Natural gas futures price soars to new high

Natural gas prices leaped to new heights as the front-month contract closed above $15/MMbtu Dec. 13 on the New York Mercantile Exchange with predictions of cold weather in key US heating markets through at least Dec. 27.

Crude prices inched up after surging higher in the previous session in what Abdullah bin Hamad al-Attiyah, Qatar's oil minister, described as "an overreaction" to the Dec. 12 decision by ministers of the Organization of Petroleum Exporting Countries to maintain the official production ceiling of 28 million b/d adopted in June for the 10 OPEC members aside from Iraq. Some observers concluded that OPEC means to rein in its above-quota production, which has exceeded 2 million b/d in recent months and is currently pegged at 200,000 b/d (OGJ Online, Dec. 13, 2005). But OPEC officials ruled that out at least through December.

On Dec. 13, the International Energy Agency in Paris increased its estimate for growth in world oil demand to 1.79 million b/d in 2006 from 1.66 million b/d previously. Although IEA reduced its 2005 crude demand growth estimate by 20,000 b/d to 1.18 million b/d for an annual growth of 1.5%, it said annual consumption growth should average 1.8-2 million b/d through 2010 (OGJ Online, Dec. 13, 2005).

Energy prices
The January natural gas contract jumped by 53.7¢ to close at $15.38/MMbtu Dec. 13 on NYMEX, after climbing as high as $15.78/MMbtu during that session.

The January contract for benchmark US light, sweet crudes moved up by 7¢ to $61.37/bbl, while the February position advanced by 5¢ to $62.31/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up by 7¢ to $61.38/bbl. Heating oil for January delivery increased by 6.4¢ to $1.84/gal on NYMEX. However, gasoline for the same month dipped by 0.09¢ to $1.646/gal.

In London, the January contract for North Sea Brent crude rose 8¢ to $59.52/bbl on the International Petroleum Exchange. Gas oil for January gained $15.25 to $539/tonne.

The average price for OPEC's basket of 11 benchmark crudes escalated by 94¢ to $54.44/bbl on Dec. 13.