MARKET WATCH: Hostage situation in Algeria raises crude prices
Crude prices climbed Jan. 17 for the second consecutive session as Islamic militants holding hostages at a remote BP PLC natural gas plant in Algeria raised the risk for supplies from Middle East and North Africa. Government reports of better-than-expected US housing starts and jobless claims numbers helped push crude oil markets higher in later trading.
“The Algerian hostage drama kept oil markets on edge as participants pondered a possible threat to other oil and gas facilities in the region, especially in Libya,” said Marc Ground at Standard New York Securities Inc., the Standard Bank Group.
Algeria's state news service reported Jan. 18 nearly 100 of the 132 foreign workers held by the rebels had been freed in a rescue attempt, but various sources indicated an unknown number of hostages were dead. Militants seized the gas plant Jan. 16 when their attempt to highjack two buses at the plant failed. Government forces then besieged the plant. It was reported the militants had wanted to trade two captive US citizens for two terrorists held in the US.
China's economy data indicated a 7.9% growth rate in the 3 months through December, up from 7.4% in the previous quarter. For 2012 as a whole, China’s growth rate was up 7.8%, its weakest performance since the 1990s, officials said.
Analysts at Barclays Capital Commodity Research said, “Crude oil markets have had a mixed week, with front-month West Texas Intermediate continuing to inch higher, crossing $95/bbl, while the equivalent Brent contract continues to move sideways. Meanwhile, near-term tightness has pushed natural gas prices upward for the week. Price action for the rest of the winter, however, will largely be weather dependent. UK gas prices jumped due to some very cold weather and the threat of some supply disruption from Algeria. Healthy storage levels for now have kept gains limited.”
A stronger dollar has been a drag on oil prices with markets still nervous over the economic crisis in the Euro-zone.
Energy prices
The February contract for benchmark US light, sweet crudes climbed $1.25 to $95.49/bbl Jan. 17 on the New York Mercantile Exchange—“its highest close since mid-September,” Ground reported. The March contract gained $1.26 to $95.94/bbl. On the US spot market, WTI at Cushing, Okla., was up $1.25 to $95.49/bbl.
Heating oil for February delivery regained 2.21¢ to $3.02/gal on NYMEX. Reformulated stock for oxygenate blending for the same month continued to rise, up 4.7¢ to $2.77/gal.
The February natural gas contract rebound 5.9¢ to $3.49/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., dropped 3.5¢ to $3.42/MMbtu.
In London, the new front-month March IPE contract for North Sea Brent increased $1.49 to $111.10/bbl. Gas oil for February lost $2.50 to $952.50/tonne.
The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes regained 26¢ to $108.01/bbl.
Contact Sam Fletcher at [email protected].
Sam Fletcher | Senior Writer
I'm third-generation blue-collar oil field worker, born in the great East Texas Field and completed high school in the Permian Basin of West Texas where I spent a couple of summers hustling jugs and loading shot holes on seismic crews. My family was oil field trash back when it was an insult instead of a brag on a bumper sticker. I enlisted in the US Army in 1961-1964 looking for a way out of a life of stoop-labor in the oil patch. I didn't succeed then, but a few years later when they passed a new GI Bill for Vietnam veterans, they backdated it to cover my period of enlistment and finally gave me the means to attend college. I'd wanted a career in journalism since my junior year in high school when I was editor of the school newspaper. I financed my college education with the GI bill, parttime work, and a few scholarships and earned a bachelor's degree and later a master's degree in mass communication at Texas Tech University. I worked some years on Texas daily newspapers and even taught journalism a couple of semesters at a junior college in San Antonio before joining the metropolitan Houston Post in 1973. In 1977 I became the energy reporter for the paper, primarily because I was the only writer who'd ever broke a sweat in sight of an oil rig. I covered the oil patch through its biggest boom in the 1970s, its worst depression in the 1980s, and its subsequent rise from the ashes as the industry reinvented itself yet again. When the Post folded in 1995, I made the switch to oil industry publications. At the start of the new century, I joined the Oil & Gas Journal, long the "Bible" of the oil industry. I've been writing about the oil and gas industry's successes and setbacks for a long time, and I've loved every minute of it.