The front-month crude price dropped in truncated trading Oct. 29 in the New York market, wiping out gains from two earlier sessions, while natural gas recovered more than its previous loss before Hurricane Sandy struck New Jersey.
Floor trading was suspended for a second day Oct. 30 on the New York Mercantile Exchange because of the storm, but electronic trading operated normally. The New York Stock Exchange remained closed for a second day—its first multiday weather-related closure since 1888, said analysts in the Houston office of Raymond James & Associates Inc. reported.
Although Sandy had the lowest Category 1 hurricane rating, after coming ashore it collided with a jet stream sweeping arctic cold down over the US Northeast and a cold front moving west, dumping snow from Illinois to Pennsylvania, to create a “superstorm” that has crippled much of the country. Massive power outages were reported from Maine to the Carolinas, while a 14-ft storm surge flooded the financial district in Lower Manhattan.
Six East Coast refineries comprising 1.22 million b/d of the region’s total capacity of 1.29 million b/d shut down ahead of the storm. “This implies poorer crude oil demand, the proximate cause of current oil price weakness,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group. “Of course, the flipside of this is dwindling product supply, which has pushed product prices higher. However, the unknown at the moment is how the shutdown of East Coast transportation will affect product demand—this should contain any upside for product prices and is another negative for crude oil prices.” Schools, businesses, and industrial plants also were closed, reducing demand for other fuels.
Ground said, “With New York financial markets closed again today, we expect another day of relatively muted moves. In the absence of any solid direction, crude oil markets seem to be following euro-dollar movements.”
Energy prices
The December contract for benchmark US sweet, light crudes lost 74¢ to $85.54/bbl Oct. 29 on the New York Mercantile Exchange. The January contract dropped 75¢ to $86.05/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down 74¢ to $85.54/bbl in step with the front-month futures contract.
However, heating oil for February delivery increased 1.74¢ to $3.12/gal on NYMEX. Reformulated stock for oxygenate blending for the same month rose 5.77¢ to $2.76/gal.
The November natural gas contract escalated 7.1¢ to $3.47/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., climbed 6¢ to $3.41/MMbtu.
In London, the December IPE contract for North Sea Brent retreated 11¢ to $109.44/bbl. The WTI-Brent spread widened again, increasing to $23.90/bbl Oct. 29—“just short of the year-to-date high of $23.95/bbl,” Ground reported. Gas oil for November was up $2 to $970.50/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes decreased 40¢ to $105.97/bbl.
Contact Sam Fletcher at [email protected].
