Cold weather in eastern US keeps oil above $41/bbl

Cold weather in eastern US keeps oil above $41/bbl

New York (Platts)--14Dec2004


The first cold snap of the season in the eastern US boosted heating oil
futures on the New York Mercantile Exchange Tuesday, keeping NYMEX trade for
West Texas Intermediate crude above $41/bbl. NYMEX January crude was up 34 cts
to $41.35/bbl at 12:45 p.m. EST (1745 GMT), after reaching an intraday high of
$41.89/bbl. NYMEX January heating oil, after seeing a high of $1.2980/gal, was
up 3.2 cts at $1.2890/gal. IPE Brent futures were also up, by 78 cts, to
$38.62/bbl. The cold weather prompted short-covering and halted a price slide
that shaved nearly 40 cts/gal off the front-month heating oil contract over
the past month. Analysts were calling for a build of 1.3-mil bbl in distillate
inventories in this week's stock reports due out Wednesday from the Department
of Energy and American Petroleum Institute. Distillate inventories at
119.3-mil bbl last week were 12.8-mil bbl below year-ago levels and 9.4- mil
bbl below the five-year average, according to the EIA. Meanwhile, unleaded
gasoline was trading at $1.0980/gal Tuesday, off 32 points.

Analysts were also projecting a draw of 2-mil bbl in US commercial crude
inventories, while consensus estimates were for a 1.2-mil bbl build in
gasoline stocks. There was no obvious market response to Qatari Oil Minister
Abdullah al-Attiyah's remarks earlier Tuesday suggesting OPEC might move to
cut its 27-mil b/d official output ceiling when the group meets in January.
OPEC Dec 10 agreed to slash 1-mil b/d of leakage above its ceiling from the
beginning of January. Saudi Arabia has already followed through on its
commitment to the Cairo pact, telling customers that supplies would be cut
back. The Saudis, who have been pumping around 9.5-mil b/d for several months,
will cut output by around 500,000 b/d. In other news, Nigeria plans to
intervene in an ongoing dispute with Shell and ChevronTexaco that has cut
120,000 b/d of production from three flow stations. Norway's Statoil said it
expects to restart 205,000 b/d of North Sea crude production at its Snorre A
field in late December.

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