,” Bush told reporters.
But OPEC is no doubt watching rising U.S. crude supplies: The Department of Energy said commercial crude oil stocks rose 3.1 million barrels last week, confirming the American Petroleum Institute’s data showing a rise of 2.4 million barrels.
Rising supplies follow OPEC’s four output boosts this year, as it sought to keep prices within a range beneficial for producers yet low enough to keep demand growing.
“OPEC will continue to learn a very hard lesson of how nettlesome it is to control the price of a commodity,” said John Kilduff, senior vice president of risk management at Fimat USA Inc. in New York.
In the case of heating oil, growing inventories may be a result of incoming cargoes from Russia, which have found their way into the U.S. in the face of milder weather in Europe.
But weather remains a critical factor in energy commodities markets, especially natural gas. Weather Services Corp. said Wednesday that temperatures in the Northeast will remain below normal through the weekend and the Midwest will remain in a deep freeze, with temperatures diving to 18 degrees below seasonal levels through Sunday.
“There’s another big wall of cold weather coming out of Canada,” said Shawn Reynolds, an oil and gas analyst at Goldman Sachs Group Inc. in New York. “Successive rounds of unusually cold weather,” he said, are pushing natural gas prices back toward record highs.
