Sam Fletcher
Senior Writer
HOUSTON, Oct. 5 -- Front-month crude futures rebounded above $81/bbl Oct. 4 on the New York market as the US dollar erased earlier gains against the euro and traders shifted their attention from an unexpected build in oil inventories to equally unexpected slumps in supplies of petroleum products.
The Energy Information Administration earlier reported US crude inventories increased 1.2 million bbl to 321.8 million bbl in the week ended Sept. 28, vs. an expected decline of 800,000 bbl. In that same week, gasoline stocks dipped 100,000 bbl to 191.3 million bbl, well below average for that time of year. Distillate fuel inventories dropped 1.2 million bbl to 135.9 million bbl (OGJ Online, Oct. 3, 2007). Consensus expectations among Wall Street analysts were for no change in gasoline and a 900,000 bbl increase in distillate inventories.
The front-month contract has remained at $79-80/bbl "for close to 15 days" and is starting to test the resolve of ministers of the Organization of Petroleum Exporting Countries, said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland. "OPEC had hinted at more production if crude oil was to stay above $80/bbl for a certain number of days, and this is starting now to be challenged by the market. OPEC will have to renew that threat soon; otherwise silence could be taken by the speculators as a free hand to test the next price level for OPEC resolve," Jakob said.
Energy prices
The November contract rebounded by $1.50 to $81.44/bbl Oct. 4, recouping most of its losses over the first three trading sessions this week on the New York Mercantile Exchange. The December contract escalated by $1.62 to $80.64/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up $1.47 to $81.45/bbl. Heating oil for November delivery increased 5.26¢ to $2.23/gal on NYMEX. The November contract for reformulated blend stock for oxygenate blending (RBOB) bumped up 5.63¢ to $2.05/gal.
The November natural gas contract gained 13.5¢ to $7.41/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub., La., lost 6¢ to $6.88/MMbtu. In the Houston office of Raymond James & Associates Inc., analysts predicted lower gas prices Oct. 4, "as the US National Hurricane Center is reporting that it doesn't expect any tropical cyclones to form over the next day or so from the many low-pressure systems in the Atlantic Ocean and in the Gulf of Mexico."
Jakob reported, "A watch is maintained on a tropical disturbance that should travel westward from the Bahamas to the US gulf, but its intensity and calculated path still makes it only a limited risk to oil assets."
In London, the November IPE contract for North Sea Brent crude gained $1.78 to $78.97/bbl. The October gas oil contract inched up 25¢ to $679/tonne
The average price for OPEC's basket of 12 reference crudes slipped by 13¢ to $74.83/bbl on Oct. 4.
Contact Sam Fletcher at [email protected].
