MARKET WATCHEnergy prices rebound with concern for Norwegian strike

Energy futures prices rose Thursday, continuing their recent pattern of down one day, up the next, as traders worried about a threatened lockout of striking Norwegian offshore oil workers.

June 25, 2004

2 min read

By OGJ editors

HOUSTON, June 25 -- Energy futures prices rose Thursday, continuing their recent pattern of down one day, up the next, as traders worried about a threatened lockout of striking Norwegian offshore oil workers.

Analysts also voiced fears about the capacity of the Organization of Petroleum Exporting Countries to produce enough additional crude to make up losses from a prolonged shutdown of Norwegian production (OGJ Online, June 24, 2004) as well as any additional disruption of Iraqi production. Coordinated terrorist attacks in five Iraqi cities killed more than 100 Iraqis and 3 US soldiers Thursday.

Meanwhile, Dow Jones Newswires quoted senior union officials in Norway as saying the Norwegian government was likely to order striking workers to return to work Friday and that offshore oil production could return to normal by Saturday. The threatened lockout by oil companies was generally viewed as a tactic to force the government to intervene in the strike.

Energy prices
The August contract for benchmark US light, sweet crudes gained 36¢ to $37.93/bbl Thursday on the New York Mercantile Exchange, recouping only a portion of the previous day's loss. The September contract was up by 38¢ to $38.02/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., inched up by 7¢ to $37.75/bbl.

Heating oil for July delivery jumped by 2.29¢ to $1.0227/gal Thursday on NYMEX. Gasoline for the same month increased by 2.04¢ to $1.2219/gal. The July natural gas contract gained 7¢ to $6.49/Mcf on the basis of a "supportive" report of US gas storage Thursday by the US Energy Information Administration (OGJ Online, June 24, 2004). "The key factor seen pushing [natural gas futures] prices up though seems to be a shift in weather forecasts over the past 2 days calling for warmer temperatures in the first week of July," said analysts Friday at Enerfax Daily.

In London, the August contract for North Sea Brent crude gained 27¢ to $35.30/bbl Thursday on the International Petroleum Exchange. Brokers said futures prices seem stable above $35/bbl in that market, with little reason for much slippage at present. Gas oil for July delivery increased by $7.50 to $319.25/tonne. The July natural gas contract was up by 1.86¢ to the equivalent of $3.81/Mcf on IPE.

However, the average price for OPEC's basket of seven benchmark crudes lost 14¢ to $34.10/bbl Thursday.