Market watch, Sept. 18

International energy prices shot up Friday amid concerns over escalating tensions between Iraq and Kuwait in the Middle East and the possible threat of a hurricane to offshore production in the Gulf of Mexico.


International energy prices shot up Friday amid concerns over escalating tensions between Iraq and Kuwait in the Middle East and the possible threat of a hurricane to offshore production in the Gulf of Mexico.

Iraq last week again accused Kuwait of stealing oil from adjacent fields and flew some of its fighter jets near the common border between the two countries. Disputes over production from bordering fields were among the issues that triggered Iraq's invasion of Kuwait in the early 1990s.

"However, we do not expect a major confrontation to develop, although crude oil prices are expected to continue to be volatile near term," said Robert Morris, senior energy analyst for Salomon Smith Barney Inc., in his weekly exploration and production report Monday.

Hurricane Gordon's potential threat to offshore production in the gulf was probably a bigger factor in Friday's fly-up of prices. But that storm went ashore Sunday in northwestern Florida without coming even close to gulf operations.

The October contract for benchmark light, sweet crude shot up $1.85 to $35.92/bbl Friday on the New York Mercantile Exchange. The November contract also jumped $1.67 to $34.72/bbl.

Unleaded gasoline for October delivery escalated 2.74� to 96.66�/gal, while home heating oil for the same month rose 2.57� to $1.0329/gal.

Natural gas for October inched up 1.1� to $5.21/Mcf on the NYMEX.

In London, the November contract for North Brent crude posted a strong gain to close at $33.98/bbl Friday on the International Petroleum Exchange. The October contract expired Thursday at $31.94/bbl.

The October natural gas contract was unchanged at the equivalent of $2.95/Mcf on the IPE.

On the Singapore exchange, the November contract for North Sea Brent crude oil shot up by $1.69 to close at $33.98/bbl, the highest level in 10 years. December Brent rose by $1.44 to close at $33.43.

The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes rose by $1.93 to $32.84/bbl Friday.

But the average price for that crude basket dipped last week to $31.48/bbl from $32.88/bbl the previous week. So far this year, that basket price has averaged $27.02/bbl, up from $17.47/bbl for all of 1999 and $12.28/bbl in 1998.

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