MARKET WATCHCrude prices fall as Iraq reopens pipeline

Energy prices continued to fall Monday following reports that Iraq had resumed transportation of crude from its northern Kirkuk field to the Mediterranean port of Ceyhan, Turkey.

Aug. 24, 2004

2 min read

Sam Fletcher
Senior Writer

HOUSTON, Aug. 24 -- Energy prices continued to fall Monday following reports that Iraq had resumed transportation of crude from its northern Kirkuk field to the Mediterranean port of Ceyhan, Turkey.

Iraq started moving crude through its repaired northern pipeline Saturday. By Monday, officials reported that 400,000-450,000 b/d was moving through that pipeline, down from a prewar capacity of 800,000 b/d. Officials said the main southern pipeline to crude export terminals in the Persian Gulf is expected to be reactivated soon.

Meanwhile, European Monetary Affairs Commissioner Joaquin Almunia said over the weekend that current high oil prices are not justified by market fundamentals. He said oil prices would likely be a topic at the Sept. 10-11 meeting of European Union finance ministers.

Energy prices
The October contract for benchmark sweet, light crudes fell by 67¢ to $46.05/bbl Monday on the New York Mercantile Exchange, while the November position retreated by 63¢ to $45.71/bbl. On the US spot market, West Texas Intermediate, Cushing, Okla., plunged by $1.16 to $46.70/bbl. Some analysts expressed doubt that price declines in two consecutive trading sessions after a long series of successive record highs signal the start of a major rollback in crude prices, however.

Heating oil for September delivery lost 1.49¢ to $1.2147/gal Monday on NYMEX. Gasoline for the same month was down by 0.98¢ to $1.2575/gal. The September natural gas contract dropped by 24.2¢ to $5.31/Mcf "on poor demand and poorer prospects," said analysts Tuesday at Enerfax Daily. "A mix of commercials, industrials, and [investment] funds sold the market down on bearish weather prospects," they explained. "Since late May's high of $6.75[/Mcf], when prospects for a steaming-hot summer were high, the market has fallen 21%."

In London, the October contract for North Sea Brent crude lost 51¢ to $43.03/bbl Monday on the International Petroleum Exchange. Gas oil for September delivery was down by $7.25 to $392.50/tonne. However, the September natural gas contract shot up by 14.6¢ to the equivalent of $4.30/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes dropped by 89¢ to $42.27/bbl Monday.

Contact Sam Fletcher at [email protected]