Market watch: NYMEX scheduled to reopen

The New York Mercantile Exchange scheduled an abbreviated open-outcry session for 11 am-2 pm EDT Monday in an energy market that some analysts say will be driven more by an information deficit than by market fundamentals.

Sept. 17, 2001

3 min read

By the OGJ Online Staff

HOUSTON, Sept. 17 -- The New York Mercantile Exchange scheduled an abbreviated open-outcry session for 11 am-2 pm EDT Monday in an energy market that some analysts say will be driven more by an information deficit than by market fundamentals.

"Current fundamentals are largely irrelevant; risk and fear are now the dominant drivers," said Paul Horsnell, with JP Morgan Securities Inc. in London.

"We are set for a period of headline-driven trading," Horsnell predicted in a report issued Monday.

"Given the uncertainty (of potential US retaliation for last week's terrorists attacks and the impact on energy markets), it is completely rational for users to wish to lock in purchases and claims to oil for, say, 2 months' time. The alternative is to wait and to leave themselves exposed to the potential price changes between now and November," he said.

Horsnell noted immediate pledges by top officials of the Organization of Petroleum Exporting Countries last week to maintain adequate oil supplies to world markets.

"They will act as a moderating force, but there are limits to their power in the current circumstances. They cannot remove all risk, and they cannot remove all uncertainty," he said.

The October contract for benchmark US light, sweet crudes jumped nearly $2 to $29.53/bbl in the first 2-hour use of the NYMEX's internet-based electronic trading system on Friday. There was no overnight electronic trading by NYMEX on Sunday.

However, crude oil futures advanced by more than $1/bbl in overnight trade on Asian markets, amid rising concerns over US retaliation to the attacks in New York and Washington, DC. The new near-month November contract for North Sea Brent crude gained $1.06 to $29.43/bbl on the Singapore Exchange, mimicking Friday's performance for that same contract on the International Petroleum Exchange in London. Spot market prices for Dubai crude increased by $1.02 to $27/bbl Monday on the Tokyo Commodity Exchange.

The October contract for natural gas inched up 0.9¢ to the equivalent of $3.09/Mcf Friday on the IPE in London.

The average price for OPEC's basket of seven crudes jumped $1.13 to $27.36/bbl Friday. But for the full week, that basket price averaged $25.95/bbl last week, up from $24.72/bbl the previous week.

So far this year, OPEC's basket price has averaged $24.78/bbl, compared with $27.60/bbl for all of 2000.

OPEC members would need to act if world oil prices exceed the $28/bbl top of OPEC's target price range for oil, said Obaid Bin Saif Al-Nasseri in a report Monday by the OPEC news agency. OPEC ministers have scheduled their regular meeting Sept. 26 in Vienna to study world supply and demand for oil.