Crude oil futures prices ease despite approaching storm

By OGJ editors
HOUSTON, Aug. 11 -- Crude oil futures prices eased in trading Tuesday on the New York Mercantile Exchange, despite the approach of Tropical Storm Bonnie, churning her way northeast in the Gulf of Mexico and heading toward the Florida Panhandle.

The storm, south of the mouth of the Mississippi River on Wednesday, was expected to make landfall Thursday, said the National Oceanic and Atmospheric Administration.

NOAA noted that the storm could be upgraded to hurricane status late Wednesday or early Thursday.

The US Department of the Interior's Minerals Management Service reported that oil and gas companies were evacuating workers from the gulf. As of Wednesday, 108 platforms and 37 drilling rigs had been evacuated.

As a consequence, a cumulative total over Tuesday and Wednesday of about 419,000 b/d of oil and 2,048 MMcfd of natural gas production have been shut in. The shut-in oil and gas production is equivalent to about 25% and 17% of the daily production from the gulf, respectively.

World oil prices have been soaring based upon fear of terrorist attacks, disruptions to Iraqi crude exports, and OAO Yukos's financial troubles tied to back taxes. Yukos received a default notice for a $1.6 billion loan on Wednesday.

The Associated Press reported that Group Menatep, the holding company through which former Yukos CEO Mikhail Khodorkovsky and his associates control the company, was the creditor.

The notice of default doesn't automatically mean that the lender is calling for immediate repayment of the loan. Some analysts had predicted, however, that Menatep might use this loan as a way to force the company into bankruptcy, AP said.

Energy prices
The September contract for benchmark US sweet, light crudes closed Tuesday at $44.52/bbl, down by 32¢ on NYMEX. The October contract declined by 38¢ to $44.06/bbl.

On the US spot market, West Texas Intermediate at Cushing, Okla., lost 30¢ to $44.55/bbl. Heating oil for September delivery dropped by 1.58¢ to $1.1698/gal, while gasoline for the same month dropped by 0.52¢ to $1.2349/gal.

The September natural gas contract rose 9.8¢ to $5.79/Mcf Tuesday on NYMEX.

In London, the September contract for North Sea Brent crude declined by 28¢ to $41.28/bbl Tuesday on the International Petroleum Exchange. Gas oil for August delivery dropped by $13 to $374.25/tonne. The September natural gas contract declined by 4¢: to the equivalent of $3.88/Mcf on IPE.

The average price for OPEC's basket of seven crudes lost 4¢ to $40.00/bbl Tuesday.

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