Crude prices soar as production at Gulf of Mexico shuts due to storm threat
Crude oil prices soared today and closed above $83/barrel for the first time today in New York. Prices rose to a record after the U.S. said that production in the Gulf of Mexico was shut in because of a storm threat. The Gulf is expected to shut down 28% of its total production. The Gulf accounts for about 25% of U.S. oil production.
For the day ending Thursday, 20 September, 2007, crude-oil futures for light sweet crude for October delivery closed at $83.32/barrel (higher by $1.39/barrel or 1.7%) on the New York Mercantile Exchange. Futures touched $83.90, the highest intraday price till date. Prices are up 38% from a year earlier.
As per the U.S. National Hurricane Center, a weak low-pressure system with the potential to become a subtropical storm as early as today has formed in the eastern Gulf.
Brent crude oil for November settlement rose 62 cents (0.8%) to $79.09 a barrel on the London-based ICE Futures Europe exchange.
Since the last couple of days, prices had crossed $81/barrel after the Fed lowered its benchmark interest rate by a half point to 4.75%, the first cut in four years, to help sustain economic growth in the world's largest oil-consuming nation.
As per yesterday’s weekly inventory report by the Energy Dept, crude supplies fell 3.8 million barrels during the week ended 14 September. This was more than analysts’ expectation of 2 million barrels. Supplies have now fallen a total of 18.3 million barrels in four weeks. Crude inventories total 318.8 million - down 3.9% from a year ago.
Natural gas falls on adequate inventories
Natural gas in New York fell after a report showed U.S. stockpiles are adequate to meet winter heating needs. Traders also discounted the potential of a supply disruption from a Gulf of Mexico storm. Stockpiles rose 63 billion cubic feet (against expected 66 bcuf) to 3.132 trillion cubic feet in the week ended 14 September.
Gas for October delivery fell 17.2 cents (2.8%) to settle at $6.008 per million British thermal units.
October reformulated gasoline closed at $2.1351 a gallon, up 4.17 cents (2%). October heating oil closed up 1.56 cents at $2.2609 a gallon.
Earlier this week, Goldman Sachs said its analysts raised their year-end forecast for oil prices to $85 a barrel for 2007 and pegged the year-end price at $95 a barrel for 2008.
Also, OPEC planned to boost daily oil production by 500,000 barrels. OPEC's production target is 27.2 million barrels a day, beginning 1 Nov. OPEC, has decided to raise their daily output by 500,000 barrels per day, starting 1 November.
Attacks on oil facilities in Nigeria have curtailed shipments and tight supplies from OPEC have bolstered crude prices this year. As per the U.S. Energy Information Administration, tight global energy supplies are expected to keep energy prices high through 2008.