HOUSTON, Oct. 8 -- Talk of production cuts among ministers of the Organization of Petroleum Exporting Countries boosted crude prices back above $90/bbl on the New York market, ending a 13% price fall over the previous four sessions.
At one point, the price for front-month US benchmark crudes climbed just above $93/bbl in intraday trading on reports by the state-run Iranian news agency that a US military aircraft had been forced down after violating Iran's air space. However, the airplane later was identified as the property of a European aid agency.
Following "another bloodbath" in the equities markets Oct. 7 with corporate stock prices tumbling, analysts in the Houston office of Raymond James & Associates Inc. said Oct. 8 trading was "shaping up to be better." They said, "Overnight, the Federal Reserve stepped forward and cut the Fed funds rate by 50 basis points to 1.5%, as part of a coordinated set of central bank rate cuts also involving the European Central Bank, Canada, the UK, Sweden, and China. On the energy front, after eking out a gain yesterday, oil seems to have stabilized for now despite concerns that a global economic slowdown will hamper demand."
Hurricane recovery report
Meanwhile, the US Minerals Management Service said only 90 of the 694 manned platforms in the Gulf of Mexico were still without crews as of midday Oct. 7. All of the mobile rigs in the gulf are now manned. MMS said 44.8% of the normal daily oil production and 38.7% of the usual gas production from federal gulf leases are still shut in.
In its latest update of hurricane damage Oct. 6, MMS said 54 of the 3,800 offshore oil and gas production platforms were destroyed, up from an earlier estimate of 52. Previously reported production from the destroyed platforms was unchanged at 13,300 b/d of oil and 90 MMcfd of natural gas. There is no indication yet whether any of those platforms will be rebuilt.
In addition, MMS reported 35 platforms with extensive damage that may take 3-6 months to repair, up from 29 units previously reported. It also confirmed 1 jack up rig with extensive damage. MMS officials said another 60 platforms sustained moderate damage, up from 33 previously reported, and will take 1-3 months to repair. MMS reported 1 oil pipeline system and 8 gas transmission pipeline systems were damaged vs. just 6 damaged gas systems reported Sept. 4.
In other news, Connacher Oil & Gas Ltd., Calgary, has shelved plans to expand the capacity of its heavy oil refinery at Great Falls, Mont., to 35,000 b/d from 9,500 b/d.
The Energy Information Administration reported Oct. 8 commercial US crude inventories shot up 8.1 million bbl. to 302.6 million bbl during the week ended Oct. 3. That far exceeded the Wall Street consensus of a 1.9 million bbl build. Gasoline stocks escalated by 7.2 million bbl to 186.8 million bbl during the same week, yet remained below average for that time of year. Wall Street analysts were anticipating an increase of 1.4 million bbl. Distillate fuel inventories lost 500,000 bbl to 122.6 million bbl, vs. an expected decline of 400,000 bbl. Propane and propylene inventories increased by 2.8 million bbl to 60.9 million bbl.
Imports of crude into the US increased by 1.4 million b/d to 10.3 million b/d in the same week. The amount of crude put into US refineries increased 1.6 million b/d to 14 million b/d, with units operating at 80.9% of capacity. Gasoline production rose to 8.9 million b/d, while distillate fuel production increased to 4 million b/d.
The November contract for benchmark US light, sweet crudes gained $2.25 to $90.06/bbl Oct. 7 on the New York Mercantile Exchange. The December contract increased $2 to $88.71/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up $2.24 to $90.06/bbl. Heating oil for November rose 3.17¢ to $2.51/gal on NYMEX. The November contract for reformulated blend stock for oxygenate blending (RBOB) inched up 0.37¢ to $2.06/gal.
Natural gas for the same month lost 6.7¢ to $6.77/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 13¢ to $6.76/MMbtu.
In London, the November IPE contract for North Sea Brent crude was up 98¢ to $84.66/bbl. October gas oil fell $11.75 to $817.75/tonne.
The average price for OPEC's basket of 13 reference crudes dropped $1.53 to $80.04/bbl Oct. 7.
Contact Sam Fletcher at email@example.com.