MARKET WATCHCrude futures jump above $46/bbl prior to Venezuelan referendum

US crude futures jumped above $46/bbl for the first time Friday as panicky New York traders attempted to cover outstanding sales positions in case Sundays recall election against Venezuelan President Hugo Chavéz might trigger civil conflict that would disrupt exports of crude and refined products.

Aug. 16, 2004

3 min read

Sam Fletcher
Senior Writer

HOUSTON, Aug. 16 -- US crude futures jumped above $46/bbl for the first time Friday as panicky New York traders attempted to cover outstanding sales positions in case Sundays recall election against Venezuelan President Hugo Chávez might trigger civil conflict that would disrupt exports of crude and refined products.

Because of heavy voter turnout and problems at the polls, voting in the referendum was extended until midnight Sunday.

Caracas-based newsletter Petroleumworld reported early Monday that Chávez was ahead with more than 58% of the vote in the referendum, but two of the five directors of Venezuela's electoral authority rejected the partial vote count because ballots had not been properly audited.

Meanwhile, the opposition coalition rejected Chávez's apparent victory, claiming there was fraud and "gross manipulation" during the voting. As of early Monday, there were no reports of major civil demonstrations or of disruptions of petroleum production or exports in Venezuela.

Record prices
The September contract for benchmark light, sweet crude closed at a record $46.58/bbl, up by $1.08 for the day, after hitting a new contract high of $46.65/bbl Friday on the New York Mercantile Exchange. The October contract jumped by $1.10 to $46.03/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., tracked the NYMEX front-month price, up by $1.08 to $46.58/bbl.

Gasoline for September delivery shot up by 4.87¢ to $1.3468/gal on NYMEX, following an explosion early Friday at BP PLC's 410,000 b/d refinery at Whiting, Ind. Initial reports from Dow Jones Newswires said the blast knocked out one of four gasoline-manufacturing units, forcing the company to buy gasoline on the open market to meet obligations and sending prices soaring in the Chicago area. Heating oil for the same month gained 2.35¢ to $1.191/gal on NYMEX.

The September natural gas contract gained 9.1¢ to $5.53/Mcf Friday, rebounding from a fresh 4-month low Thursday. "Back months [later contract prices] rose more modestly, indicating that part of the gains were related to fears of near-term supply disruptions. The potential for a tropical depression making its way through the Caribbean to become a named storm by early this week promoted more caution on the part of traders," said analysts Monday at Enerfax Daily.

In London, the September contract for North Sea Brent crude escalated by $1.59 to $43.88/bbl on the International Petroleum Exchange. Gas oil for September delivery was up by $6.75 to $385/tonne. The September natural gas contract increased by 3.6¢ to the equivalent of $3.91/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes gained 57¢ to $41.33/bbl Friday. So far this year, OPEC's basket price has averaged $33.49/bbl.

Contact Sam Fletcher at [email protected]