Market watch: Oil futures prices drop as UN snubs US stand against Iraq
Energy futures prices continued to decline amid mounting evidence that the United Nations Security Council will not stand behind the US in its proposed "get-tough" policy on Iraq.
OGJ Senior Writer
HOUSTON, Oct. 17 -- Energy futures prices continued to decline Wednesday on the New York Mercantile Exchange, amid mounting evidence that the United Nations Security Council will not stand behind the US in its proposed "get-tough" policy on Iraq.
Although the US Congress authorized President George W. Bush to use military force to topple Saddam Hussein's government, international political pressures might check any US offensive on Iraq, analysts said. As a result, they expect a gradual decline in the so-called "war premium" that, according to various estimates, has added $1-5/bbl to current oil prices.
However, combined losses during trading sessions Wednesday and Tuesday on NYMEX did not wipe out gains from Monday's bullish session when the near-month oil contract surged above $30/bbl once more and the natural gas position inched above $4.30/Mcf for the first time since June 2001.
Those gains were triggered by weekend terrorists attacks in Bali and the first cold snap in what meteorologists are predicting will be a cooler fall and winter in the US.
Wednesday, the November contract for benchmark US sweet, light crudes lost 25¢ to $29.47/bbl on NYMEX, while the December position dropped 27¢ to $29.49/bbl. Analysts also attributed the drop in oil futures prices Wednesday to the large increase in US oil inventories reported by the American Petroleum Institute late Tuesday (OGJ Online, Oct. 16).
Unleaded gasoline for November delivery dipped 0.06¢ to 83.93¢/gal. Heating oil for the same month inched down 0.02¢ to 79.96¢/gal.
The November natural gas contract lost 2¢ to $4.23/Mcf Wednesday. "Hindering the market was the announcement by Dynegy (Inc.) that it will get out of the wholesale energy marketing and trading business over the next few months. Williams (Cos. Inc.), Aquila (Inc.), and El Paso (Corp.) all have been cutting trading staff recently in response to credit downgrades," analysts at Enerfax Daily reported Thursday.
Gas trading- Wednesday on NYMEX "opened lower and dropped quickly as locals sold off to start the session, but commercial trading houses held off the selling at around $4.13(/Mcf), the intraday low, and the market rebounded from there. By the close, locals again covered short positions," Enerfax Daily analysts said.
In London, the futures price for North Sea Brent crude remained above $28/bbl on the International Petroleum Exchange because of continued uncertainty about the Middle East situation, analysts said. The November Brent contract lost 8¢ to $28.58/bbl.
The November natural gas contract jumped 15.1¢ to the equivalent of $3.78/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes lost 20¢ Wednesday to $28.01/bbl.
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