By OGJ editors
HOUSTON, Nov. 19 -- A relapse of Middle Eastern war-nerves among traders triggered a jump in energy futures prices on the New York and London markets Monday.
Energy futures prices fell last week amid market expectations that Iraq's acceptance of the United Nations Security Council's new resolution on the return of weapons inspectors to that country had at least postponed for many months the threat of armed conflict in the Middle East. But even as a lead team of UN inspectors arrived in Iraq on Monday to prepare for the Dec. 23 initiation of the inspection program (OGJ Online, Nov. 18, 2002), members of President George W. Bush's administration continued to express skepticism about that mission.
Some said Iraq might have already violated the UN resolution by firing on allied warplanes patrolling a "no-fly" zone in the north.
The hike in US energy market prices Monday also was aided by forecasts of below-normal temperatures for almost the whole country over the next week.
Natural gas futures prices soared above the $4/Mcf level once more, with the December contract shooting up 28.2¢ to $4.26/Mcf on the New York Mercantile Exchange. "New weather forecasts warned of a sustained, colder-than-normal winter, forcing prices near highs posted in late October," analysts at Enerfax Daily reported Tuesday. "Much of the buying and short covering came from locals who were caught by surprise on the entrenched cold-weather forecast with predictions of new cold weather into December."
Heating oil for December delivery jumped by 3.43¢ to 72.28¢/gal as the giant US Northeast market braced for increased cold. Those price surges came on the heels of Friday's increases of 11.2¢/Mcf for gas and 1.16¢/gal for heating oil.
The December contract for benchmark US sweet, light crudes surged by $1.20 to $26.71/bbl Monday on NYMEX, while the January position was up $1.09 to $25.80/bbl. Unleaded gasoline for December delivery jumped 2.21¢ to 71.94¢/gal.
In London, futures prices for North Sea Brent oil rallied sharply on the International Petroleum Exchange, with the January position gaining 93¢ to $24.28/bbl. The December natural gas contract, however, lost 12.4¢ to the equivalent of $3.58/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes regained 63¢ to $23.73/bbl Monday.