Oil Prices Up, Natural Gas Prices Drop
WASHINGTON – Crude oil futures rose Thursday on worries about possible supply disruptions from Iran and Nigeria, while natural gas prices fell in response to data showing that winter supplies in the U.S. are ample.
Light sweet crude for March delivery on the New York Mercantile Exchange climbed 60 cents to $66.45 a barrel in afternoon trading. March Brent crude futures on London’s ICE Futures exchange rose 33 cents to $64.56 a barrel.
The rise in oil prices trickled over into motor fuels, sending unleaded gasoline futures more than 3 cents higher to $1.695 per gallon.
The market took a more bearish outlook on prices for home-heating fuels after the Energy Department said in a weekly report that domestic storage of natural gas stood at 2.49 trillion cubic feet at the end of last week. While the week-to-week draw of 81 billion cubic feet was larger than the market had anticipated, supplies are considered ample at 8 percent above year-ago levels and 22 percent above the five-year average for this time of year.
Moreover, the regions that consume much of the natural gas and heating oil in the U.S. have experienced above-normal temperatures so far this winter.
Nymex natural gas futures fell 26 cents to $8.20 per 1,000 cubic feet, while heating oil futures fell 1.56 cent to $1.775 a gallon.
However, unrest in Nigeria and instability in the Middle East, such as concern over Iran restarting its nuclear program, have led to worries over oil supplies, said PVM Oil Associates.
Nigerian President Olusegun Obasanjo vowed on Thursday to restore stability to the Niger Delta. Nine people were killed Tuesday in an attack on the offices of the Italian energy company Agip SpA, while other recent attacks on platforms and pipelines have killed dozens of civilians and soldiers.
Nigeria is Africa’s largest oil exporter and the unrest has cut 10 percent of its daily oil output.
Markets also remain concerned about the dispute between Iran – the second-largest oil producer in the Organization of Petroleum Exporting Countries – and the West over the restarting of its nuclear program. Iran insists the program is aimed at generating electricity, while the U.S. and several European countries fear it could lead to nuclear weapons.
In Iraq, bad weather has shut in exports from two of the nation’s offshore terminals in the Persian Gulf. The country’s southern oil production was reduced by 56 percent beginning Wednesday, an oil official said, according to Dow Jones Newswires.
The March Nymex crude oil contract had fallen more than $1 Wednesday as traders shrugged off the U.S. Energy Department’s supply report showing crude oil inventories fell by 2.3 million barrels to 319.1 million barrels. Those levels remain 11 percent above a year ago.