By OGJ editors
HOUSTON, Aug. 22 -- Energy futures prices jumped again Wednesday, as a meeting by President George W. Bush with his top security advisers fanned fears that Middle East oil supplies may be disrupted by an US attack on Iraq.
Analysts also cited another market "fear factor"—the approaching anniversary of the Sept. 11 terrorist attacks in New York and Washington, DC. There is speculation that terrorists may mount additional attacks on the anniversary date.
In the face of those fears, bearish reports by both the American Petroleum Institute and the US Department of Energy of rising US inventories of oil and gasoline had little effect on Wednesday markets, analysts said.
The new near-month October contract for benchmark US sweet, light crudes gained 47¢ to $29.24/bbl Wednesday on the New York Mercantile Exchange. The November contract also advanced by 30¢ to $28.50/bbl. Heating oil for September delivery jumped by 1.62¢ to 75.42¢/gal, while unleaded gasoline for the same month rose 0.63¢ to 80.66¢/gal.
The September natural gas contract rebounded by 10.8¢ to $3.27/Mcf, wiping out Tuesday's 10.1¢ loss. That contract briefly surpassed "key resistance" at $3.30/Mcf in thin trading Wednesday on NYMEX, "but couldn't hold on," said market analysts at Enerfax Daily. "Most of the buying was by a mix of speculators, a few funds, locals, and trade, pushing the market up on technicals, hitting fund buy-stops, and keeping pace with heavy crude oil buying."
Meanwhile, the US Energy Information Administration reported early Thursday that natural gas injections into US underground storage totaled 37 bcf last week, down from 53 bcf the previous week and 85 bcf during the same period a year ago. Last week's injections were below Wall Street's expectations and the latest in what Enerfax analysts described as "a trend of substantially lower injections than the prior year that continue to chip away at the surplus storage from last year."
US gas storage now exceeds 2.6 tcf, up 231 bcf year-over-year and up 307 bcf compared with the 5-year average.
In London, futures prices for North Sea Brent oil also rallied on war fears at the International Petroleum Exchange. The growing possibility of armed conflict between the US and Iraq attracted speculators and fund buyers who kept Brent oil prices buoyed above $27/bbl, said London brokers. The October Brent contract closed at $27.41/bbl, up 31¢ for the day after trading at $27.37-27.68/bbl.
The September natural gas contract bumped up 2.7¢ to the equivalent of $1.94/Mcf on the IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes gained 18¢ to $26.95/bbl Wednesday.