MARKET WATCH
London bombs deflate energy prices

Sam Fletcher
Senior Writer

HOUSTON, July 8 -- The July 7 terrorist bomb blasts that killed at least 49 people and wounded hundreds more in London also blew energy futures prices off the record highs set in the previous trading session.

With the first news of the attacks, the August contract for benchmark US light, sweet crudes plummeted from an intraday high of $62.10/bbl to a low of $57.20/bbl before rebounding to $60.73/bbl, down just 55¢ for the day, on the New York Mercantile Exchange.

Some traders obviously feared that the terrorist attacks on three subway trains and a bus would trigger at least a general fear of travel, if not an economic downturn, that would affect global demand for energy. Crude prices fell 40% in the months following the Sept. 11, 2001, terrorist attacks on New York and Washington, DC.

However, Paul Horsnell, Barclays Capital Inc., London, reported July 8, "There are times when a market response should not be over-rationalized. That [July 7] response is typical of what a fairly febrile market can do when faced with a shock, and the sharp fall was a major overshooting. In our view, to have at the time put that response down to views on the likely impacts of global growth and oil demand would have been at best disingenuous."

Some said energy markets also were adversely affected by a large build in commercial US inventories of distillate fuel during the week ended July 1(OGJ Online, July 7, 2005).

Hurricane strengthens
Meanwhile, Hurricane Dennis, a powerful Category 4 storm with sustained winds of 150 mph, was still strengthening as it approached Cuba on July 8. Although forecasters expect the storm to weaken slightly after making landfall in Cuba, it still will be a major hurricane when it enters the Gulf of Mexico.

The National Hurricane Center in Miami, Fla., said the storm still threatens the US Gulf Coast from Florida to Louisiana.

The US Minerals Management Service said 81 offshore platforms and 35 rigs were evacuated ahead of the hurricane as of July 8. It said production of 220,326 b/d of oil and more than 1 bcfd of natural gas had been shut in. The MMS may close its Gulf of Mexico regional office in New Orleans on July 11 because of the storm, officials said. Meanwhile, it has activated a continuity of operations plan that involves opening a temporary office in Houston.

Other energy prices
The September contract for US crudes lost 45¢ to $61.68/bbl July 7 on NYMEX. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by 55¢ to $60.74/bbl. Heating oil for August delivery lost 1.99¢ to $1.77/gal on NYMEX. However, gasoline for the same month continued climbing to a new record closing of $1.81/gal, up by 1.57¢ for the day.

The August natural gas contract plunged by 29¢ to $7.40/MMbtu, "hit by a steady stream" of profit taking after a 3-day run up in prices. Those holding open purchase positions that obligates the holder to take delivery on contracts "bailed on concerns that the storm track for Hurricane Dennis might be shifting east towards Florida and away from the natural gas platforms" in the central Gulf of Mexico, said analysts July 8 at Enerfax Daily.

In London, the August contract for North Sea Brent crude lost 57¢ to $59.28/bbl on the International Petroleum Exchange.

The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes inched up by 2¢ to $54.82/bbl on July 7.

Contact Sam Fletcher at samf@ogjonline.com

Related Articles

Deloitte studies oil supply growth for 2015-16

02/16/2015 A Deloitte MarketPoint analysis suggested large-field projects, each producing more than 25,000 b/d, could bring on 1.835 million b/d in oil supply...

MARKET WATCH: NYMEX crude oil price jumps more than $2/bbl

02/13/2015 Crude oil prices on the New York market jumped by more than $2/bbl Feb. 12 to settle above $51/bbl, which analysts attributed to more oil and gas c...

Apache’s 2015 capital budget less than half of last year’s $8.5 billion

02/12/2015 Apache Corp., Houston, plans a capital budget of $3.6-4 billion in 2015, with $2.1-2.3 billion directed toward onshore North America and $1.5-1.7 b...

Total reduces budget by 10% to $23-24 billion

02/12/2015 Total SA plans to lower its organic investments to $23-24 billion in 2015 from $26.4 billion in 2014 by reducing spending in brownfield development...

MARKET WATCH: NYMEX crude prices drop back below $50/bbl

02/12/2015 The New York Mercantile Exchange March crude oil contract dropped $1.18 on Feb. 11, closing at $48.84/bbl. The April contract dropped $1.15 to $50....

US House vote sends Keystone XL approval bill to Obama’s desk

02/12/2015 The US House of Representatives voted by 270 to 152 to pass S. 1, which would deem the proposed Keystone XL crude oil pipeline approved more than 6...

TransCanada challenges EPA’s comments on Keystone XL SEIS

02/11/2015 TransCanada Corp. responded to the Feb. 2 comment letter from the US Environmental Protection Agency on the US Department of State’s final suppleme...

PNR cuts capital spending nearly in half

02/11/2015 Pioneer Natural Resources Co. (PNR), Dallas, plans to spend $1.85 billion in 2015 following a fourth quarter in which the company reported a net in...

PACE survey finds 69% support for crude exports to trading partners

02/11/2015 More than two thirds of registered voters responding in a nationwide telephone survey commissioned by Producers for American Crude Exports (PACE) s...
White Papers

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by
Available Webcasts

On Demand

Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


The Future of US Refining

Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected