By OGJ editors
HOUSTON, Sept. 3 -- Crude oil futures prices pushed past the $75/bbl mark helped by encouraging US economic data, supportive production news, and a fire on a platform in the Gulf of Mexico, analysts said.
“After a weak opening, oil prices gained ground through the day, with front month [West Texas Intermediate] (October) finishing the session $1.11 higher at $75.02/bbl,” noted analysts at Barclays Capital. “Encouraging employment and housing statistics from the US added to yesterday’s strong manufacturing data, helping lift sentiment,” they said, adding, “With prices weighed down recently by deteriorating macro sentiment, this week’s improvement in the flow of economic data has helped shore up prices.”
They said, “News of an explosion at an oil and gas platform in the Gulf of Mexico added momentum to the price recovery. While the fire at the platform was quickly controlled and no spill was detected, the accident is likely to reinforce current concerns over the safety of offshore drilling, increase pressure and scrutiny over the industry and lower the chance of a roll back of the drilling moratorium.”
Analysts in the Houston office of Raymond James & Associates Inc., meanwhile, reported, “Hurricane Earl continues to ruin Labor Day plans for vacationers on the East Coast as it swirls towards the New England area. The northeast is the highest energy consuming region in the US and any potential shutdown of businesses, power, etc., due to the hurricane could send gas prices…further below the $4/Mcf mark.”
Olivier Jakob at Petromatrix in Zug, Switzerland, said, “We are in front of a long weekend and we would expect that traders call it a day after the release of the nonfarm payroll (the big guys on the East Coast will probably not be on the desk anyway today as they are busy supervising the taping of the windows on the mansion before hurricane Earl arrives).”
Jakob said, “The risk on Hurricane Earl would be bearish oil (lower travel demand, lower West African crude oil imports) but the storm intensity has weakened (although still Hurricane force 2 to 1) and we can not give it a high probability that it will have an impact on the downstream assets.”
He said, “Gaston would have been a bullish risk for the weekend as it is traveling more towards the West, and that would have given him a US Gulf potential for next week but it has lost a lot of intensity overnight and is now only a remnant of a Low. It is not excluded that it regains some strength over the weekend but the models disagree on that probability. There is also a Low off the coast of Africa that could develop over the weekend. Overall, if there is still a weather risk for the long weekend it is less defined than yesterday.”
Adam Sieminski, chief energy economist, Deutsche Bank, Washington, DC, “Hot weather across the US this summer has made a substantial difference to end-of-season storage estimates but not by enough to provide firm support for US natural gas prices as long as production remains firm and industrial use remains weak.”
Sieminski said, “US summer gasoline demand growth has averaged a better-than-expected 1.8% year over year. However, the supply-side of the balance was also better than expected. Consequently inventories counter-seasonally built and gasoline cracks have underperformed.”
Energy prices
The October contract for benchmark US light, sweet crudes gained $1.11 to $75.02/bbl on the New York Mercantile Exchange. The November contract advanced 88¢ to $76.24/bbl. On the US spot market, the price for WTI at Cushing, Okla., went unreported. Heating oil for October delivery rose 2.12¢ to $2.06/gal on NYMEX. Reformulated blend stock for oxygenate blending for the same month increased 3.25¢ to $1.92/gal.
The October natural gas contract fell 1.1¢ to $3.75/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., fell 1¢ to $3.81/MMbtu.
In London, the October IPE contract for North Sea Brent crude gained 58¢ to $76.93/bbl. Gas oil for September was down $5.75 to $639.75/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was up 40¢ cents to $72.89/bbl.
Rystad Energy.
