MARKET WATCHCrude futures prices continue climb in New York, London
Steven Poruban
Senior Staff Writer
HOUSTON, Aug. 6 -- Crude futures prices resumed their upward trend Thursday in New York and London on news that uncertainty still looms once again for lower oil exports from Russian's largest oil producer, OAO Yukos. Refined products also made gains, and natural gas prices also settled higher.
Analysts had said last week that the market was likely to stay volatile and possibly could jump to $45/bbl or higher on NYMEX pending a resolution of Yukos's financial and legal difficulties with Russian authorities (OGJ Online, July 30, 2004).
The rally came on the back of news that Russia's justice ministry Thursday withdrew permission, which was granted just a day before, for Yukos to tap into its frozen bank assets, noted Merrill Lynch analysts in a research report Friday.
"As has been the case, the report heightened concerns that the ongoing court/tax battle might lead to an operational hiccup in the company's oil production and export flows," Merrill Lynch said.
"In a more general sense, the specific fear is that amid a background of stretched capacity, such an outage could lead to a forced shortage (even with 1.4 billion bbl of oil and products in [Organization for Economic Cooperation and Development] emergency stocks)," it said.
"Nevertheless, while our sense continues to be that the Kremlin does not want the country's energy oil sales interrupted, the situation we're experiencing likens to a panicked crowd and the rush to the exit door," Merrill Lynch noted. "In this case, a mounting concerns about shortages over the past several months appears to have led to precautionary inventory accumulation in areas for which there is virtually no access to reliable data—which of course, adds to and exacerbates supply pressures."
Energy prices
The September contract for benchmark US light, sweet crude hit new highs in the US Thursday, with high trading for the day reaching $44.50/bbl before settling at $44.41/bbl, an increase of $1.58 from Wednesday's close. The October crude futures contract also rose to $43.80/bbl, up $1.50.
On the US spot market, West Texas Intermediate at Cushing, Okla., shot up by $1.57 to $44.40/bbl.
Refined petroleum products also closed higher, with heating oil for September delivery reaching $1.1930/gal, up 3.74¢ Thursday on NYMEX, while gasoline for the same month surged by 4.10¢ to $1.2444/gal.
The September natural gas contract gained 5.1¢ to $5.712/Mcf.
Meanwhile, in London Thursday, North Sea Brent crude for September delivery also set a new trading record on the International Petroleum Exchange. Brent settled at $41.12/bbl, a $1.42 gain from Wednesday.
Gas oil for August delivery was up by $2.25 to $382/tonne on IPE. The September natural gas contract, meanwhile, gained 1.7¢ to the equivalent of $3.869/Mcf on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes reached $39.55/bbl Thursday, up 31¢ from Wednesday.
According to a UAE banking report, oil prices are likely to remain high and volatile, with the price of the OPEC basket of crudes forecast to average $35/bbl for the remainder of the year.
The latest economic report from Standard Chartered bank said, "The combined net oil exports of the Gulf Cooperation Council are on course to exceed $180 billion in 2004, a jump of $35 billion from 2003."
It continued, "Supply concerns and strong global demand have pushed oil prices to 20-year highs. To match demand, the gulf is now close to producing oil at full capacity."
Contact Steven Poruban at [email protected].