HOUSTON, Aug. 4 -- Crude prices rebounded Aug. 1 after Israeli Deputy Prime Minister Shaul Mofaz warned that Iran may be nearing a breakthrough in its nuclear program, fanning market fears of a possible preemptive strike by US or Israeli forces.
Mofaz is Israel's transport minister, but he's also a former defense minister; he triggered another price jump in June when he said Israel "will attack" Iran if Iranians develop nuclear weapons. Iran did not respond to the Aug. 2 deadline for a United Nations proposal involving Iran's nuclear program, but European officials are ready to extend the deadline.
With the Aug. 1 increase, the front-month contract for benchmark US crudes up $1.84/bbl for that week. But crude prices generally took a beating in July, down $15.92/bbl overall for the biggest dollar loss for any month since crude has been trading on the New York Mercantile Exchange. On July 31, the front month September crude contract dropped more then 2% on NYMEX in what analysts described as the worst month for oil in percentage terms since December 2004.
"After 2 consecutive weeks of correction, West Texas Intermediate stabilized last week," said Olivier Jakob at Petromatrix, Zug, Switzerland. North Sea Brent crude "was not as strong," resulting in a loss of 34¢ per barrel during the week. "Heating oil was under continued correction and lost $4.75/bbl, while RBOB gasoline kept pace with WTI and gained $1.84/bbl for the week. Natural gas managed as well to hold and gained 2.9% on the week," Jakob said. Even with recent declines, crude prices still were up 29% over the first 7 months of 2008.
Meanwhile, energy prices were up in early trading Aug. 4, driven by fears of possible disruption of oil and gas supplies by Tropical Storm Edouard, which quickly formed Aug. 3 just 100 miles off Alabama The storm was still below minimal hurricane strength early Aug. 4 and was projected to make landfall Aug. 5 on the upper Texas coast, possibly in the Galveston-Houston area.
Although the tropical storm was close to major oil and gas production in the gulf, there apparently have been relatively few evacuations of offshore workers. Shell Oil Co. in Houston said Aug. 4 it would begin evacuation of 40 workers from the western Gulf of Mexico. While they will continue to monitor the storm, Shell officials said, "No further evacuations are planned at this time and based on current information and forecast, we do not expect any impact on Shell operated production in the Gulf of Mexico."
The National Hurricane Center issued a hurricane watch from Intracoastal City, La. to Port O'Connor, Tex., and a tropical storm warning from the mouth of the Mississippi River to Port O'Connor. However, analysts in the Houston office of Raymond James & Associates Inc. said, "The market is likely anticipating that the Iran issue will not prove to have a material impact on supply and that there will be minimal impact from Edouard."
The September contract for benchmark US light, sweet crudes gained $1.02 to $125.10/bbl Aug. 1 on NYMEX. The October contract advanced by 99¢ to $125.50/bbl. On the US spot market, however, WTI at Cushing, Okla., was down 82¢ to 123.26/bbl. The September contract for reformulated blend stock for oxygenate blending (RBOB) increased 1.34¢ to $3.08/gal on NYMEX. However, heating oil for the same month lost 2.25¢ to $3.44/gal.
The September natural gas contract climbed 27¢ to $9.39/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., lost 9.5¢ to $9.14/MMbtu.
In London, the September IPE contract for North Sea Brent crude gained 20¢ to $124.18/bbl. The August gas oil contract dropped $2.25 to $1,125.50/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 13 reference crudes was down $1.40 to $121.08/bbl on Aug. 1.
Contact Sam Fletcher at firstname.lastname@example.org.