MARKET WATCHEnergy prices continue climbing

Aug. 12, 2005
Energy futures prices continued to escalate to new heights Aug. 11, with increased concerns about Middle East crude supplies and the tightening US gasoline market.

Sam Fletcher
Senior Writer

HOUSTON, Aug. 12 -- Energy futures prices continued to escalate to new heights Aug. 11, with increased concerns about Middle East crude supplies and the tightening US gasoline market.

The International Energy Agency in Paris reported Aug. 11 that producers outside of the Organization of Petroleum Exporting Countries are providing less crude that it earlier anticipated, putting additional strain on energy supplies. Total North Sea production is 10% below normal, officials said.

IEA again lowered its estimates of global supply growth, reducing projected non-OPEC output by 205,000 b/d this year and by 150,000 b/d in 2006.

Refinery problems in the US caused a 1.1% decline in capacity utilization in the latest reported period while demand for gasoline is up by 1.4% from year-ago levels (OGJ Online, Aug. 11, 2005).

Energy prices
Benchmark US light, sweet crudes for September delivery hit an all-time high of $66/bbl for a near-month contract during trading Aug. 11 on the New York Mercantile Exchange. It also set a new record for a front-month closing, up by 90¢ to $65.80/bbl. The October position advanced by 69¢ to $66.75/bbl. Other contracts from November through June 2006 closed above $67/bbl on NYMEX. On the US spot market, West Texas Intermediate at Cushing, Okla., was up by 91¢ to $65.81/bbl.

The September contract for gasoline increased by 5.35¢ to a new record of $1.95/gal on NYMEX. Heating oil for the same month gained 5.97¢ to $1.90/gal. Natural gas for September delivery surged by 23¢ to $9.30/MMbtu "on another record rally in crude oil prices and continued heat over much of the nation," said analysts as Enerfax Daily.

The natural gas futures market remains "very bullish," despite the fact that it is "being overbought and due for a correction after a 27% rally over the last 3 weeks," analysts said.

In London, the September contract for North Sea Brent crude shot up by $1.39 to a record closing of $65.38/bbl on the International Petroleum Exchange. Gas oil for August increased by $30.75 to $597.75/tonne.

The average price for OPEC's basket of 11 benchmark crudes gained 98¢ to $58.28/bbl on Aug. 11.

Contact Sam Fletcher at [email protected]