MARKET WATCH: NYMEX crude briefly tops $80/bbl

Paula Dittrick
Senior Staff Writer

HOUSTON, Sept. 13 -- The October contract for benchmark US light, sweet crudes briefly reached $80.18/bbl during trading on the New York Mercantile Exchange Sept. 12 before settling at a record $79.91, up $1.681 from the Sept. 11 closing price.

Analysts noted that oil remains below inflation-adjusted highs hit in early 1980. Depending on the adjustment, a $38/bbl of oil in 1980 would be worth roughly $100/bbl in 2007 dollars.

The escalating prices followed the US Energy Information Administration weekly inventory reports showing drops in oil and gasoline supply (OGJ Online, Sept. 12, 2007).

Earlier in the week, the Organization of Petroleum Exporting Countries announced plans to increase its production quota by 500,000 b/d, effective Nov. 1 (OGJ Online, Sept. 11, 2007).

"We believe the door to $80[/bbl] and beyond remains open and beckons," Barclays Capital analyst Paul Horsnell of London said in a research note on Sept. 12.

OPEC "probably should have increased by a tad more if there was a desire to keep the incursion above the $80/bbl reasonably limited," Horsnell said. Before the production increase announcement, OPEC production was expected to fall during November because of heavy field maintenance in the UAE.

Maintenance slated for the giant mature Lower Zakum and Upper Zakum oil fields off Abu Dhabi could reduce output by 600,000 b/d for 2-3 weeks, Horsnell said. Additional reductions from Umm Shaif field off Abu Dhabi are likely to bring the peak reduction total up to 800,000 b/d, he said.

"In all, an increase in output of 500,000 b/d from the rest of the OPEC 10 would do little more than cancel out the reduction in the UAE across November as a whole, and leave output fairly stable," Horsnell said. "It would then be December before the increase became significant, and January before that oil turned up in the market."

US Sec. of Energy Samuel Bodman called high oil prices "troublesome" while speaking to reporters in Washington, DC, after a Sept. 12 speech. He said was not concerned by oil inventory levels.

Hurricane Humberto
Meanwhile, daily energy prices were supported by concerns about a tropical depression that formed in the western Atlantic and become Tropical Storm Humberto.

It turned into Hurricane Humberto and was a Category 1 hurricane as it made landfall near High Island, Tex., the National Hurricane Center said. At 8 a.m. EDT on Sept. 13, Humberto was on the Texas-Louisiana border about 25 miles west-northwest of Lake Charles, La.

The Houston Ship Channel was closed on Sept. 12 in advance of the storm, and it remained closed before noon Sept. 13 pending improved weather conditions at its mouth in the gulf.

In Port Arthur, Tex., a power failure shut down Total Petrochemicals USA's 231,252 b/cd refinery early Sept. 13, but operations were expected to resume later in the day. Ship pilots shut traffic on the Sabine-Neches Waterway serving Beaumont and Port Arthur and on the Calcasieu Ship Channel serving Lake Charles.

Valero Energy Corp.'s Port Arthur refinery was down Sept 13 due to a power loss caused by Hurricane Humberto.

"Some power has been restored to the plant, but it will take time to assess the status of the production units and bring them back online. We don't have a timetable yet for when production will resume, but we are working to accomplish this as quickly as possible," Valero said.

IEA demand report
The International Energy Agency said world oil demand will grow slower than expected in the fourth quarter and next year.

In its monthly Oil Market Report, IEA said world demand would rise by 2.35 million b/d to 87.8 million b/d in the fourth quarter, 240,000 b/d less than it had expected last month.

IEA reduced its 2008 demand outlook to 88 million b/d, down 160,000 b/d. The agency said more downward adjustments are probable.

"It is likely that credit conditions in the US and other developed countries will tighten," EIA said. "Economic growth will probably suffer to some degree, conferring a downside risk to oil demand, but the impact is as yet very uncertain."

Energy prices
The November contract for US light, sweet crudes increased $1.54 to $78.54/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., soared $1.63 to $79.97/bbl.

The October contract for reformulated blendstock for oxygenate blending (RBOB) rose 3.49¢ to $2.016/gal on NYMEX. Heating oil for the same month rose 3.64¢ to $2.2191/gal.

The October natural gas contract climbed 50.4¢ to $6.438/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., rose 17¢ to $6.14/MMbtu.

In London, the October IPE contract for North Sea Brent crude $1.30 to $77.68, the highest since Aug. 7, 2006.

The average price for OPEC's basket of 11 benchmark crudes increased by $1.08 to $74.21/bbl on Sept. 12.

Contact Paula Dittrick at paulad@ogjonline.com.

Related Articles

MEG Energy cuts capital spending for 2015 to $305 million (Can.) from $1.2 billion

12/18/2014

MEG Energy Corp., Calgary, is reducing its 2015 capital spending plans to $305 million (Can.) from the original budget of $1.2 billion.

Severance tax would backfire, Pennsylvania association leaders warn

12/17/2014 Enacting a severance tax aimed at Pennsylvania’s unconventional natural gas activity would substantially harm the commonwealth beyond the industry ...

MARKET WATCH: Oil prices held steady on NYMEX awaiting crude inventory

12/17/2014 Oil prices held fairly steady on the New York market in Dec. 16 trading while Brent crude oil prices fell by more than $1/bbl on the London market....

Encana to focus spending on four core shale assets in 2015

12/16/2014 Encana Corp., Calgary, reported plans to spend $2.7-2.9 billion on its capital budget with roughly 80% of this total directed towards four of what ...

Cenovus trims budget, slows oil sands work

12/16/2014 Cenovus Energy Inc., Calgary, is trimming its capital spending in response to declining crude oil prices and will slow development of some of its t...

MARKET WATCH: Oil prices continue falling awaiting economic statistics

12/16/2014 Oil prices on the New York market dropped in Dec. 15 trading following reports of supply disruptions in Libya and awaiting reports of economic stat...

MARKET WATCH: OPEC basket price closes below $59/bbl

12/15/2014 The average crude oil basket price for the 12 members of the Organization of Petroleum Exporting Counties closed below $59/bbl on Dec. 12 while cru...

TAEP: TPI still peaking, but ‘contraction unavoidable’ as oil prices fall

12/12/2014 The Texas Petro Index (TPI), a composite index based on a comprehensive group of upstream economic indicators released by the Texas Alliance of Ene...

MARKET WATCH: NYMEX crude oil price extends slump

12/12/2014 Crude oil prices extended their slump on the New York market with a Dec. 11 settlement of less than $60/bbl for January, and prices continued downw...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


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