Sam Fletcher
Senior Writer
HOUSTON, May 5 -- After dipping to $110/bbl in the previous session, benchmark crude prices shot up more than $3/bbl May 2 in New York as Turkish warplanes attacked positions of the militant Kurdish Worker's Party (PKK) in northern Iraq.
That was the largest increase in a month. A Labor Department report that showed fewer-than-expected job losses in March, with 20,000 jobs eliminated instead of the 75,000 expected, helped buoy energy prices. The US jobless rate fell to 5% from 5.1% previously.
Still, West Texas Intermediate lost a total $2.20/bbl during the week from the Apr. 25 close of the New York market through the May 2 session, "mitigating some deeper mid-week losses, which made for a wide high-to-low range of close to $10/bbl," said Olivier Jakob at Petromatrix, Zug, Switzerland. North Sea Brent was closely in line with losses of $1.78/bbl, while heating oil was down $2.94/bbl, and the June contract for reformulated blend stock for oxygenate blending (RBOB) lost $3.36/bbl, Jakob said.
In other news, unknown assailants on May 2 attacked a flow station belonging to a subsidiary of Royal Dutch Shell PLC in southern Nigeria. Some oil production was reported lost as a result of the attack, but Shell provided no immediate details.
Meanwhile, with the Organization of Petroleum Exporting Countries struggling to increase oil production capacity, "overall growth in global oil supply appears barely sufficient to keep up with demand," said analysts in the Houston office of Raymond James & Associates Inc.
"Given the mature characteristics of much of non-OPEC oil production, it does not appear feasible that non-OPEC countries as a group will be able to deliver meaningful oil supply growth in the future. A permanent non-OPEC peak seems likely within the next 5 years. Non-OPEC growth is highly dependent on Russian growth and, given its current policy environment and recent production declines, Russia would do well to return to 2-3% growth," said Raymond James analysts. "Accordingly, the world is likely to continue in an environment of thin excess capacity for the foreseeable future. Given this tight supply-demand equation, threats of even minor supply disruptions are bound to have a large impact on oil prices."
Energy prices
The June contract for benchmark US light, sweet crudes escalated by $3.80 to $116.32/bbl May 2 on the New York Mercantile Exchange. The July contract gained $3.99 to $115.79/bbl. On the US spot market, WTI at Cushing, Okla., was up $3.80 to $116.32/bbl. Heating oil for June delivery rose 10.1¢ to $3.22/gal on NYMEX. RBOB for the same month climbed 8.82¢ to $2.97/gal.
The June natural gas contract jumped by 21.6¢ to $10.78/MMbtu. On the US spot market, gas at Henry Hub, La., dropped 9¢ to $10.48/MMbtu.
In London, the June IPE contract for North Sea Brent crude was raised by $4.06 to $114.56/bbl. The May gas oil contract jumped by $29.75 to $1,076.50/tonne.
The average price for OPEC's basket of 13 reference crudes gained $1 to $106.99/bbl on May 2. So far this year, OPEC's basket price has averaged $96.03/bbl.
Contact Sam Fletcher at samf@ogjonline.com
