MARKET WATCHJakarta terrorist bombing lifts energy futures prices
Sam Fletcher
Senior Writer
HOUSTON, Aug. 6 -- Energy futures prices rebounded Tuesday, following a suicidal terrorist bombing of a hotel in Jakarta, Indonesia, that killed at least 14 people, injured 150, and inflicted extensive damage.
Jemaah Islamiyah—a militant Islamic group active in several Southeast Asian countries that's seeking to establish a Muslim fundamentalist state in the region—is suspected in the latest terrorist bombing. A member of that group currently is on trial in Indonesia, facing a possible death sentence in connection with the bombing of a Bali nightclub in October 2002. Jemaah Islamiyah has been linked as an ally to Al Quad.
Signs of improvement in the US economy also had a bullish effect on the futures market, analysts said.
Energy prices
The September and October contracts for benchmark US light, sweet crudes increased by 38¢ each to $32.22/bbl and $31.91/bbl, respectively, Tuesday on the New York Mercantile Exchange. Unleaded gasoline for September delivery jumped by 2.72¢ to 95.39¢/gal, wiping out its loss in the previous session. Heating oil for the same month gained 1.16¢ to 84.63¢/gal.
The September natural gas contract inched up 4.7¢ to $4.68/Mcf on NYMEX. That market was lifted by firmer oil prices, technical buying, and short covering by traders forced to make purchases to offset open market positions.
"Higher crude oil futures (prices) helped trigger the buying, as a brewing storm in the Atlantic appeared to be too far north to threaten Gulf of Mexico production," analysts reported Wednesday at Enerfax Daily. "While there are signs that lower (natural gas) prices have brought back some industrial load, which could help limit selling, mostly moderate weather and record (US gas) storage builds have calmed fears about tight winter supplies."
Analysts said, "Technical traders agreed the (gas futures) market got a little oversold Monday after the 5% (price) dive and was due for a bounce, but few expect much more upside without hotter weather in the forecast."
In London, news of the terrorist bombing triggered a sharp rally that temporarily pushed the September contract for North Sea Brent oil above $30/bbl on the International Petroleum Exchange. It settled at $29.93/bbl, up 40¢ for the day, after trading at $29.38-$30.16/bbl during that session.
That market is thinly traded at present and prone to volatile price swings based on news headlines rather than market fundamentals, said London brokers.
The September natural gas contract gained 1.6¢ to the equivalent of $2.51/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes gained 14¢ to $28.80/bbl Tuesday.
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