MARKET WATCHMarkets mixed as Iraq resumes crude exports
By OGJ editors
HOUSTON, June 21 -- Energy futures were mixed Friday as a strike by Norwegian oil workers offset an announcement that partial exports of Iraqi crude were to resume over the weekend.
The strike affected the availability of nearly 400,000 b/d of crude to world markets. Meanwhile, Iraqi officials said late Sunday they reactivated the Basra and Khor al-Amaya terminals and resumed loading crude into tankers, after repairing one of three sabotaged pipelines.
Officials said 1 million b/d of crude exports would remain shut in until the other two pipelines are repaired. However, a Coalition Provisional Authority spokesman predicted Iraqi exports would improve to 1.6 million b/d by midweek, the same level as before the latest terrorist attack on pipeline facilities (OGJ Online, June 18, 2004).
Meanwhile, Jefferies & Co. Inc., said Monday it boosted its outlook for West Texas Intermediate crude to an average $35.50/bbl from $31.25/bbl in 2004, and to $30/bbl from $28/bbl in 2005. That's based on the fact that "crude oil prices have remained at very lofty levels due to tight underlying supply-demand fundamentals, limited worldwide excess capacity, a weak US dollar, and to a lesser extent, concerns about supply disruptions and limited US refining capacity," said Jefferies analysts.
"We expect oil demand to increase 2.3 million b/d (2.9%) in 2004 to 81.1 million b/d and increase at least 1.4 million b/d in 2005 (1.8%), following a jump of 1.8 million b/d (2.3%) in 2003," analysts said. "The keys to the 2004 demand increase are China (up 800,000 b/d, or 14.3%) and other Asia (up 400,000 b/d, or 5.1%). Rising oil demand from India, which surged to an all-time high of 2.57 million b/d in March and appears poised to remain solid, is also a key to growing worldwide oil demand," they said.
Jefferies also increased its spot market average price forecast for Henry Hub natural gas to $5.50/Mcf from $4.90/Mcf in 2004 and to $5.25/Mcf from $4.50/Mcf in 2005. "We believe our revised commodity price assumptions provide a rock-solid environment for rising worldwide upstream activity," the analysts said. As a result, they also raised US rig count projections to an average 1,160 in 2004 from 1,135 previously and to 1,225 in 2005.
Energy prices
The July contract for benchmark US light, sweet crudes increased by 29¢ to $38.75/bbl Friday on the New York Mercantile Exchange, while the August contract was up by 19¢ to $39/bbl. On the US spot market, West Texas Intermediate gained 27¢ to $38.75/bbl.
Gasoline for July delivery rose by 0.99¢ to $1.197/gal on NYMEX, but heating oil for the same month slipped by 0.55¢ to $1.0253/gal. The July natural gas contract lost 6.2¢ to $6.52/Mcf on profit taking ahead of the weekend, analysts said Monday at Enerfax Daily.
In London, traders were less bullish about the strike by Norwegian oil workers. The August contract for North Sea Brent oil remained unchanged at $36.21/bbl. Brokers said futures prices in that market appear to be relatively stable above $36/bbl for the near term. Gas oil for July delivery increased by $2 to $320.50/tonne. The July natural gas contract rose by 0.94¢ to $3.87/Mcf.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes was up by 50¢ to $35.19/bbl Friday. OPEC announced plans to host an international seminar Sept. 16-17 in Vienna to study industry developments and the global energy outlook. That meeting will be attended by OPEC ministers, key government officials from energy-consuming countries, and industry experts, officials said. The last such OPEC seminar was in September 2001.