Market watch, Oct. 24

Political tensions in the Middle East kept pushing up international energy futures prices Monday as the US Department of Energy outlined its plan for emergency winter sales of home heating oil.


Political tensions in the Middle East kept pushing up international energy futures prices Monday as the US Department of Energy outlined its plan for emergency winter sales of home heating oil.

The December contract for benchmark US sweet, light crudes jumped 81� to $33.76/bbl on the New York Mercantile Exchange, while the January contract gained 71� to $32.99/bbl. In after-hours electronic trading, both continued rising to $33.82/bbl and $33.13/bbl respectively.

The November contract for home heating oil also rose 2.79� to 99.9�/gal on the NYMEX, as unleaded gasoline for the same month increased 1.37� to 97.12�/gal.

The November position for natural gas gained 13.5� to $5.07/Mcf on the NYMEX.

In London, the December contract for North Sea Brent crude was up 47� to $32.09/bbl on the International Petroleum Exchange. The November natural gas contract dropped 10� to the equivalent of $3.60/Mcf.

On the Singapore exchange, the December contract for North Sea Brent crude oil gained 4� to close at $32.09/bbl, while the January contract slipped 10� to $31.52/bbl.

The Organization of Petroleum Exporting Countries reported the average price for its basket of seven crudes increased 60� Monday to $31.17/bbl.

Brokers said the oil market is braced for escalation of tensions in the Middle East and that news headlines could trigger volatile price moves over the next few days.

Meanwhile, the US Department of Energy is seeking public comment through Nov. 3 on its plan for rapid competitive sales of 2 million bbl of heating oil in the event of severe winter disruptions of that fuel.

DOE officials said that all 2 million bbl of those emergency supplies are in place at two locations in New Haven, Conn., and Woodbridge, NJ (OGJ Online, Oct. 20, 2000). The plan calls for competitive sale of those supplies in 50,000-bbl lots to preregistered bidders in an emergency process that would take only 1-3 days to complete.

No one company will be awarded more than half of the heating oil offered at any one geographic location, officials said.

The DOE plan would be triggered by a presidential decision that a severe fuel problem exists. DOE officials would notify prospective bidders of the proposed sale within 1-2 days, via agency websites and newswire services.

Bidders would submit their bids by noon the next day. Officials said sealed bids would be taken over the internet using secure encrypted connections. Bidders also will be required to present financial guarantees of $250,000 either before or with their bids.

DOE officials said they would notify bidders of the results of the sale that same day prior to the NYMEX close. Winning bids will be announced publicly after the market closes.

The heating oil will be picked up from terminals by ship, barge, truck, or pipeline, where available. Those terminals are required to be capable of delivering all of the emergency heating oil in less than 10 days on 24 hours notice, officials said.

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