MARKET WATCHEnergy prices rebound with stronger economic prospects

Nov. 4, 2005
Energy prices surged Nov. 3 with crude again topping $61/bbl in New York as buyers took advantage of recent declines in that market.

Sam Fletcher
Senior Writer

HOUSTON, Nov. 4 -- Energy prices surged Nov. 3 with crude again topping $61/bbl in New York as buyers took advantage of recent declines in that market.

The rebound also was aided by testimony from Federal Reserve Chairman Alan Greenspan before the Congressional Joint Economic Committee in which he said hurricane disruptions of Gulf Coast oil and natural gas production would have only a temporary effect on the fundamentally firm US economy.

The US Minerals Management Service said 5 drilling rigs and 207 production platforms in the Gulf of Mexico were without crews Nov. 3, with 790,610 b/d of crude and 4.7 bcfd of natural gas production still shut in. Cumulative production lost from the gulf since Aug. 26 now totals 77.4 million bbl of crude and 396.2 bcf of natural gas.

The US Department of Energy, now updating its hurricane damage reports twice weekly, said Nov. 3 that a number of gas processing plants in Louisiana and Texas with an aggregate capacity of 7.9 bdfd and a prehurricane flow volume of 4.6 bcfd remain inactive. Several additional plants with an aggregate capacity of 1.17 bcfd are operational but inactive because of infrastructure problems upstream or downstream. "A number of the inactive plants are expected to be operating by the end of November," officials said.

As of Nov. 3, the Louisiana Office of Conservation said 1.5 bcfd of natural gas production had been restored onshore and in state waters in 38 southern parishes. However, officials said 46% of the wells in that area remain shut in.

Energy prices
The December contract for benchmark US light, sweet crudes jumped by $2.03 to $61.78/bbl Nov. 3 on the New York Mercantile Exchange. The January contract was up by $2.06 to $62.55/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., gained $2.03 to $61.79/bbl. Gasoline for December delivery escalated by 5.77¢ to $1.63/gal on NYMEX. Heating oil for the same month increased by 5.07¢ to $1.83/gal. The December natural gas contract registered its first increase in several sessions, up by 8.5¢ to $11.69/MMbtu.

In London, the December contract for North Sea Brent crude climbed by $2.14 to $60.52/bbl on the International Petroleum Exchange. November gas oil increased by $7.50 to $537.75/tonne.

The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes gained 57¢ to $53.45/bbl on Nov. 3.

Contact Sam Fletcher at [email protected].