Sam Fletcher
Senior Writer
HOUSTON, Aug. 26 -- Crude energy prices inched up to new highs Aug. 25, briefly touching $68/bbl in overnight electronic trading in the New York market even as it became evident that slow-moving Tropical Storm Katrina posed no immediate threat to oil and natural gas production in the Gulf of Mexico.
The March 2006 contract for benchmark US light, sweet crudes hit $70/bbl during intraday trading Aug. 25 on the New York Mercantile Exchange—the first time any contract has reached that high in the 22 years oil futures have been trading in that market. Prices for such "medium-term" contracts "rose faster than prompt ones," said analysts at Enerfax Daily. "The gap between the front-month contract and future contracts, known as the price curve, begins to widen again as traders increasingly bet on tight supplies at the end of winter as the summer demand season winds down," they said.
The fact that crude futures prices continued to climb even as the danger of production curtailments dissipated may signal that the market is "looking for excuses" to move higher, analysts said.
Katrina is expected to reach hurricane strength before coming ashore Aug. 26 between Fort Lauderdale and West Palm Beach in southeast Florida, cross the peninsula through the Everglades, and enter the Gulf of Mexico on Aug. 27, said the National Hurricane Center.
Meanwhile, the Ecuador government lifted the weeklong state of emergency in the Amazon provinces of Orellana and Sucumbios although it has no agreement yet with protestors whose earlier attacks caused that country to declare a force majeure on oil exports.
Energy prices
NYMEX crude futures for October gained 17¢ to $67.49/bbl, another record closing for the front month contract. The November position advanced by 18¢ to $68.19/bbl. On the US spot market, West Texas Intermediate was up by 22¢ to $67.30/bbl.
Gasoline for September delivery led the NYMEX energy futures market, climbing by 3.79¢ to $1.96/gal as traders continued to react to the latest drop in US inventories of that fuel (OGJ Online, Aug. 24, 2005). Heating oil for the same month inched up by 0.41¢ to $1.87/gal.
The September natural gas contract, however, plunged by 21.4¢ to $9.77/MMbtu, "pressured by a softer [spot] cash market, dwindling fears about Tropical Storm Katrina, and a slightly bearish Energy Information Administration weekly storage report," said Enerfax analysts. EIA reported Aug. 25 an injection of 60 bcf of natural gas into US underground storage during the week ended Aug. 19 (OGJ Online, Aug. 25, 2005).
In London, the October contract for North Sea Brent crude increased by 26¢ to $66.27/bbl on the International Petroleum Exchange. Gas oil for September gained $7.25 to $597.50/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes advanced by 85¢ to $59.75/bbl.
Contact Sam Fletcher at [email protected]
