HOUSTON, May 23 -- The price of crude bounced back from a 7-week low, and natural gas marked its first gain in four sessions on the New York futures market May 22 on a warning of an active hurricane season starting June 1 that could again threaten production in the Gulf of Mexico.
The National Oceanic and Atmospheric Administration predicted 13-16 tropical storms will form in the north Atlantic this season, with 8-10 developing into hurricanes, 4-6 of which are likely to be major storms. That's not as severe as the 2005 hurricane season, but it's harsh enough to remind traders that crude and gas production is susceptible to unexpected disruptions.
Oil and gas operations in the gulf and along the US Gulf Coast still haven't fully recovered from Hurricanes Katrina and Rita in August and September 2005. Shell Exploration & Production Co. said May 22 that partial production has resumed from its Mars tension-leg platform, the largest producing platform in the Gulf of Mexico. It had been shut-in since being damaged by Hurricane Katrina in late August.
It was repaired by a workforce that often numbered more than 500 people daily, representing over 1 million man-hr of labor. It was one of the "most technologically complex operations in the world" and was completed "safely and ahead of schedule," said Shell officials. Mars production is to ramp up during the next several weeks and is expected to be back to prehurricane levels by the end of June. Shell operates the Mars platform with a 71.5% working interest, with the remaining interest held by BP PLC.
Meanwhile, other sources reported crude exports from Iraq's southern oil fields fell by 84,000 b/d to 1.5 million b/d during the first 20 days of May.
The June contract for benchmark US sweet, light crudes escalated by 70¢ to $69.23/bbl May 22 on the New York Mercantile Exchange. The July contract was up by 67¢ to $69.96/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., gained 69¢ to $69.23/bbl. Gasoline for June delivery bumped up by 1.9¢ to $2.06/gal on NYMEX. Heating oil for the same month increased by 1.25¢ to $1.93/gal.
The June natural gas contract jumped up 31.4¢ to $6.28/MMbtu in a technical rebound from the previous sell-off as it followed crude prices up. "The June-August period is expected to average warmer than normal across most of the US," said analysts at Enerfax Daily.
In London, the July IPE contract for North Sea Brent crude gained 67¢ to $69.35/bbl. However, the June natural gas contract lost $2.50 to $604.75/tonne.
Contact Sam Fletcher at [email protected].