Sam Fletcher
Senior Writer
HOUSTON, May 27 -- Crude prices continued to decline May 23 just prior to the extended Memorial Day holiday that marked the start of summer driving in the US, but prices rebounded in early trading May 27 following a rebel attack on a pumping station along a Royal Dutch Shell PLC oil pipeline in Nigeria.
Militant group Movement for the Emancipation of the Nigeria Delta (MEND) has claimed responsibility for four attacks on oil facilities in April and one in May. Nigerian Oil Minister Odein Ajumogobia said May 26 he expects 175,000 b/d of the crude production shut in by recent attacks to come back on stream soon. Shell was forced to shut in some 164,000 b/d of Bonny Light crude late last month due to rebel attacks. "We had about 470,000 b/d shut in even before these (latest) incidents, which is a direct result of security issues," Ajumogobia said.
Olivier Jakob at Petromatrix, Zug, Switzerland, noted that benchmark US light, sweet crudes are now priced $70/bbl higher than a year ago, including the gain of $6.15/bbl in the New York market over the 5 trading days through May 23. North Sea Brent crude was up $6.58/bbl over the same period, while heating oil increased by $7.56/bbl. during last week. Reformulated blend stock for oxygenate blending (RBOB) gained $6.30/bbl.
While many are blaming speculators for the sharp spike in energy prices this year, Jakob reported, "We continue to observe that large professional speculators have no greater net length in West Texas Intermediate futures than in previous years. They are slightly above last year but at par to 2006 and 27% lower than in 2004 (WTI crude oil was then $100/bbl lower)."
He said, "The net length held in WTI futures is also half what it was in early March of this year (the first peak at $110/bbl). We also observe that since early April when WTI broke the $110/bbl resistance, the net futures positions of large speculators have stayed in a narrow range of about 20,000 net contracts."
Energy prices
The July contract for benchmark US crudes gained $1.38 to $132.19/bbl May 23 on the New York Mercantile Exchange. The July contract increased $1.34 to $132.24/bbl. On the US spot market, WTI at Cushing, Okla., was up $1.38 to $131.60/bbl. The July RBOB contract climbed by 6.63¢ to $3.40/gal on NYMEX. Heating oil for the same month, however, dropped 8.87¢ to $3.87/gal.
The June natural gas contract escalated 16¢ to $11.86/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., was up 5¢ to $11.59/MMbtu. Pritchard Capital analysts said, "The recent hike in [gas] prices has fundamental market experts scratching their heads." Storage and price level comparisons with last year don't add up, they reported. Meanwhile, above-normal temperatures are forecast for much of the western US over the next 6-10 days.
In London, the July IPE contract for North Sea Brent crude increased $1.06 to $131.57/bbl. The June gas oil contract gained $9.75 to $1,282.75/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 13 reference crudes dropped $1.02 to $126.35/bbl on May 23 but regained 20¢ to $126.57/bbl on May 26. So far this year, OPEC's basket price has averaged $99.48/bbl.
Contact Sam Fletcher at [email protected].
