Energy traders took a break from selling down oil Friday, but sentiment remained bearish for prices as a warm winter continues. Nearby futures contracts for light, sweet crude were unchanged at $55.59 a barrel in recent trading on the New York Mercantile Exchange. Prices for natural gas were ahead by 1.1 cents at $6.173 per million British Thermal Units, also on the Nymex. A report from the Energy Information Administration showed the impact of the recent unseasonably warm temperatures, as stocks of natural gas totaled 3.074 trillion cubic feet as of a week ago, off only 47 billion cubic feet from seven days prior. Traders had been expecting larger declines. In the same period a year ago, inventories in the lower 48 states totaled 2.641 TcF. "It's primarily a weather play," says Max Pyziur, an energy analyst at CPM Group in New York. "Given that the near-term forecast over the next six to 10 days is calling for milder weather than expected, it would make sense for prices to stay at current levels or pull back." He also notes that Russia and Europe are also enjoying better weather than usual, which has dampened demand. Chart watchers also see the possibility of crude prices going down further. Look for initial support at $52 a barrel, followed by $47 and then a rock-solid level at $42, says Larry Levin, president of SecretsOfTraders.com in Chicago. On the upside, he sees increasingly tough resistance at $60, $64 and then $68.
For natural gas, he says, support should materialize in the range $5.20 to $5.25 and then $4. Resistance will likely become apparent at $8 and then $9. Levin adds that for the most part the technicals are taking something of a back seat to climate issues, as well the promised OPEC cuts that have thus far failed to materialize. Analysts were fairly active in moving on the energy stocks before the floor session began. Goldman Sachs initiated coverage of Atmos Energy ( ATO) with a neutral rating. The stock drifted lower on the news, off 1.6% recently. Credit Suisse upgraded shares of EOG Resources ( EOG) to neutral from under-perform, and the stock was bouncing 1.8%. Lehman Brothers dinged Exxon Mobil ( XOM) down to an equal-weight rating from overweight, but the stock was still up 0.6% in afternoon action. Elsewhere, Prudential trimmed its expectations on a basket of companies in the sector. Most notably, it slashed its price targets on Pioneer Natural Resources ( PXD) and Anadarko Petroleum ( APC) by more than 10% each. The firm reiterated its ratings of neutral on Pioneer and underweight on Anadarko. The stocks were down 0.2% and up 0.3%, respectively.