MARKET WATCHMiddle East problems keep pushing up energy prices

Energy futures prices continued to climb Wednesday with traders wary of possible disruption of crude supplies from the Middle East in the wake of spreading anti-US sentiment over reported abuse to Iraqi prisoners by US-led coalition forces.

May 6, 2004

2 min read

By OGJ editors

HOUSTON, May 5 -- Energy futures prices continued to climb Wednesday with traders wary of possible disruption of crude supplies from the Middle East in the wake of spreading anti-US sentiment over reported abuse to Iraqi prisoners by US-led coalition forces.

The June contract for benchmark US sweet, light crudes gained 59¢ to $39.57/bbl Wednesday on the New York Mercantile Exchange, while the July position advanced by 61¢ to $39.36/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., increased by 60¢ to $39.58/bbl Wednesday.

Gasoline for June delivery rose by 0.67¢ to $1.3125/gal Wednesday on NYMEX, as traders shrugged off a report by the US Energy Information Administration that US gasoline inventories shot up by 4 million bbl to 204.million bbl during the week ended Apr. 30. Near-month gasoline contracts have set new records for high prices in 9 out of 10 NYMEX trading sessions from Apr. 22 through May 5, as gasoline stocks remained at critically low levels prior to the traditional start of summer demand on Memorial Day, May 31.

Recent escalation of energy prices "has been heavily centered on dislocations in the US gasoline market. Over the past week, June gasoline futures have risen by $4.37/bbl, three times the pace of the rise in crude oil prices. As a result, gasoline crack spreads are manifesting a severe spike," said Paul Horsnell, Barclays Capital Inc., London.

US stocks of crude gained 100,000 bbl—well below analysts' expectations—to 298.9 million bbl during the week ended Apr. 30. Distillate fuel stocks gained 2.4 million bbl to 107.2 million bbl, with diesel fuel accounting for all of the increase.

The June heating oil contract jumped by 0.97¢ to 99.78¢/gal Wednesday on NYMEX. Natural gas for the same month gained 4.1¢ to $6.31/Mcf.

On the International Petroleum Exchange in London, the June contract for North Sea Brent crude increased Wednesday by 79¢ to $36.72/bbl, the highest level since the 1990 Gulf War. Gas oil for May delivery inched up by 75¢ to $321.75/tonne. The June natural gas contract increased by 0.91¢ to the equivalent of $3.70/Mcf on IPE.

The average price for the Organization of Petroleum Exporting Counties' basket of seven benchmark crudes was up by 59¢ to $35.30/bbl.