By OGJ editors
HOUSTON, Sept. 27 -- The oil futures price climbed on the New York Mercantile Exchange Sept. 26, settling above $80/bbl after a volatile trading session that ended with a rally.
The price rise came despite a report from the US Energy Information Administration earlier in the day showing an expected gain in crude inventories (OGJ Online, Sept. 26, 2007).
"Oil prices shook off the bearish inventory report and continued their bullish trajectory," said Wayne Andrews, an analyst with of Raymond James & Associates Inc. in Houston.
"Supporting oil prices is news of a tropical depression headed for Mexico," Andrews said. "However, it is expected that the storm will miss the Bay of Campeche where a significant amount of Mexico's oil production is centered."
Mexico's gulf coast was under a storm watch for a tropical depression. The US Hurricane Center was monitoring Tropical Storm Karen in the open Atlantic Ocean.
Karen had maximum sustained winds of near 65 mph with higher gusts as of early Sept. 27. Some weakening was forecast for the next 24 hr, the hurricane center said.
Natural gas activity
The Natural Gas Supply Association issued its winter outlook saying that gas rig activity averaged 10% above year-ago levels.
Gas production in the US Lower 48 is expected to increase to 51.3 bcfd this winter, which would be 1.2% higher than last year's heating season.
The association forecast a record inventory level of 3.45 tcf for the Nov. 1 start of the heating season.
Separately, EIA reported that gas inventories in underground storage increased by 74 bcf to 3.24 tcf for the week ended Sept. 21. The level is well above the 5-year average of 2.97 tcf, EIA said in its weekly report.
The November contract for benchmark US sweet, light crudes rose 77¢ to settle at $80.30/bbl Sept. 26 on NYMEX. The gain for the front-month contract followed a 3-day retreat. The December contract gained 25¢ to $78.86/bbl.
On the US spot market, West Texas Intermediate was down $1.33 to $80.31/bbl. Heating oil for October delivery rose 0.13¢ to $2.1826/gal on NYMEX. The October contract for reformulated blend stock for oxygenate blending fell 1.05¢ to $2.0274/gal.
The October natural gas contract rose 6.3¢ to $6.423/MMbtu on NYMEX. It was the last day of trading for the October contract. On the US spot market, gas at Henry Hub, La., dropped 4¢ to $6.47/MMbtu.
In London, the November IPE contract for North Sea Brent crude dropped 19¢ to $77.43bl.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes slipped by 69¢ to $75.11/bbl.