Sam Fletcher
Senior Writer
HOUSTON, May 14 -- Near-month crude and gasoline futures contracts continued setting new highs in prices Thursday on the New York Mercantile Exchange, with the market driven by low inventories of gasoline approaching the May 31 start of the peak summer driving season.
Traders also are worried about terrorist threats to oil production and export facilities in the Middle East. However, many analysts said that speculation by the cash-flush major investment funds has been a major factor in driving up energy prices in recent weeks.
Purnomo Yusgiantoro, conference president for the Organization of Petroleum Exporting Countries and Indonesia's energy minister, said the group is encouraging members to produce more crude than their current quotas in an effort to curb high prices.
He also said members will meet informally in Amsterdam next week to discuss Saudi Arabia's proposal that the cartel hike production by 1.5 million b/d to 25 million b/d at their next scheduled meeting June 3 (OGJ Online, May 13, 2004). Kuwait agreed to that plan, but most OPEC members have not yet decided whether to back it, said Purnomo.
He said members next week also will discuss a proposal to raise its target price from the $22-28/bbl range set in 2000.
Meanwhile, Dow Jones news services reported Thursday that Saudi Arabia is preparing to book more tankers to carry an extra 1 million b/d of crude to the US in July.
New highs for crude
The June contract for benchmark US light, sweet crudes increased by 31¢ to $41.08/bbl Thursday, the highest closing price in the 21 years that NYMEX has traded crude futures. In electronic overnight trading after the close of that session, the same contract hit an all-time high of $41.17/bbl, surpassing the previous record of $41.15/bbl set in October 1990 after Iraqi troops had occupied Kuwait.
The July crude contract gained 34¢ to $41/bbl Thursday on NYMEX. On the US spot market, West Texas Intermediate at Cushing, Okla., increased by 30¢ to $41.08/bbl. Although crude prices are now at record high levels, analysts said that, when adjusted for inflation, current prices are still at almost half the peak seen in the boom period of the early 1980s.
Gasoline for June delivery also hit a record high Thursday, up by 2.7¢ to $1.4005/gal on NYMEX. Over the last month, US demand for gasoline has averaged nearly 4% higher than during the same period in 2003 and is likely to remain higher than average through the summer driving season, analysts said.
Heating oil for the same month gained 0.95¢ to $1.0487/gal. The June natural gas contract increased by 0.75¢ to $6.48/Mcf, "with most months hitting new contract highs after another rally in crude oil futures," said analysts Friday at Enerfax Daily.
However, those analysts said the natural gas futures market "is again overbought and due for a pullback. Warm Northeast and Midwest [US] weather this week has been a supportive factor for the [spot natural gas] cash market, but moderating forecasts for next week could bring out some sellers."
In London, the June contract for North Sea Brent increased by 54¢ to $38.49/bbl Thursday on the International Petroleum Exchange. However, the new-month gas oil contract for June lost $5 to 321.75/tonne, while the June natural gas contract was down by 10.8¢ to the equivalent of $3.80/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes increased by 19¢ to $36.93/bbl Thursday.
Contact Sam Fletcher at [email protected]