HOUSTON, Sept. 19 -- Energy prices rebounded Sept. 18 with the front-month crude contract rising in two consecutive trading sessions for the first time this month on the New York market.
"The slight rebound in oil was driven, in part, by the reported delay in production from BP [PLC]'s Thunder Horse platform until mid-2008. Continued maintenance is still required following damage incurred from Hurricane Dennis last year and the platform—largest in the Gulf of Mexico—is estimated to produce 250,000 b/d of oil at peak production," said analysts in the Houston office of Raymond James & Associates Inc.
"To put this into perspective, Thunder Horse would have represented roughly 4% of total US oil production in 2007. This latest tribulation in BP's continued chain of operational mishaps, coming after the recent Texas refinery explosion and Alaska pipeline problems, further exemplifies the tightness existing within the petroleum markets," analysts said. They now expect various energy forecasters to reduce 2007 supply predictions.
Meanwhile, the Russian natural resources ministry this week revoked environmental approvals for the giant Sakhalin-2 oil and gas project on Russia's Pacific coast. "This $20 billion project is led by operator Royal Dutch Shell [PLC] with a 55% share, while two Japanese companies split the other 45%," Raymond James analysts said. "While the Kremlin says its decision does not mean the project will have to shut down, this certainly shows that foreign energy companies are not immune from the tougher political and legal environment for businesses in Russia. While this situation is quite different from what happened to [OAO] Yukos, in a broader sense it further shows the government's degree of control over the 'commanding heights' of the economy. This does not bode well for growth in Russia's oil and gas output."
In other news, the US may tighten its existing sanctions against trade with Iran now that the European Union no longer insists that Iran halt its uranium enrichment program prior to renewing negotiations.
The October contract for benchmark US sweet, light crudes gained 47¢ to $63.80/bbl Sept. 18 on the New York Mercantile Exchange. The November contract increased by 43¢ to $64.45/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up by 27¢ to $63.81/bbl. Heating oil for October delivery on NYMEX rose 2.34¢ to $1.73/gal. Unleaded gasoline for the same month rose for the second consecutive session for the first time this month, inching up 0.46¢, but remained virtually unchanged at an average $1.58/gal.
The October natural gas contract traded at $4.85-5.27/MMbtu before closing at $4.94/MMbtu, down 4¢ for the day on NYMEX.
In London, the November IPE contract for North Sea Brent crude climbed by 72¢ to $64.05/bbl. Oil gas for October gained $9.25 to $554/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes regained 22¢ to $58.67/bbl on Sept. 18.
Contact Sam Fletcher at [email protected].