HOUSTON, Aug. 23 -- Storm activity in the Gulf of Mexico and the Atlantic Ocean helped push up US natural gas prices on Aug. 22.
The September natural gas contract jumped by 45.3¢ to $9.56/MMbtu on the New York Mercantile Exchange. Other energy commodities were mixed, with the expiring September crude futures contract gaining on NYMEX.
US natural gas futures prices were "driven higher by a rising cash market on storage buying, short-covering [of open sales contracts on NYMEX], and concerns about rising storm activity, all backing the gains despite milder weather this week that should lower demand," said analysts at Enerfax Daily.
"Reports of storm activity this week in the Bay of Campeche in the Gulf of Mexico and in the southern Atlantic near Hispaniola served as a reminder that the peak of the hurricane season in September is still ahead," they said.
The National Hurricane Center said the short-lived tropical storm Jose dissipated overnight over Mexico. But forecasters are now watching two other storms, including an area of clouds and showers extending from eastern Cuba and Hispaniola across the southeastern Bahamas and other islands. That could develop into a tropical depression by Aug. 24, they said.
A second area is associated with a large tropical wave over the eastern Atlantic 700 miles west of the Cape Verde Islands that could develop into a tropical depression in the next few days.
Meanwhile, as government officials opened talks with protestors in Ecuador on Aug. 22, oil companies resumed some of the oil production that was curtailed last week by civil unrest (OGJ Online, Aug. 22, 2005). State-owned Petroecuador said it increased production in the provinces of Orellana and Sucumbios by 65% to 90,000 b/d vs. normal production levels of 201,000 b/d. EnCana Corp. of Calgary said its production is up an unspecified amount from the 55,000 b/d it was producing on Aug. 19, but still below its normal production of 78,000 b/d.
The protestors called for a 24-hour truce to negotiate with government agents in Quito, Ecuador. According to news reports from Ecuador, the protestors want EnCana and US-based Occidental Petroleum Corp. to leave the country. They also insist that major international oil companies operating in that country pay 25% of their income tax directly to provincial and local governments for investment in local infrastructure.
In Nigeria, Royal Dutch Shell PLC said it has reactivated two oil flow stations that were shut in by protestors last week. Nigeria is the largest oil producer in Africa and the fifth largest exporter of crude to the US.
Other energy prices
The expiring September contract for benchmark US sweet, light crudes rebounded to $66.25/bbl during trading on Aug. 22 before settling at $65.45/bbl, up by 10¢ for the day, on NYMEX. However, the October crude contract slipped by 14¢ to $65.65/bbl. On the US spot market, West Texas Intermediate increased by 10¢ to $65.46/bbl. Gasoline for September delivery plunged by 4.23¢ to $1.86/gal on NYMEX. Heating oil for the same month was down by 1.12¢ to $1.81/gal.
In London, the October contract for North Sea Brent crude gained 14¢ to $64.50/bbl on the International Petroleum Exchange. Gas oil for September increased by $9.25 to $592.75/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes gained 57¢ to $58.10/bbl on Aug. 22.
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