Market watch: NYMEX reopens internet trade of energy futures

By the OGJ Online Staff

HOUSTON, Sept. 13 -- Directors of the New York Merchantile Exchange said they're making "every possible effort" to reopen trade of all major futures contracts for 2 hours Thursday afternoon through the internet-based version of the NYMEX access system.

NYMEX officials were still consulting with traders Thursday morning on exactly when that trading would resume. However, they said if that initial effort proves successful, they plan a 4-hour trading session Friday.

The planned sessions will include trade in futures contracts for US benchmark and North Sea Brent crude and US contracts for natural gas, gasoline, home heating oil, propane, electricity, gold, silver, and other metals.

Meanwhile, prices for Brent crude futures declined Wednesday on the International Petroleum Exchange in London from the initial jump immediately following the terrorist attacks Tuesday in New York and Washington, DC.

The October Brent contract closed at $28.02/bbl Wednesday, down $1.04 for the day after trading in ranges of $28-$29.50/bbl. It had jumped by $1.61 to a closing price of $29.06/bbl Tuesday after hitting a record high of $31.05/bbl at one point following the televised attacks by hijacked airplanes on the Twin Towers of the World Trade Center in New York and the Pentagon military headquarters in Washington. The October natural gas contract lost 6.3¢ to the equivalent of $3.07/Mcf on the IPE, however.

London brokers said crude futures prices in that market likely will stabilize around $27/bbl in the near term. However, they said traders are reluctant to hold substantial positions in case US officials quickly identify and move against those responsible for the terrorist attacks.

Energy prices would be too unpredictable in that case, analysts said, especially if the attacks are linked to a major oil producing country.

"Obviously, the impact on crude prices will depend on what type of response from the US and where that response is, but I think that if crude prices were to move up, that OPEC would reverse their Sept. 1 (1 million b/d) production cut, said Gene Gillespie, a market analyst with Howard, Weil, Labouisse, Friedrichs Inc.

"That would take care of any concerns about supply shortages. But inventory levels worldwide are adequate, particularly of product. I think refiners are going to continue to run pretty hard," he said.

Gillespie and other analysts also are predicting a near-term decline in US demand for energy.

"I think we are going to see demand for products like jet fuel worldwide decline. Right now there are no airplanes flying. I think we are going to be on a limited flight schedule for a period of time," Gillespie said. "So demand for transportation fuels, at least in this country, which is the largest consumer of transportation fuels, could be down pretty sharply in the short term, in the area of 10-15%."

Meanwhile, the energy ministers of Saudi Arabia, Kuwait, and the United Arab Emirates issued separate statements Wednesday pledging their commitment to fill any shortage in world oil markets. Obaid Bin Saif Al-Nasseri, the UAE minister of petroleum and mineral resources, also condemned the attacks on US targets, which he said would cause only temporary fluctuations in world oil prices.

US energy officials said Wednesday there are sufficient inventories of crude, gasoline, and heating oil in stock to meet foreseeable demand.

Nevertheless, hoarding and fears of potential shortages drove up retail gasoline prices in some US areas and produced lines of automobiles at some stations Wednesday. Several major refiners moved quickly to freeze gasoline prices at company-owned retail outlets and to wholesale distributors and independently owned stations to prevent a fly-up in pump prices.

The American Petroleum Institute said US gasoline inventories increased by 159,000 bbl to a total 194.6 million bbl last week, or 1.4 million bbl more than during the same period a year ago. US gasoline production increased to 8.2 million b/d last week, up 2.4% from last year, API officials said.

NYMEX officials earlier reported their trading facility in New York's World Financial Center was "fully operational" and would resume normal trading "as soon as it's safely possible" for participants to return to that area, just blocks from the World Trade Center.

Several analysts said that could occur by Monday, although search and rescue operations are still being conducted nearby.

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