Market watch, Sept. 12

International energy futures prices jumped Monday as traders concluded the 800,000 b/d production increase proposed by the Organization of Petroleum Exporting Countries, which will start Oct. 1, is too late to help build heating oil inventories for this winter.


International energy futures prices jumped Monday as traders concluded the 800,000 b/d production increase proposed by the Organization of Petroleum Exporting Countries, which will start Oct. 1, is too late to help build heating oil inventories for this winter.

However, some analysts said the market might be overreacting to fears of a supply crunch and underestimating the effects of the production increase.

The October contract for home heating oil on the New York Mercantile Exchange shot up 5.49� to $1.0498/gal, more than recouping a loss of 3.37� Friday when traders were scurrying to reap profits from previous increases prior to the weekend OPEC meeting.

The natural gas position for October also wiped out its previous 11.8� loss, gaining 13.1� to $5.01/Mcf. Other energy commodities regained only portions of Friday's losses, however.

Unleaded gasoline for October was up 2.3� to 97.35�/gal on the NYMEX.

The October contract for benchmark US sweet, light crudes jumped $1.51 to $35.14/bbl, while the November contract was up $1.45 to $34.22/bbl. Both oil contracts continued to climb in after-hours electronic trading to $35.28/bbl and $34.39/bbl, respectively.

In London, prices initially fell in reaction to the OPEC agreement to boost production, but the market eventually became more bullish. The October contract for North Sea Brent crude closed at $33.62/bbl on the International Petroleum Exchange, up 84� for the day.

However, analysts said the London market seems set to move even higher. Another report this week of low US inventories could cause prices to shoot above $35/bbl, they said.

The October natural gas contract was flat at the equivalent of $2.88/Mcf on the IPE.

The average price for OPEC's basket of seven crudes inched up 8� to $32.45/bbl.

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