Sam Fletcher
Senior Writer
HOUSTON, Oct. 7 -- Crude futures prices continued to explore new heights Wednesday, with the November contract for benchmark US crudes jumping to an all-time peak of $52.15/bbl before retreating to a new record closing price of $52.02/bbl, up 93¢ for the day.
The market was jolted by new reports that it may take 3 months to restore Gulf of Mexico oil and natural gas production shut in by Hurricane Ivan, which went ashore in Alabama on Sept. 16. Wednesday, the US Minerals Management Service said 478,126 b/d of oil and 1.8 bcfd of natural gas production in the gulf were still shut in. That's equivalent to 28.1% of daily oil production and 14.6% of daily gas production from the US sector of the gulf. Cumulative production lost to the storm during Sept. 11-Oct. 6 totaled 16.1 million bbl of oil and 70.5 bcf of natural gas, MMS said
"Ivan brought US crude oil production down to a 54-year low in September, and we are beginning to wonder how bad the October number is likely to be. Indeed, we are even beginning to look a little anxiously at the prospects for the November number," said Paul Horsnell, Barclays Capital Inc., London.
No price cap apparent
Despite the recent rapid escalation of crude prices, Horsnell said, "There is no more of a suggestion now than there was at $40[/bbl] that a cap on prices is yet in place. So far, there has not yet been anything substantial enough in either fundamentals or the flow of news that could create a firebreak for the move up. Indeed, the revelation that $50 oil is perhaps not after all the shatterer of worlds simply creates more headroom and a greater level of comfort."
The US Energy Information Administration reported Wednesday that US commercial crude inventories increased by 1.1 million bbl to 274 million bbl in the week ended Oct. 1. Gasoline stocks rose by 600,000 bbl to 199.4 million bbl in the same period, but distillate fuel plummeted by 2.1 million bbl to 123.4 million bbl. "The culprit is, as before, Ivan and the reduction in refinery runs just as the seasonal heating oil inventory build should have been being rounded off," said Horsnell.
US distillate stocks currently are 6% lower than year-ago levels, said EIA. Meanwhile, the US National Oceanic and Atmospheric Administration released its winter outlook Wednesday, calling for lower-than-normal temperatures in the mid-Atlantic heating oil market.
Energy prices
The December crude oil contract gained 89¢ to $51.53/bbl Wednesday on NYMEX. Heating oil was up by 1.41¢ to a record $1.42/gal. Gasoline for the same month increased by 2.09¢ to $1.39/gal. However, the November natural gas contract lost 11.9¢ to $7.05/Mcf in profit-taking Wednesday, after hitting a record high of $7.23/Mcf in the previous session. Still, Horsnell said Wednesday, "US natural gas prices rose faster than prices for any other commodity over the past week."
In London, the November contract for North Sea Brent increased by 86¢ to $47.99/bbl on the International Petroleum Exchange.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes rose by 46¢ to $44.26/bbl Wednesday.
Contact Sam Fletcher at [email protected]
