Sam Fletcher
Senior Writer
HOUSTON, Oct.15 -- Energy futures prices soared to new heights Thursday after Purnomo Yusgiantoro, conference president of the Organization of Petroleum Exporting Countries, surprised traders with a prediction of additional price jumps.
"I believe that oil prices will continue to rise until the end of this month because demand is getting stronger," said Purnomo, who previously claimed that OPEC was taking action to bring prices down.
Meanwhile, other market analysts forecast that crude prices will hit $60/bbl in the next few months with the approach of winter in the US and Europe and continued supply disruptions. "Prices of around or even above $50/bbl will remain a fact of life for the foreseeable future. The market is very, very volatile," said Louis Hobika, head of the economics department at the American University in Beirut, in a report carried by OPEC's news agency.
"We need between 6-12 months before we feel the full impact of the prices," said Abdul Samad Al Awadi, a London-based oil consultant. "The driving force now is supply and demand, more than anything else. I expect prices to reach between $58-60/bbl if we have a cold winter."
Meanwhile, the US Minerals Management Service said Friday some 462,018 b/d of crude production and nearly 1.7 bcfd of natural gas production in the Gulf of Mexico remained shut in because of damage caused in mid-September by Hurricane Ivan. That is equivalent to 27.2% of normal daily oil production and 13.8% of normal daily gas production from the US sector of the gulf. MMS said cumulative production lost to Hurricane Ivan from Sept. 11 through Friday totaled 20.3 million bbl of crude and 86 bcf of natural gas.
Energy prices
The November contract for benchmark US light, sweet crudes Thursday hit a new peak of $54.88/bbl before closing at a record-high $54.76/bbl, up by $1.12 for the day, on the New York Mercantile Exchange, marking the eighth time crude prices reached new record highs within the last 2 weeks. The December position advanced by 92¢ to $54.06/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., gained $1.12 to $54.77/bbl.
Heating oil for November delivery jumped by 5¢ to a record $1.55/gal Thursday on NYMEX after the Energy Information Administration reported a larger-than-expected 2.5 million bbl drop in US distillates stocks to 120.9 million bbl during the week ended Oct. 8, less than a month before the Nov. 1 start of the winter demand season. (OGJ Online, Oct. 14, 2004). Gasoline for the same month increased by 1.13¢ to $1.42/gal.
The November natural gas contact dipped by 4.8¢ to $6.80/Mcf, however. That contract was "up early with some technical buying and a firmer cash (spot natural gas) market, but it lost ground after the EIA reported another large weekly inventory injection," said analysts Friday at Enerfax Daily. EIA reported Thursday a true physical injection of 74 bcf of natural gas into US underground storage for the week ended Oct. 8, including a 7 bcf reclassification of "working" gas into the "base" gas category. That compares with injections of 81 bcf the previous week and 77 bcf a year ago.
In London, the November contract for North Sea Brent crude increased by 79¢ to $50.84/Mcf on the International Petroleum Exchange.
The average price for OPEC's basket of seven crudes increased by 49¢ to $45.48/bbl Thursday.
Contact Sam Fletcher at [email protected]
