Sam Fletcher
Senior Writer
HOUSTON, Oct. 30 -- The December contract for benchmark US crudes climbed to record highs above $93/bbl Oct. 29 on the New York market, boosted by a weak dollar and stormy weather that shut in some of Mexico's crude production.
The value of the US dollar dropped to $1.4438 against the euro Oct. 29, the lowest level since the 13-nation common currency was introduced in January 1999. Meanwhile, the Federal Reserve is expected to cut further the overnight lending rate when the Federal Open Market Committee meets Oct. 31 to evaluate the economic situation.
Mexico's Petroleos Mexicanos announced Oct. 28 it would shut in 600,000 b/d of oil production in the Gulf of Mexico after stormy weather shut down the country's three main oil-exporting ports and killed 18 Mexican oil workers when a jack up rig was apparently washed into production platform 20 miles off Dos Bocas (OGJ Online, Oct. 25, 2007). Nevertheless, crude futures prices were down in premarket trading Oct. 30 on reports that Pemex would start bringing production back on stream.
Mexico is the second-largest exporter of crude to the US, behind Canada. The US Department of Energy said Mexican crude imports averaged 1.66 million b/d in the first 8 months of 2007.
Meanwhile, Tropical Storm Noel moved across eastern Cuba with heavy rain and strong winds on Oct. 30. It was expected to move out over the western Atlantic later, where it could strengthen as it heads to the central Bahamas. A tropical storm watch might be issued for southeastern Florida, officials said.
While "some profit taking patterns are starting to appear" in intraday trading on the New York Mercantile Exchange, the market remains "in a 'buy the dip' mode and has been able so far to maintain its positive momentum," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland. "We still view $95/bbl [for front-month benchmark crudes as] the key resistance level to break in order to put the $100/bbl December call hedge kicker within reach," he said.
Jakob reported, "Hostages in Nigeria have been released and as per the hostages of last week, the releases are now happening in a quicker pattern (OGJ Online, Oct. 23, 2007)." He also said, "The Russian Foreign minister is making an unannounced visit to the Iranian president, 2 weeks after the visit of the Russian president, and China continues to state that sanctions [against Iran] are of no use. The East-West divide on the handling of 'Iranium' remains as vivid as ever."
Jakob said: "More reports are coming out of China pointing to inland refineries having to curtail severely production as losses emanating from the difference between capped inland prices and world crude at record highs are becoming too great of a burden. Refinery margins are also not good in the US, and we would not be surprised to see there more 'power failures.'"
Energy prices
The December contract for benchmark US sweet, light crudes traded at a record intraday high of $93.80/bbl prior to its record closing of $93.53/bbl, up $1.67 for Oct. 29 on NYMEX. The January contract escalated $1.89 to $92.63/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up $1.66 to $93.53/bbl. The November contract for reformulated blend stock for oxygenate blending (RBOB) jumped 5.34¢ to $2.33/gal. Heating oil for the same month gained 3.21¢ to $2.46/gal.
The November natural gas contract climbed 5.1¢ to $7.27/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated 31¢ to $6.72/MMbtu. "The November [NYMEX] natural gas contract expired Oct. 29. The more heavily traded December contract rose 2.1%," said analysts in the Houston office of Raymond James & Associates Inc.
In London, the December IPE contract for North Sea Brent crude increased $1.63 to $90.32/bbl. The November gas oil contract climbed $13.25 to $770.25/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes was up $1.04 to $85.84/bbl on Oct. 29.
Contact Sam Fletcher at [email protected].
