MARKET WATCH: Markets track Hurricane Felix
Sam Fletcher
Senior Writer
HOUSTON, Sept. 4 -- Oil futures prices rose Sept. 3 in international markets as traders tracked another potentially destructive hurricane in the Caribbean, but trading was sluggish with US markets closed for the Labor Day holiday.
Having just returned to full production after Hurricane Dean, Petroleos Mexicanos again faced a possible decision Sept. 3 whether to evacuate offshore rigs and platforms in the Bay of Campeche as another category 5 storm, Hurricane Felix, churned through the Caribbean.
Felix developed quickly with a much stronger than anticipated pattern, reaching category 5 even before it entered Caribbean waters. Dean also was a category 5 that weakened as it crossed land and entered the Bay of Campeche 2 weeks ago. Nevertheless, it forced Pemex to shut down 140 offshore units and move 1,300 workers to land.
At one point, a weather model at the US National Hurricane Center showed Felix possibly passing over the Yucatan Peninsula to enter the Bay of Campeche—where 66% of Pemex's oil production is located—not far from Dean's previous track. "None of the models show it going straight towards the US Gulf but rather through the Yucatan (as did Dean) or Central America," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland.
Hurricane Felix later was downgraded to Category 4 with sustained winds of 135 mph. Meteorologists said it could fluctuate between the two categories until hitting the mainland. There was no indication Sept. 3 that Pemex was evacuating any workers or shutting down any production as Felix's track appeared to move south toward the Central American coast. Hurricane alerts were issued for Nicaragua, Guatemala, and Belize.
However, traders expect Felix to remain a major market force through the rest of the week. They also expected production losses as a result of Hurricane Dean to show up in Sept. 6 reports of US imports.
Energy prices
The October contract for benchmark US light, sweet crudes gained 68¢ to $74.04/bbl Aug. 31 on the New York Mercantile Exchange before the start of the 3-day Labor Day weekend that historically marks the end of the US summer driving season. The November contract escalated by 71¢ to $73.32/bbl. On the US spot market, West Texas Intermediate was up 68¢ to $74.05/bbl. The expiring September contract for reformulated blendstock for oxygenate blending (RBOB) fell 2.82¢ to $2.05/gal on NYMEX. Heating oil for the same month dropped 1.38¢ to $2.04/gal.
The October natural gas contract fell by 16.7¢ to $5.47/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., lost 10¢, also to $5.47/MMbtu.
In London, the October IPE contract for North Sea Brent crude increased 79¢ to $72.69/bbl. Gas oil for September gained $4.75 to $641.25/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes advanced by 50¢ to $69.60/bbl on Aug. 31. So far this year, OPEC's basket price has averaged $62.42/bbl, up from $61.08/bbl for all of 2006.
Contact Sam Fletcher at [email protected].