Sam Fletcher
Senior Writer
HOUSTON, Mar. 4 -- Worries about possible inflation, a slowdown in US spending, and deterioration of the US dollar pushed oil and gold prices to new highs Mar. 3 as investors put their money into commodities.
The April contract for benchmark US sweet, light crudes topped out at $103.95/bbl in intraday trading on the New York Mercantile Exchange, while gold closed at a record $981.50/oz on NYMEX's Comex division.
Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said it's unlikely that group would vote to boost production to push down crude prices at their Mar. 5 meeting in Vienna, especially since global demand for crude historically is reduced in the second quarter of each year. The average price for OPEC's basket of 12 reference crudes increased 76¢ to $97.26/bbl on Mar. 3.
Meanwhile, Royal Dutch Shell PLC has lifted the force majeure on shipments of its Forcados and Bonny crudes from Nigeria. "Until the next militancy attack there will be more oil flowing from West Africa, and with its higher light-end yields it will have more of an impact than any increase from Saudi Arabia," said Olivier Jakob at Petromatrix, Zug, Switzerland.
"The dollar index might be at record low, but US retail gasoline prices are at record high," Jakob said. "Middle distillates continue to dominate the show, but reformulated blend stock for oxygenate blending (RBOB) is falling to a deeper discount to heating oil. This is a very unusual change of relative values for the season and will continue to push for maximum distillate yields."
Jakob said, "There has been no overall oil demand growth in the US for the last 3 years. And this was while the US economy was in sixth gear; now that it is running between the first and reverse gears we would not expect the trend to change. The price support that the US has been providing to oil markets is one of capacity disruptions not of demand growth. There is so far this year relatively little supply disruptions, and this is creating havoc in the gasoline to heating oil relationship."
The United Nations recently voted another set of sanctions on Iran. However, Jakob claimed, "The nature of the new sanctions is more a face-saving exercise than anything else. European powers have immediately said that they want to propose new incentives to Iran. Nobody will go to war over the new sanctions; it pushes the issue another 90 days forward and will continue to drag until a new US administration is in place."
Energy prices
The April contract for benchmark US crudes closed at $102.45/bbl Mar. 3 on NYMEX, up 61¢ for the day. The May contract gained 59¢ to $102.01/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 61¢ to $102.46/bbl. The April RBOB contract inched up 0.21¢ to $2.67/gal on NYMEX. Heating oil for the same month climbed 3.39¢ to $2.84/gal.
The April natural gas contract lost 2¢ to $9.35/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., escalated by 8¢ to $9.20/MMbtu.
In London, the April IPE contract for North Sea Brent crude increased 38¢ to $100.48/bbl. The March gas oil contract jumped $22 to $937/tonne.
Contact Sam Fletcher at [email protected].
