MARKET WATCHNYMEX crude price hits new high before falling

Energy futures prices retreated Monday on the New York Mercantile Exchange but not before hitting a new high of $46.91/bbl for the September crude contract during that session.

Aug. 17, 2004

2 min read

Sam Fletcher
Senior Writer

HOUSTON, Aug. 17 -- Energy futures prices retreated Monday on the New York Mercantile Exchange but not before hitting a new high of $46.91/bbl for the September crude contract during that session.

The market generally attributed the rollback to the apparently peaceful victory of Venezuela's President Hugo Chávez in Sunday's recall referendum. With international observers certifying that voting was fair, traders were hoping that political stability, crude production, and oil exports would continue in that country. Officials at Petroleos de Venezuela, the state oil company, reported no disruptions Monday.

However, some analysts claimed the general decline of energy prices Monday was the result of a market adjustment. Purnomo Yusgiantoro, conference president of the Organization of Petroleum Exporting Countries, was quoted Monday in a Jakarta newspaper as predicting crude prices might retreat to $30/bbl next year with improved political developments in Iraq and Venezuela and the end of the financial crisis at OAO Yukos, the Russian oil giant.

"There is a psychological premium in the market of $15/bbl because of Yukos, Iraq, and Venezuela. If the premium can be eliminated, oil prices will be down to $30/bbl," Purnomo said.

Meanwhile, Chávez said Monday his government is asking other OPEC members to raise the group's targeted price band to $25-30/bbl from present levels of $22-28/bbl.

Energy prices
The September contact for benchmark US sweet, light crudes settled at $46.05/bbl, down 53¢ for the day on NYMEX. On the US spot market, West Texas Intermediate at Cushing, Okla., traced the same course, losing 53¢ to $46.05/bbl. The October crude contract on NYMEX was down by 34¢ to $45.69/bbl.

Gasoline for September delivery plunged by 4.23¢ to $1.3045/gal Monday on NYMEX, wiping out much of Friday's gain. Heating oil for the same month lost 1.17¢ to $1.2028/gal.

The September natural gas contract fell by 15.5¢ to $5.38/Mcf on NYMEX, "converging with cash [spot market] pricing as traders anticipate even lower prices unless another Gulf of Mexico tropical storm gets added to the mix," said analysts Tuesday at Enerfax Daily.

In London, the September contract for North Sea Brent crude declined by 21¢ to $43.67/bbl Monday on the International Petroleum Exchange. However, gas oil for September delivery increased by $1.25 to $386.25/tonne, and the September natural gas contract gained 4.3¢ to the equivalent of $3.95/Mcf on IPE.

The average price for OPEC's basket of seven benchmark crudes was up by 37¢ to $41.70/bbl Monday.

Contact Sam Fletcher at [email protected]