By the OGJ Online Staff
HOUSTON, Sept. 19 -- Energy futures prices plummeted Tuesday as international traders focused on a looming global recession, accelerated by a weakening US economy, that they fear will slash world demand for oil.
However, in his Tuesday oil market report, Paul Horsnell of JP Morgan Securities Inc., London, said. "Prices are still precisely where they have been every single day this year, i.e. within the OPEC band."
He said, "Trading may be nervous and intra-day volatile, but in no way have prices moved out of control."
The October contract for benchmark US sweet, light crude plunged $1.11 to $27.70/bbl on the NYMEX, while the November contract dropped $1.08 to $28.09/bbl.
In after-hours electronic trading both contracts increased slightly to $27.80/bbl and $28.17/bbl, respectively, in reaction to a bullish report of US inventories by the American Petroleum Institute.
US gasoline inventories fell by 4.2 million bbl last week, while US crude stocks were down by 377,000 bbl, API officials reported after the close of NYMEX's abbreviated trading session Tuesday.
US distillate stocks, including home heating oil and jet fuel, increased by 1.3 million bbl last week, however. A 20% decline in US commercial air traffic is expected to impact that market for several months, analysts said.
Home heating oil for October delivery plunged 6.27¢ to 74.43¢/gal during Tuesday's trading session on the NYMEX. Unleaded gasoline for the same month fell 3.85¢ to 79.32¢/gal, and the October natural gas contract was down 14.4¢ to $2.23/Mcf.
In London, North Sea Brent crude futures were virtually unchanged until midday on the international Petroleum Exchange, then dropped sharply in reaction to the NYMEX sell-off.
The November Brent contract lost $1.11 to $27.27/bbl. But the October natural gas contract increased by 4.8¢ to the equivalent of $3.13/Mcf on the IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes dropped 80¢ to $25.82/bbl.
Trade on the New York Mercantile Exchange was disrupted for more than an hour Tuesday morning by a phony bomb threat aboard a "water taxi" ferry docked outside its headquarters in the World Financial Center in Manhattan. The exchange was vacated as a precaution, with traders leaving the building in an orderly fashion. They returned to resume trading when investigators found no evidence of a bomb.
The threat came almost to the minute a week after terrorists flew two hijacked airliners into the twin towers of the adjacent World Trade Center. "There are only a few of us back in this area yet. You would think these nuts would leave us alone and let us get on with out work," a NYMEX employee told OGJ Online.