Sam Fletcher
Senior Writer
HOUSTON, June 13 -- Energy prices fell June 10 as Tropical Storm Arlene failed to achieve hurricane strength before it blew ashore June 11 near the Florida-Alabama line on the US Gulf Coast.
Residents of Florida, hit last year by multiple hurricanes, dismissed Arlene as a "piddling little rainstorm." Traders reacted on expectations that the storm would do more to reduce demand through power outages and curtailed travel than to disrupt production of oil and natural gas in the Gulf of Mexico.
The US Minerals Management Service said June 10 that 36 platforms and 16 rigs were evacuated in the gulf ahead of Arlene. It said 25,474 b/d of crude and 353.9 MMcfd of natural gas production temporarily were shut in as a result of the storm.
Mexican production peaking?
Meanwhile, analysts in the Houston office of Raymond James & Associates Inc., reported June 13 that crude production appears stagnant "at the very least" in Mexico, the largest source of foreign oil for the US market. In fact, they said, "The month-to-month volatility hides the fact that on a 12-month moving average basis, it looks like Mexican oil production may have already peaked."
This doesn't imply "a dramatic fall in output anytime soon," analysts said, "but it does indicate that the growth rates of 1999-2002 have slowed down meaningfully, if not disappearing outright." They project Mexican production will post modest annual declines in 2005 and 2006 for the first time since the late 1990s. "Even if production is flat, that would still provide strong evidence that the No. 1 source of foreign oil to the US is close to peaking," they said.
Energy prices
The July contract for benchmark US light, sweet crudes lost 74¢ to $53.54/bbl June 10 on the New York Mercantile Exchange. The August position dropped 89¢ to $54.68/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down by 74¢ to $53.55/bbl. Gasoline for July delivery fell by 2.78¢ to $1.54/gal on NYMEX. Heating oil for the same month declined by 1.82¢. The July natural gas contract plunged by 11.3¢ to $6.93/MMbtu on NYMEX.
In London, the July contract for North Sea Brent crude plummeted by $1.20 to $52.62/bbl on the International Petroleum Exchange.
However, the average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes increased by 19¢ to $50.74/bbl. So far this year, OPEC's basket price has averaged $45.96/bbl.
Contact Sam Fletcher at [email protected]
