Sam Fletcher
Senior Writer
HOUSTON, July 9 -- Energy prices soared above $40/bbl Thursday for the first time in more than a month, after US Sec. of Homeland Security Tom Ridge warned that terrorists may be planning an attack aimed at disrupting the upcoming US presidential elections.
"It is obvious that any more increase in oil supply will not help as prices are rising on the fear factor," said an unnamed major trading house source quoted Friday by the official news agency of the Organization of Petroleum Exporting Countries. "We see the war and fear premiums rising in the barrel price due to instability in Iraq and ever-rising tension in the rest of the Middle East," the source said.
The New York and London energy futures markets also were impacted by reports Thursday of lower-than-expected increases in US inventories of crude and petroleum products during the week ended July 2.
The US Energy Information Administration reported commercial stocks of crude inched up by only 100,000 bbl to 305 million bbl last week and are now 1.2 million bbl below the 5-year average for this period. US gasoline inventories increased by 1 million bbl to 206.1 million bbl, still 7.6 million bbl below the 5-year average on the cusp of the high-demand Fourth of July weekend. Distillate fuel stocks increased by 3.1 million bbl, primarily in diesel fuel, to 114 million bbl, down by 5.7 million bbl for the 5-year average.
US imports of crude were down by 453,000 b/d to an average 10.1 million b/d last week. That marked the seventh consecutive week that crude imports have averaged more than 10 million b/d—"the longest such streak ever," said EIA. Imports of both finished gasoline and blending components averaged nearly 1.3 million b/d during the same period, "the second highest weekly average ever."
Inputs of crude into US refineries were essentially unchanged at nearly 16.1 million b/d last week. Moreover, US refinery operations increased to 96.7% of capacity last week. Yet gasoline production fell slightly from the previous week to little more than 8.7 million b/d.
Energy prices
The August contract for benchmark US light, sweet crudes jumped by $1.25 to $40.33/bbl Thursday on the New York Mercantile Exchange, as did West Texas Intermediate at Cushing, Okla., on the US spot market. The September crude contract was up by $1.33 to $40.53/bbl on NYMEX. It marked the first time that the near-month NYMEX contract had pushed past $40/bbl since June 1.
Heating oil for August delivery climbed to a 16-month high on NYMEX, up by 2.3¢ to $1.1021/gal. Gasoline for the same month shot up by 5.43¢ to $1.3278/gal. However, the August natural gas contract plunged by 18.5¢ to $6.19/Mcf on NYMEX in reaction to a larger-than-expected build in US storage. EIA reported 109 bcf of gas were injected into storage last week, vs. expectations of 100 bcf.
In London, the August contract for North Sea Brent crude increased by $1.16 to $37.77/bbl Thursday on the International Petroleum Exchange. Gas oil for July delivery gained $3.50 to $346.25/tonne. However, the August natural gas contract lost 2.8¢ to the equivalent of $4.01/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes was up by 44¢ to $35.91/bbl Thursday.
Contact Sam Fletcher at [email protected]