12/31/07: BNS $93.85 a barrel, WTI $95.98
light, sweet crude for February delivery settled two cents lower at $95.98 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell 3 cents to $93.85 a barrel.
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Oil Futures Fall in Thin Trade,
End Year Higher by Nearly 60%
By GREGORY MEYER
December 31, 2007 3:42 p.m.
NEW YORK – Crude-oil futures closed out a roaring 2007 in subdued fashion Monday, ending flat in thin volume on the last trading day of the year.
After ranging more than $2, light, sweet crude for February delivery settled two cents lower at $95.98 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell 3 cents to $93.85 a barrel.
For the year, Nymex crude turned in an eye-popping performance: up 57.2%. That’s the largest annual percentage gain for the front-month contract since 2002, when Nymex crude climbed from $19.84 a barrel to $31.20.
“The percentage is massive,” said Peter Donovan, a vice president at Vantage Trading on the Nymex floor. “The dollar increase is even more massive.”
Since oil reached an all-time nominal intraday high of $99.29 a barrel on Nov. 21 it has traded above $85 a barrel, still more than the highs of any prior year. Because of global demand growth, a weaker dollar, global security concerns and steady production quotas from the Organization of Petroleum Exporting Countries, among other factors, many traders aren’t ruling out higher prices in 2008.
“There is potential for a dip, but overall the trend is still up,” said Tom Bentz, an analyst and broker at BNP Paribas Commodity Futures in New York. “At some point we will see $100 oil. It’s just a matter of time.”
On Monday, however, the market moved indecisively as traders squared positions before year-end. January contracts for heating oil and gasoline expired, and strength in those products supported crude, analysts said.
Worries about global politics drove prices as high as $96.78 a barrel early in the session, after Iran, the world’s fourth-largest oil exporter, announced it will start operating its first nuclear power plant next summer. As well, Turkish Prime Minister Recep Tayyip Erdogan said over the weekend that his country will press on with cross-border raids on Kurdish rebels based in Iraq, which exports several hundred thousand barrels a day across the border with its northern neighbor.
Prices then dove as low as $94.73 a barrel as the dollar gained against the euro, making dollar-denominated oil more expensive for buyers with other currencies. Assisting the greenback was a report by the National Association of Realtors that showed existing U.S. home sales rose by 0.4% last month.
“The dollar roared back. That’s why we fell out of bed,” said Michael Cambria of Eagles Futures on the Nymex floor.
The NAR also reported the median price of a previously owned home fell 3.3% to $210,200 in November from $217,300 in November 2006. Some saw this figure as a proxy for weakening oil demand ahead.
“As the price of your house devalues, you start to be more conservative about spending,” said David Beavers, a broker at Alaron Trading Corp. in Chicago.
Volumes were light before Tuesday’s New Year’s Day holiday, when markets will be closed. When traders return Wednesday, focus is expected to shift to the latest U.S. oil inventory data from the U.S. Energy Information Administration, due at 10:30 a.m. EST Thursday.
Analysts surveyed by Dow Jones Newswires on average foresee a 1.8 million-barrel draw in crude inventories, the the seventh straight weekly decline. They predict gasoline stockpiles to rise by 1.6 million barrels, distillate stockpiles to fall by 300,000 barrels and refinery use to rise by 0.4 percentage point to 88.5% of capacity.
“Although trading volume will not likely return to normal until next week, there should be plenty of news later this week to crank up volatility considerably as Thursday’s EIA stats could provide some bullish impetus,” said Jim Ritterbusch, president of Galena, Ill.-based energy trading advisory firm Ritterbusch and Associates, in a note to clients.
January heating oil rose 74 points, or 0.3%, to settle at $2.6444 a gallon. January reformulated gasoline blendstock, or RBOB, rose 1.61 cents, or 0.7%, to $2.4758 a gallon.
Write to Gregory Meyer at greg.meyer@dowjones.com