Steve- what do want to bet GS knew the SPR was going to be 'tapped'? (Personally, I think it already has since retail gas prices have fallen since BBL oil began ramping)
Crude contract hovers around $48
Natural-gas prices ease as supply rise meets forecasts
By CBS MarketWatch - Sept. 23, 2004
SAN FRANCISCO (CBS.MW) -- Crude-oil futures weakened a bit early Thursday but held near $48 a barrel with the Energy Department contemplating refiners' requests to borrow oil from U.S. reserves. The Bush administration is considering temporarily releasing crude oil from the Strategic Petroleum Reserve to Gulf Coast refiners hit by Hurricane Ivan earlier this month, White House spokesman Scott McClellan said.
The government loaned oil from the reserve back in 2002 after Hurricane Lili disrupted imports into the region, according to Tim Evans, a senior analyst at IFR Energy Services. But Kevin Kerr, a senior trader at Kwest International, doesn't believe President Bush will allow any type of release from the reserve.
"The President is facing re-election in a month or so, and it goes against his politics and philosophy to interfere with the free-market prices with the SPR," he said, adding that the federal government is actually working to fill reserves even more.
The reserve currently holds about 670 million barrels. It can hold up 727 million, meaning it's filled to about 92 percent of capacity. Against this backdrop, crude for November delivery was lately off 40 cents at $47.95 a barrel on the New York Mercantile Exchange. The benchmark crude contract ended Wednesday just 35 cents shy of the record closing high of $48.70 set on Aug. 19.
Ivan prompted a huge drawdown in U.S. inventories for the week ended Sept. 17. Reports issued Wednesday by the Energy Department showed an eighth-straight weekly drop in crude supplies to their lowest level since early February. See full story. And "to add insult to an already injured oil industry, there are three other storms in the Atlantic" -- Hurricanes Jeanne and Karl and Tropical Storm Lisa -- as well as doubts that the market will get away unscathed, said Phil Flynn, a senior trader at Alaron Trading in Chicago. "This time of year we are supposed to be building nice fat inventories for the coming winter and we're running behind," he said. The Energy Department said Wednesday that weekly distillate stocks, which include heating oil for the winter, also fell. "Heating oil is of most concern and the storms only make the worry worse," said Flynn.
Natural-gas prices ease
Natural gas, an alternative heating fuel for the winter, moved lower after a key report said the nation's inventories rose within market expectations for the week ended Sept. 17.
October natural gas fell 12.4 cents, or 2.2 percent, to $5.48 per million British thermal units.
Earlier, the Energy Department said U.S. natural-gas stocks rose by 68 billion cubic feet for the week ended Sept. 17, in line with an estimate from analysts at Enercast.com.
The increase was significantly lower than that of the prior week, which came in above 90 billion cubic feet, but this didn't surprise the market considering Ivan's disruptions to output and shipments in the Gulf of Mexico. The "injection was still pretty decent considering the storm," said Flynn.
While the market can take some near-term satisfaction, the "caveat is that there's still a lot of storm problems in the Gulf," he said. Total U.S. stocks now stand at 2.942 trillion cubic feet, up 223 billion cubic feet from the year-ago level, and up 188 billion cubic feet from the five-year average, the government said.
In equities, energy benchmarks were broadly higher, with the Philadelphia Oil Service Index ($OSX: news, chart, profile) leading the advance. See Energy Stocks. In Nymex metals trading, gold futures headed higher on fresh weakness in the U.S. dollar. See Metals Stocks. The Reuters/CRB index, a broad measure of commodity futures markets, was down 0.1 percent at 279.18 points.
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