Sam Fletcher
Senior Writer
HOUSTON, Sept. 19 -- Front-month crude futures prices jumped to new highs above $82/bbb Sept. 18 on the New York market after the Federal Reserve cut its target interest rate by a larger-than-expected half of a percentage point to 4.75% to stem a possible slowdown in the US economy.
"The Fed cut [was at] the high of the expected range and plunged the dollar index to new record low," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland. Meanwhile, for five consecutive sessions, the New York market has registered record high crude prices for intraday trades, closings, or both.
In their Houston office, Raymond James & Associates Inc. analysts said, "The Fed cut may have been a move to curb a possible recession; however, the markets should remain wary on possibilities of inflation."
Gulf evacuations
Meanwhile, Shell Oil Co. said Sept. 18 it has evacuated 300 nonessential workers from oil and gas facilities in the Gulf of Mexico because of the potential development of a tropical disturbance in those waters. A company spokesman said another 400 people were scheduled for evacuation Sept. 19. No production has yet been shut in, officials said.
Meteorologists said Sept. 19 they are watching a complex of thunderstorms with an upper-level low pressure area crossing the Florida peninsula. Several weather forecast models indicate that system should become better organized as it pushes into the gulf and could develop into a tropical system Sept. 19-20.
Jakob said, "Intensity forecast will be difficult until the disturbance has made the crossing [of Florida] but the calculated path takes it on a track to the New Orleans area. This could lead to a high concern level over the weekend, and already some oil companies are starting to take nonessential personnel out of the region. Given its calculated path and how fast storms have recently strengthened over gulf waters, we will not discount this current weather risk."
US inventories
The Energy Information Administration reported Sept. 19 commercial US crude inventories fell by 3.8 million bbl to 318.8 million bbl during the week ended Sept. 14. The consensus among Wall Street analysts was for a draw of 2 million bbl. US gasoline stocks inched up by 400,000 bbl to 190.8 million bbl during the same week, still well below average range. Analysts were expecting gasoline stocks to drop 1 million bbl. Distillate fuel inventories increased by 1.5 million bbl to 135.5 million bbl, vs. a consensus of a 1.2 million bbl gain among analysts. Propane and propylene inventories increased by 700,000 bbl to 58.1 million bbl in the same week.
During that period, imports of crude into the US increased 242,000 b/d to 9.8 million b/d. Gasoline imports averaged more than 1 million b/d. Imports of distillate fuel were at 307,000 b/d. Input of crude into US refineries decreased by 207,000 b/d to 15.4 million b/d, with refineries operating at 89.6% capacity. Gasoline production rose to 9.1 million b/d, but distillate fuel production fell to 4.1 million b/d.
Energy prices
The October contract for benchmark US light, sweet crudes soared to an all-time high of $82.39/bbl in intraday trading Sept. 18 on the New York Mercantile Exchange. It settled at a record closing of $81.51/bbl, up 94¢ for the day. The November contract advanced 85¢ to $80.23/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 95¢ to $81.52/bbl. Heating oil for October delivery gained 1.36¢ to $2.24/gal on NYMEX. The October contract for reformulated blend stock for oxygenate blending (RBOB) climbed 1.61¢ to $2.06/gal.
The October natural gas contract, however, lost 8.5¢ to $6.57/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 1¢ to $6.35/MMbtu.
In London, the November IPE contract for North Sea Brent crude gained 61¢ to $77.59/bbl. The October gas oil contract increased $1 to $697.50/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 reference crudes rebounded by 86¢ to $74.92/bbl on Sept. 18.
Contact Sam Fletcher at [email protected].
