Commodity Corner: Irene Supply Fears Propel Oil, Gasoline

- Commodity Corner: Irene Supply Fears Propel Oil, Gasoline

Thursday, August 25, 2011
Rigzone Staff
by Matthew V. Veazey

Light sweet crude oil gained 14 cents Thursday amid fears that Hurricane Irene could diminish gasoline supplies along the East Coast.

The WTI ended the day at $85.30 a barrel after fluctuating from $83.01 to $86.56. The major hurricane, which is expected to hit North Carolina's Outer Banks Saturday evening, could cause widespread power outages, flooding, and wind damage from the Carolinas to New England. Six refineries with approximately 1.3 million barrels of processing capacity lie within the storm's projected path. Pipelines and terminals serving those facilities could also be impaired should Irene remain on her current track.

As of 5 p.m. EDT Thursday, Hurricane Irene was packing maximum sustained winds of 115 miles per hour. The storm, centered over the Bahamas at press time, was moving north-northwestward at 14 mph.

The Brent contract price also settled higher Thursday, gaining 47 cents to end the day at $110.62 a barrel. It peaked at $111.38 and bottomed out at $109.05.

Buoyed by the threat of Irene, gasoline for September delivery rose nine cents to end the day at $2.97 a gallon. It traded within a range from $2.88 to 2.97.

September natural gas edged upward by one cent to settle at $3.93 per thousand cubic feet. The front-month contract fluctuated from $3.87 to $3.98.

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Commodity Corner: Mfg. Data Stoke Oil Demand Fears

- Commodity Corner: Mfg. Data Stoke Oil Demand Fears

Monday, August 01, 2011
Rigzone Staff
by Matthew V. Veazey

The September contract price for light sweet crude oil settled at $94.89 a barrel Monday. The WTI traded within a range from $93.42 to $98.60.

The 81-cent day-on-day loss followed the release of disappointing July manufacturing figures by the Institute of Supply Management (ISM). ISM, which bases its findings on surveys of manufacturing supply managers, reported that the U.S. manufacturing sector expanded at a slower rate in July. The organization's closely monitored Purchasing Manager's Index (PMI) fell from 55.3 to 50.9 from June to July; a value above 50 generally means that the manufacturing sector is expanding.

"Production and employment also showed continued growth in July, but at slower rates than in June," ISM Manufacturing Business Survey Committee Chair Bradley J. Holcomb said in written statement. "The New Orders Index registered 49.2 percent, indicating contraction for the first time since June of 2009, when it registered 48.9 percent." Holcomb also pointed out that export sales were very strong and domestic sales were sluggish last month.

Brent futures edged upward Monday, gaining seven cents to settle at $116.81 a barrel. The Brent contract price peaked at $119.95 and bottomed out at $114.86.

Weather forecast models are projecting above-normal temperatures throughout the eastern half of the U.S. through the middle of next week, and cooling demand is expected to increase as a result. September natural gas gained 4.3 cents to end the day at $4.19 per thousand cubic feet.

A new weather system in the Caribbean could also have an effect on natural gas prices over the next several days. The National Hurricane Center in Miami reported Monday afternoon that a "vigorous" tropical wave has formed near the Lesser Antilles and will likely to develop into a tropical cyclone by the middle of the week. The system, which was moving west-northwestward at 15 to 20 miles per hour at 2 p.m. EDT Monday, would be named Emily if it strengthens into a tropical storm.

September natural gas traded within a range from $4.13 to $4.20 Monday.

Gasoline for September delivery lost a penny Monday to settle at $3.05 a gallon after fluctuating from just under $3.01 to $3.145. The August contract, which expired Friday, settled at $3.11.

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Commodity Corner: Default Fears Push Oil Lower

- Commodity Corner: Default Fears Push Oil Lower

Monday, July 25, 2011
Rigzone Staff
by Matthew V. Veazey

With investors nervous about whether Congress and the White House can agree on a plan by August 2 to raise the U.S. debt ceiling and possibly avert default, crude oil settled lower Monday.

Light sweet crude oil for September delivery lost 67 cents to end the day at $99.20 a barrel. The September Brent contract price fell 73 cents to settle at $117.94 a barrel. Recent debt ceiling negotiations between congressional leaders and the Obama Administration have proven both fruitless and contentious. Key areas of disagreement have been how high to raise the federal government's current $14.3 trillion borrowing limit and how deeply to cut spending to offset the increase. Subsequent negotiations between Democrat and GOP congressional leaders did yield a bipartisan framework proposal, but the White House has increased the specter of default by opposing this potential deal.

The WTI peaked at $99.87 and bottomed out at $98.52 and the Brent fluctuated from $117.00 to $118.31.

The August natural gas contract price ended the day at $4.39 per thousand cubic feet, a penny lower than Friday's settlement price. Natural gas traded within a range from $4.34 to $4.46 Monday.

Front-month gasoline remained flat Monday, again settling at $3.13 a gallon. The August contract price fluctuated from $3.09 to $3.13 during the first session of the week.

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Commodity Corner: Oil Falls on EU, China Fears

- Commodity Corner: Oil Falls on EU, China Fears

Monday, May 23, 2011
Rigzone Staff
by Matthew V. Veazey

The July contract price for a barrel of crude oil fell to $97.70 a barrel Monday.

Monday's selloff occurred as the dollar strengthened amid fears of a spreading debt crisis in the European Union. Stoking concerns was Standard and Poor's decision to revise Italy's credit outlook from stable to negative. The Dollar Index, which gauges the value of the U.S. Dollar against a basket of other major world currencies, rose 0.93 percent Monday. Priced in dollars, oil becomes a less attractive value for investors holding other currencies.

Also contributing to the lower oil price was a report by HSBC that manufacturing growth in China hit its lowest point in nine months in April. The bank, in releasing its latest Purchasing Managers Index (PMI) report, observed that new order growth in China is below the long-run trend.

July crude oil peaked at $100.04 and bottomed out at $96.37 during Monday's session.

Weather forecasters expect Americans in the southern and eastern regions of the U.S. to experience hotter-than-normal temperatures through next week. As a result, demand for air conditioning—and the natural gas used to generate electricity—is expected to strengthen during the period.

Front-month natural gas gained 12 cents Monday to settle at $4.35 per thousand cubic feet. June natural gas traded within a range from $4.22 to $4.38.

The June gasoline contract price remained flat at $2.94 a gallon Monday. It fluctuated from $2.87 to $2.955.

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