Mike
08-31-2004, 04:38 AM
Oil Prices Drop $1 Despite Iraq Sabotage[/b]
Oil Prices Fall Below $42 a Barrel Despite Sabotage of Iraqi Oil Infrastructure
The Associated Press
Aug. 30, 2004 — Oil futures dropped by nearly $1 per barrel Monday despite pipeline sabotage in Iraq that has delayed exports from a southern port reinforcing the view among traders that prices had risen too fast earlier this summer.
"It just goes to show you that when the psychology turns, it turns," said Tom Bentz, a trader at BNP Paribas Futures in New York.
There were also signs Monday that a peace deal reached in Najaf, Iraq, last week could spread to other parts of the country, raising hopes that saboteurs might stop attacking oil pipelines. An aide to Muqtada al-Sadr said the rebel Shiite cleric called for his followers across Iraq to end fighting against U.S. and Iraqi forces and that he is planning to join the political process in the coming days.
Light sweet crude for October delivery plunged 90 cents to $42.28 on the New York Mercantile Exchange. Crude futures are at their lowest level since July 27 and roughly 14 percent below the record settlement high of $48.70 on Aug. 19. When adjusted for inflation, oil prices are about half the price reached in 1981 after the Iranian revolution.
Oil markets have been extremely volatile this summer because traders fret there is inadequate supply globally in the event of a prolonged output disruption in Iraq, Russia or Venezuela.
But with the exception of sporadic dropoffs in Iraqi oil exports due to attacks on industry infrastructure, none of these fears have materialized.
Oil-price speculation by institutional investors, including hedge funds, magnified this summer's surge in prices, as well as the latest retreat, traders said.
On Monday, senior officials at Iraq's state-run oil company told The Associated Press that oil exports in Basra had come to a halt after a rash of insurgent attacks on the petroleum infrastructure. The officials of the South Oil Co., speaking on condition of anonymity, said the lines were not likely to resume operations for at least a week.
Basra Gov. Hassan al-Rashid confirmed that oil exports in the south were halted completely Monday. "Yes, they are stopped," he told The Associated Press.
An oil trading and transport consultant based in New York said he received word from oil companies and independently owned shippers who are scheduled to pick up crude in Basra later this week that loadings will be delayed for five or seven days.
"I don't know the extent of the damage to the pipelines. But generally speaking, they get repaired very quickly," said Jeff Goetz, head of marine projects at Poten & Partners.
Other reports, however, suggested the damage was less severe and traders said they were operating on the assumption that exports had fallen by about a third, or less.
Regardless of just how badly the oil flow has been hindered, "two weeks ago, with that news, we would have been up more than $1," Bentz said. "The tide has definitely turned."
Also on Monday, OPEC's president said the cartel was "doing everything it can to restore and stabilize oil prices."
Paradoxically, that too might have contributed to higher prices earlier in the month, since many market participants believe the Organization of Petroleum Exporting Countries has very little excess production capacity with which to calm jittery markets.
On Monday, traders just "brushed it off," said Mario Chavez, vice president of global energy futures at ABN AMRO in New York.
Chavez said the sharp move downward was also magnified by thin trading volume.
Separately on Monday, the Commodity Futures Trading Commission said a seven-month investigation into last year's surging natural gas prices yielded no evidence that markets were manipulated.
The agency said the run-up, which sent Nymex-traded futures above $7 per 1,000 cubic feet in December 2003, was not "artificial." Instead, prices rose sharply due to the combination of colder-than-expected weather in the Northeast and estimates that U.S. inventories of natural gas were slim ahead of the home-heating season, the CFTC said.
"The CFTC will continue to monitor market information and aggressively pursue any individual or entity that intentionally seeks to undermine the integrity of futures markets," said the CFTC's acting chair, Sharon Brown-Hruska.
Natural gas for October delivery settled at $5.234 per 1,000 cubic feet on Monday, a rise of about 4.5 cents on Nymex.
Unleaded gasoline futures fell by 3.65 cents to $1.1404 per gallon, while heating oil futures declined by 2.61 cents to $1.1195 per gallon.
