Market watch: Oil futures prices rise in weak rally
The pending expiration of a US crude contract and Tropical Storm Chantal's potential to disrupt oil shipments to Gulf Coast refineries boosted energy futures prices in international markets Monday.
By the OGJ Online Staff
HOUSTON, Aug. 21 -- The pending expiration of a US crude contract and Tropical Storm Chantal's potential to disrupt oil shipments to Gulf Coast refineries boosted energy futures prices in international markets Monday.
The September contract for benchmark US light, sweet crude jumped 50¢ to $27.18/bbl on the New York Mercantile Exchange as traders moved to square market positions prior to expiration of that contract after today's session. The October contract also gained 62¢ to $26.23/bbl. Both contracts continued to inch up during after-hours electronic trading to $27.25/bbl and $26.30/bbl, respectively.
The extent of Monday's rebound in oil prices surprised analysts who were expecting a minor recovery following losses in recent sessions. However, they said the rally would likely run out of steam because it lacks fundamental support.
Refined products also participated in Monday's rally. Home heating oil for September delivery moved up 0.84¢ to 71.35¢/gal, while unleaded gasoline for the same month added 0.36¢ to 74.31¢/gal.
However, the September contract for natural gas lost 11.6¢ to $3.19/Mcf on the NYMEX.
In London, Tropical Storm Chantal's slow crawl across Mexico's Yucatan Peninsula toward the Gulf of Mexico proved exactly the kind of unexpected bullish news that traders were looking for to justify an oil price raise. Although the storm could suddenly change course, the potential risk to oil shipments from Mexico and Venezuela to refineries on the Texas and Louisiana Gulf Coasts triggered buying on the International Petroleum Exchange.
The October contract for North Sea Brent crude closed at $25.05, up 32¢ for the day after trading in a range of $24.50-$25.25/bbl Monday. The September natural gas contract also gained 4.7¢ to the equivalent of $2.45/Mcf on the IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes lost 27¢ to $23.48/bbl Monday.