ENERGY PRICES rose yesterday after sharp falls last week. Crude oil traded above $124 a barrel and natural gas again breached $9 per million British thermal unit, though analysts warned any recovery could be shortlived.
New data highlighted the impact of high oil prices - which hit $147.27 a barrel this month - on US domestic demand. The number of miles driven on US highways in May fell by a record 3.7 per cent on the same period last year, while the US government revised its May figures for oil demand, now down 4.3 per cent on the same period last year.
In a sign of weakening investor sentiment toward oil, the majority of speculators, or non-commercial investors, on Nymex shifted towards betting on lower prices for the first time in more than 16 months, according to the Commodity Futures Trading Commission (CFTC), the US regulator.
It revealed in its weekly report that non-commercial investors at Nymex were net short - bets on lower prices - by 3,640 contracts on the week ending on July 22nd. It is the first time since mid-February 2007 that speculators have shifted into a net short position.
Olivier Jakob, of Swiss oil consultancy Petromatrix, said the move into a net short position was a convincing one as it "was through both a liquidation of long positions and the addition of fresh short positions".
"Speculators are now net short in WTI whereas they have been for this time of the year always on the net long side over the last five years," Mr Jakob said.
Traders added that oil and natural gas producers continued selling futures and options in a bid to lock-in current prices, further weakening the energy market.
Nymex September West Texas Intermediate rose $1.16 to $124.45 a barrel. ICE September Brent rose $1.49 to $125.97 a barrel.
Gasoline and heating oil prices in New York and London also rose.
Traders said that $122 a barrel, the 100-day moving average, was critical. Nauman Barakat, of Macquarie Futures in New York, warned that a break below that level could trigger a "move down quickly closer to $110, at about the 200-day moving average". - (Financial Times service)