Associated Press Writer Abbas Fayadh in Basra, Iraq contributed to this report.
Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Oil Prices Fall Below $42 a Barrel Despite Sabotage of Iraqi Oil Infrastructure
The Associated Press
Aug. 30, 2004 — Oil futures dropped by nearly $1 per barrel Monday despite pipeline sabotage in Iraq that has delayed exports from a southern port reinforcing the view among traders that prices had risen too fast earlier this summer.
"It just goes to show you that when the psychology turns, it turns," said Tom Bentz, a trader at BNP Paribas Futures in New York.
There were also signs Monday that a peace deal reached in Najaf, Iraq, last week could spread to other parts of the country, raising hopes that saboteurs might stop attacking oil pipelines. An aide to Muqtada al-Sadr said the rebel Shiite cleric called for his followers across Iraq to end fighting against U.S. and Iraqi forces and that he is planning to join the political process in the coming days.
Light sweet crude for October delivery plunged 90 cents to $42.28 on the New York Mercantile Exchange. Crude futures are at their lowest level since July 27 and roughly 14 percent below the record settlement high of $48.70 on Aug. 19. When adjusted for inflation, oil prices are about half the price reached in 1981 after the Iranian revolution.
Oil markets have been extremely volatile this summer because traders fret there is inadequate supply globally in the event of a prolonged output disruption in Iraq, Russia or Venezuela.
But with the exception of sporadic dropoffs in Iraqi oil exports due to attacks on industry infrastructure, none of these fears have materialized.
Oil-price speculation by institutional investors, including hedge funds, magnified this summer's surge in prices, as well as the latest retreat, traders said.
On Monday, senior officials at Iraq's state-run oil company told The Associated Press that oil exports in Basra had come to a halt after a rash of insurgent attacks on the petroleum infrastructure. The officials of the South Oil Co., speaking on condition of anonymity, said the lines were not likely to resume operations for at least a week.
Basra Gov. Hassan al-Rashid confirmed that oil exports in the south were halted completely Monday. "Yes, they are stopped," he told The Associated Press.
An oil trading and transport consultant based in New York said he received word from oil companies and independently owned shippers who are scheduled to pick up crude in Basra later this week that loadings will be delayed for five or seven days.
"I don't know the extent of the damage to the pipelines. But generally speaking, they get repaired very quickly," said Jeff Goetz, head of marine projects at Poten & Partners.
Other reports, however, suggested the damage was less severe and traders said they were operating on the assumption that exports had fallen by about a third, or less.
Regardless of just how badly the oil flow has been hindered, "two weeks ago, with that news, we would have been up more than $1," Bentz said. "The tide has definitely turned."
Also on Monday, OPEC's president said the cartel was "doing everything it can to restore and stabilize oil prices."
Paradoxically, that too might have contributed to higher prices earlier in the month, since many market participants believe the Organization of Petroleum Exporting Countries has very little excess production capacity with which to calm jittery markets.
On Monday, traders just "brushed it off," said Mario Chavez, vice president of global energy futures at ABN AMRO in New York.
Chavez said the sharp move downward was also magnified by thin trading volume.
Separately on Monday, the Commodity Futures Trading Commission said a seven-month investigation into last year's surging natural gas prices yielded no evidence that markets were manipulated.
The agency said the run-up, which sent Nymex-traded futures above $7 per 1,000 cubic feet in December 2003, was not "artificial." Instead, prices rose sharply due to the combination of colder-than-expected weather in the Northeast and estimates that U.S. inventories of natural gas were slim ahead of the home-heating season, the CFTC said.
"The CFTC will continue to monitor market information and aggressively pursue any individual or entity that intentionally seeks to undermine the integrity of futures markets," said the CFTC's acting chair, Sharon Brown-Hruska.
Natural gas for October delivery settled at $5.234 per 1,000 cubic feet on Monday, a rise of about 4.5 cents on Nymex.
Unleaded gasoline futures fell by 3.65 cents to $1.1404 per gallon, while heating oil futures declined by 2.61 cents to $1.1195 per gallon.
Associated Press Writer Abbas Fayadh in Basra, Iraq contributed to this report.
Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.