Natural gas inventories down on week, still 15 percent above average

Crude oil prices fell again on Friday, bringing the weeks declines to almost 7 percent for Brent crude and close to 9 percent on West Texas Intermediate crude. The drop in prices was primarily the result of much lower than usual demand for heating oil due to mild temperatures in parts of the United States and a consequent surge in stockpiles. The National Weather Service now is predicting that the mild weather, especially in the northeast US, will persist until at least the middle of January.

The fall in prices leaves open the question of what the Organization of Petroleum Exporting Countries will do to try to support prices. A recent survey by Dow Jones Newswires shows that OPEC’s member nations have cut their output by around 500,000 barrels per day, much less than the agreement to cut production by 1.2 million barrels per day from the first of November. A second production cut is scheduled to go into effect on the first of February.

In afternoon trade, February contracts for Brent crude were 17 cents lower to $54.94 per barrel, their lowest price since November 2005. New York Mercantile Exchange February West Texas Intermediate crude was down 21 cents to $55.38 per barrel.

New inventory figures for natural gas, announced on Friday, showed a decline of 47 billion cubic feet in the week ending December 29, about what analysts had expected. However, with withdrawals from the stockpiles at less than half of the normal 100 billion cubic feet or more this time of year, total inventories are about 15 percent higher than normal at 3.074 trillion cubic feet. Prices for natural gas were down by about 3 percent over the week.

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