Sam Fletcher
Senior Writer
HOUSTON, June 14 -- A strong rally in the heating oil market pushed crude futures prices back above $55/bbl on June 13 in the New York market.
Both heating oil and natural gas prices shot up as hot, humid weather over much of the eastern US turned up air conditioning demand. Heating oil for July delivery jumped by 5.57¢ to $1.66/gal on the New York Mercantile Exchange. Natural gas for the same month shot up by 32.8¢ to $7.26/MMbtu. That's the highest price levels in several weeks for near-month contracts in both of those markets, officials said.
"While Tropical Storm Arlene did blow through some key oil and natural gas producing areas in the Gulf of Mexico and forced several producers to shut in some supply [late last week], it never strengthened enough to do serious damage to offshore facilities," said analysts at Enerfax Daily. Most offshore producers resumed normal operations in the gulf by June 14. The US Minerals Management Service said 28 platforms and 5 rigs remained evacuated, with 56,445 b/d of oil and 416.2 MMcfd of natural gas still shut in June 13 after the storm went ashore June 11 near the Florida-Alabama line on the US Gulf Coast.
OPEC outlook
Meanwhile, the scheduled June 15 meeting of ministers of the Organization of Petroleum Exporting Countries will "likely have negligible impact on oil prices," said analysts June 14 at the Houston offices of Raymond James & Associates Inc.
"OPEC ministers say they may increase official output quotas by 500,000 b/d (to a total of 28 million b/d), although [OPEC Conference President Ahmad Fahad al-Sabah] of Kuwait admits the move would be little more than a political gesture to consuming countries who are worried about prices rising further," said Raymond James analysts. "Actual OPEC output for the 10 members with quotas [excluding Iraq] is already close to 28 million b/d and very little, if any, new oil is expected to reach the market."
They noted that Saudi Arabian Oil Minister Ali I. al-Naimi has said, "There is absolutely no shortage" of crude and that Saudi Arabia is unlikely to ramp up its production beyond its current level of 9.5 million b/d. Any incremental Saudi production would be "sour" crude with high-sulfur content and is not the type needed by refineries running short of light, sweet crudes.
"Refineries around the world have already been stretched to near-capacity, given the lack of incremental sweet production," analysts said. "Saudi Arabia, the only country with meaningful spare production capacity, is already pumping as much high-grade oil as it can. We continue to project that the low level of global excess capacity, in the face of steadily growing demand, will underpin robust oil prices for the foreseeable future."
Other energy prices
The July contract for benchmark US sweet, light crudes surged by $2.08 to $55.62/bbl June 13 on NYMEX, while the August contract was up by $2.14 to $56.82/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., gained $2.08 to $55.63/bbl. Gasoline for July delivery increased by 1.06¢ to $1.55/gal on NYMEX.
In London, the July contract for North Sea Brent crude rebounded by $2.11 to $54.78/bbl, wiping out the previous session's loss on the International Petroleum Exchange.
The average price for OPEC's basket of seven benchmark crudes inched up by 9¢ to $50.83/bbl June 13.
Contact Sam Fletcher at [email protected]
