MARKET WATCHSpeedy repair of Iraqi pipeline undermines energy prices

Energy futures prices plunged Monday with reports that Iraq resumed exporting nearly 1 million b/d of crude Sunday after workers repaired one of two sabotaged pipelines to southern export terminals faster than expected.

June 22, 2004

2 min read

By OGJ editors

HOUSTON, June 22 -- Energy futures prices plunged Monday with reports that Iraq resumed exporting nearly 1 million b/d of crude Sunday after workers repaired one of two sabotaged pipelines to southern export terminals faster than expected.

The second pipeline is expected to be operational within a few days, with exports back up to previous levels of 1.8 million b/d, Iraqi officials said. Exports from the Kirkuk oil field in northern Iraq are still shut in after that pipeline was sabotaged in late May (OGJ Online, June 17, 2004).

Meanwhile, Norwegian oil workers remained on strike Monday, halting some 300,000 b/d of production. That outage could increase to 450,000 b/d if additional workers join the strike this week, sources said.

Energy prices
The July contract for benchmark US sweet, light crudes fell by $1.12 to $37.63/bbl Monday on the New York Mercantile Exchange, while the August position was down by $1.23 to $37.77/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., also lost $1.12 to $37.63/bbl.

Gasoline for July delivery plunged by 3.55¢ to $1.1615/gal on NYMEX. Heating oil for the same month dropped 3.21¢ to 99.32¢/gal. The July natural gas contract fell by 18.1¢ to $6.34/Mcf "on more profit-taking, milder weather this week, and a tumbling crude oil market," said analysts Tuesday at Enerfax Daily.

"Physical natural gas prices last week were lifted by outages and operational problems at nuclear power plants in Arizona, Arkansas, and California, many of which are back up now," the analysts said. Meanwhile, they reported, "Traders said that there was no indication of even a remote threat of a tropical weather disruption in the Gulf of Mexico."

In London, the August contract for North Sea Brent crude tumbled by $1.08 to $35.13/bbl Monday on the International Petroleum Exchange. Gas oil for July delivery was down by $3.25 to $317.25/tonne. The July natural gas contract slipped by 0.2¢ to the equivalent of $3.85/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes retreated by 54¢ to $34.65/bbl Monday.