Market Watch: Falling bombs trigger slight rise in energy prices
By the OGJ Online Staff
HOUSTON, Oct. 9 -- US air strikes on Afghanistan caused a slight rise in most energy futures prices Monday on the New York Mercantile Exchange.
However, the increase was dampened by continued discussions of a possible production cut by members of the Organization of Petroleum Exporting Countries after the average price for their basket of seven crudes dropped below their targeted floor of $22/bbl for 10 consecutive trading days. OPEC's basket price lost another 34¢ to $19.75/bbl Monday.
Most traders apparently believe OPEC members will forego a reduction of their output for political reasons. Some said excess production capacity among non-OPEC nations would come on stream to replace any cut in OPEC production, costing the cartel some of its market share.
The November contract for benchmark US light, sweet crudes advanced by 6¢ to $22.45/bbl Monday on the NYMEX, while the December contract was up 5¢ to $22.86/bbl. Both contracts continued to increase in after-hours electronic trading to $22.50/bbl and $22.88/bbl, respectively.
Home heating oil for November delivery rose 0.45¢ to 64.47¢/gal, but unleaded gasoline for the same month slipped by 0.4¢ to 61.47¢/gal. The November natural gas contract gained 4.3¢ to $2.27/Mcf.
In London, North Sea Brent crude prices were slightly lower in range-bound trading on the International Petroleum Exchange as traders waited for fresh news on military action in Afghanistan.
The November Brent contract dipped 6¢ to $21.57/bbl. Brokers said prices would probably hover around $21-$22/bbl, pending any new developments.
The November natural gas contract dropped 3.6¢ to the equivalent of $3.40/Mcf on the IPE.