Sam Fletcher
Senior Writer
HOUSTON, Sept. 17 -- Energy futures prices weakened Tuesday along with Hurricane Isabel, as traders decided that the storm—downgraded to a still powerful Category 2 from the top-rank Category 5 just a few days ago—poses less of a threat to East Coast refineries.
Although weakened over the last 36 hours, Isabel was still packing top winds near 110 mph about 425 miles south-southeast of Cape Hatteras, NC, the National Hurricane Center in Miami, Fla., reported early Wednesday. The storm was moving north-northwest at about 9 mph and is expected to hit the US coastline Thursday near Cape Lookout in North Carolina's Outer Banks, a 300-mile chain of barrier islands.
Weather experts said Category 2 storms can badly damage mobile homes, fell trees, and damage roofs, doors, and windows. Forecasters said Isabel could dump up to 10 in. of rain along its path. It still is a huge storm with hurricane-force winds extending 145 miles from its center. The US Census Bureau earlier reported that it ultimately could affect 50 million people in 13 states.
A hurricane warning was in effect Wednesday from Cape Fear, NC, northward to Chincoteague, Va., including Chesapeake Bay south of Smith Point, Va. A hurricane watch was in effect for the tidal Potomac and Chesapeake Bay north of Smith Point.
Energy prices
Unleaded gasoline for October delivery plunged by 2.47¢ to 83.46¢/gal on the New York Mercantile Exchange, as traders who had bought contracts on reports of a stronger storm rushed to unload those positions Tuesday, wiping out the previous session's 1.41¢/gal gain. Heating oil for the same month fell by 1.22¢ to 73.48¢/gal. Oil futures prices continued to decline, with the October contract for benchmark US light, sweet crudes falling 58¢ to $27.56/bbl and the November position down by 57¢ to $27.68/bbl.
The October natural gas contract dipped by 2.4¢ to $4.66/Mcf on NYMEX, "pressured by a late wave of selling when upside momentum stalled midday despite a stable cash market and still-wide spreads to winter," analysts said Wednesday at Enerfax Daily. That sell-off was "triggered by expectations Hurricane Isabel will have a bearish impact on demand. While Isabel could force some Mid-Atlantic nuclear units to ramp down or shut later in the week, boosting demand for natural gas, the storm should also bring milder East Coast weather," the analysts said.
In London, near-month futures prices for North Sea Brent oil fell to a 3-month low as the sell-off on NYMEX spread to the International Petroleum Exchange. Market bears had been looking for an excuse to sell heavily and thus break the futures market out of the tight price range in which it was locked earlier this week, analysts said.
The October Brent oil contract lost 56¢ to $25.91/bbl Tuesday on IPE. The October natural gas contract was down 1.8¢ to the equivalent of $3/Mcf in that market.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes declined by 20¢ to $25.59/bbl Tuesday.
Iraq embraces OPEC
Ibrahim Bahr al-Ulum, Iraq's newly appointed oil minister, will head a delegation to attend the meeting of OPEC ministers Sept. 24 meeting in Vienna, in a move to bring that country into closer cooperation with the organization it helped found.
In a statement issued this week, Al-Ulum said, "The removal of the Baath regime and its detrimental oil polices towards the oil industry in Iraq and elsewhere has opened the way for new constructive and more positive polices towards OPEC and the international oil community."
With Iraq's potential to again become a major oil producer and exporter, that country "will certainly play an increasingly dominant role in international oil affairs," he said. "It is with this in mind that we believe it will serve the interest of OPEC and that of all member countries, including Iraq, to be active in the organization's meetings and oil activities and thereby strengthening its role and objectives."
Iraq has not been a fully active member of OPEC since the United Nations imposed trade restrictions on that country in 1991, following military intervention to force Iraqi troops out of Kuwait. It has not been represented officially at OPEC meetings since US-led coalition forces invaded Iraq earlier this year.
Iraq's new 49-yar-old oil minister is the son of a member of the Iraqi governing council, Mohammed Bahr al-Ulum. He holds a petroleum minerals degree from the University of New Mexico and spent much of his life in London before returning to Iraq after US-led forces deposed Saddam Hussein in April.
Meanwhile, another OPEC member, Venezuela, claimed its oil production averaged 3.33 million b/d in August, including 2.97 million b/d of medium and heavy crude and the rest in extra-heavy crude, liquefied natural gas (LNG), and condensates.
Contact Sam Fletcher at [email protected]
