Sam Fletcher
Senior Writer
HOUSTON, Feb. 5 -- The front-month crude contract rebounded above$90/bbl Feb. 4 in the New York futures market as reports of battles in Nigeria and Iraq reminded traders of the vulnerability of oil supplies from those regions.
Analysts also said the market had gone too far with a 3% drop in the contract price on Feb. 1, resulting in readjustments (OGJ Online, Feb.4, 2008).
In Nigeria, the rebel Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility for a weekend attack on a military houseboat at a Royal Dutch Shell PLC pipeline hub that killed three soldiers.
Meanwhile, Turkish warplanes were reported to have hit some 70 Kurdish rebel targets inside northern Iraq.
"Apart from the MEND taking ownership of the [Feb. 3] gun battle in the Nigeria Delta, we could not find any real drivers yesterday, making West Texas Intermediate prone to intraday technical trades," said Olivier Jakob at Petromatrix, Zug, Switzerland.
However, analysts in the Houston office of Raymond James & Associates Inc. said the crude price also was supported by the temporary closing of the Houston Ship Channel serving the largest US petroleum port. "The Houston Ship Channel was closed for 18 hr due to fog and delayed 20 incoming vessels, including 5 tankers," they said.
Despite the Feb. 4 rebound, benchmark US light, sweet crudes are still struggling to maintain a positive momentum. Therefore, the front-month crude contract needs another positive closing on Feb. 5 "or face the risk of a negative crossover of the moving averages," Jakob said.
Raymond James analysts reported crude futures prices were down in premarket trading Feb. 5 "on speculation that tomorrow's Department of Energy inventories report will show that US crude supplies rose for a fourth week as refiners shut plants for maintenance before summer. They said the price of natural gas also was down moderately in premarket trading "after slightly increasing yesterday as the prices of alternative forms of energy such as coal and crude advanced."
Energy prices
The March crude contract of benchmark US light, sweet crudes regained $1.06 to $90.02/bbl Feb. 4 on the New York Mercantile Exchange, while the April contract rose $1.07 to $90.07/bbl. On the US spot market, WTI at Cushing, Okla., was up $1.05 to $90.02/bbl. The March heating oil contract advanced 3.44¢ to $2.48/gal on NYMEX. The March contract for reformulated blend stock for oxygenate blending (RBOB) increased by 2.83¢ to $2.31/gal.
The March natural gas contract climbed 12.9¢ to $7.87/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., fell 29¢ to $7.61/MMbtu.
In London, the March IPE contract for North Sea Brent increased $1.03 to $90.47/bbl. Gas oil for February dropped 50¢ to $799.75/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 benchmark crudes declined 70¢ to $87.02/bbl on Feb. 4.
Contact Sam Fletcher at [email protected].
