Oil prices jumped more than US$2 and closed above US$65 a barrel on Friday, pushed by Middle East terror fears and a production outage in Andean producer Ecuador.
The gains capped a volatile week for the oil market, as supply worries sparked by a missile attack on a US Navy ship off the coast of Jordan and the Ecuador production outage overshadowed earlier concerns that the record high prices were slowing demand.
"In the earlier part of the week, people were worried about demand and then these things happened and now people are worried about the supply side," said Jim Rollyson, vice president for energy research with Raymond James & Associates.
PHOTO: AP
September crude futures on the New York Mercantile Exchange rose US$2.08 to close at US$65.35 a barrel, recouping the bulk of losses incurred earlier this week.
On London's International Petroleum Exchange, October Brent crude futures jumped US$1.96 to close at US$64.36.
Petroleum products futures were pushed higher partly by the renewed strength in crude and partly by lingering worries about refinery glitches, including outages at two key Venezuelan refineries.
September gasoline futures edged US$0.0410 higher to close at US$1.9039 a gallon, while September heating oil futures rose US$0.0323 to close at US$1.8228 a gallon.
Terrorism worries were kindled after militants affiliated with an al-Qaeda-linked group in Jordan fired at least three missiles from Jordan, with one narrowly missing a US ship docked in a Jordanian port.
The attacks, which the al-Qaeda-linked Abdullah Azzam Brigades militant group claimed responsibility for, come at a time of heightened tension in the oil-rich Middle East, marked by continued instability in Iraq, a brewing crisis over Iran's suspected nuclear weapons program and a number of terrorist attacks in Egypt in the past year.
In Ecuador, several days of violent protests have halted production, forcing state-owned Petroecuador and EnCana Corp to declare force majeure on exports, the bulk of it going to the US
Ecuador produces about 535,000 barrels a day, exporting 390,000 barrels a day, including 290,000 barrels a day to the US, according to the federal Energy Information Administration. It's not clear exactly how much production has been shut down and how much exports are affected. Several oil companies have reported halting output in the past day, and Venezuela said it has yet to receive a request from Ecuador to provide it with oil to keep its export commitments to customers.
An executive with Petroecuador said on Friday the force majeure, affecting more than 100,000 barrels a day of exports to the US, may last up to 60 days. Petroecuador has stopped all of its 200,000 barrels a day in production.
An EnCana spokeswoman in Canada said the company has declared force majeure on all its production of 78,000 barrels a day.
"EnCana is continuing to work with the relevant authorities towards a peaceful solution," Almas Kassam said.
But analysts at Eurasia Group, a New York based consultancy, said an end to Ecuador's costly oil stoppage remained in doubt despite the Ecuadorean military's takeover of key strategic production points in the country's northern oil producing provinces.
"The government hopes to negotiate a solution to the crisis once tensions ease but oil production will only pick up once protesters agree to talk with the government," Eurasia analyst Patrick Esteruelas said in a note, Dow Jones Newswires reported.
The US imported about 288,000 barrels a day of crude oil from Ecuador in June, making it the No. 9 source of crude imports, according to the EIA.
"The shut-in could affect the US West Coast more than the size of Ecuadorean imports might suggest," the Eurasia note said.
Worries about petroleum product supplies lingered amid trouble at Venezuela's giant Amuay refinery where a fire this week forced the facility to reduce run rates.
Jesus Luongo, manager for the Amuay and Cardon refineries, said that a distillation unit at the Amuay refinery was due back up Monday or Tuesday.
A key gasoline-producing unit at PdVsa's Punta Cardon refinery is expected to return to service by next Friday, he said.
The 77,000 barrel a day fluid catalytic cracker at Punta Cardon was shut for repairs about a month ago, he added.
Venezuela exports relatively small amounts of petroleum products such as gasoline to the US, but is the No. 4 source of crude oil for the US, where state-owned Petroleos de Venezuela SA runs a number of refineries through its Citgo unit.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS