On the top of price of crude oil, there could be an impact. Though not an expert in this area, this is some information,
Crude-oil futures rose Thursday, ending a three-day drop as traders returned their attention to market uncertainties surrounding tension between Iran
and Western nations.
Iran's threat to the United States Wednesday, as well as a more than 3 usd-a-barrel drop in crude prices since Friday, likely contributed to oil's
strength Thursday, according to James Williams, an economist at WTRG Economics.
Iran said that it can cause "harm and pain" on America if Washington recommends that the United Nations tackle the Middle Eastern nation's nuclear
issue, news reports said Wednesday.
"We can expect to hear news out of Iran that, on one hand, says they continue to produce, and on the other hand, threatens dire consequences," said
All in all, "this will have a very measured pace in the Security Council with no big surprise like a total embargo."
Even so, "the market will remain very volatile until the nuclear problem is resolved -- then we can start worrying about hurricanes again," he
The April crude contract fell to a low of 59.55 usd a barrel on the New York Mercantile Exchange Thursday, then bounced to a high of 60.90 usd. It
closed up 45 cents at 60.47 usd a barrel.
Among petroleum products, April unleaded gasoline gained 6.99 cents to close at 1.7201 usd a gallon, while April heating oil added 2.59 cent to finish
at 1.72 usd a gallon.
On Wednesday, April crude fell to 59.25 usd, touching its weakest intraday level since Feb 15, on hefty US crude-inventory levels and a decision by
key oil producers to leave output limits unchanged.
The Energy Department reported that last week's crude inventories stood at 335.1 mln barrels -- the highest level for US stockpiles since the end of
At the same time, the Organization of the Petroleum Exporting Countries passed up a chance to cut member production ahead of an expected
second-quarter slowdown in oil demand.
Tension over Iran's nuclear program remained a key focus in the oil market.
Iran has been adamant about continuing its nuclear research, saying the program is for purely peaceful purposes. Western nations fear that Iran is
trying to build nuclear weapons.
The International Atomic Energy Agency ended its three-day meeting in Vienna on Wednesday. The UN's Security Council will debate Iran's nuclear
issue next week, according to the Associated Press.
Elsewhere on Nymex, natural-gas futures closed slightly lower Thursday, but held their ground above a one-year low.
"Traders are essentially writing off this winter season and are now focusing on the summer, which will need the additional storage to offset an
active hurricane season," said Agbeli Ameko, a managing partner at First Enercast Financial.
US natural-gas stocks fell by 85 bln cubic feet for the week ended March 3, the Energy Department reported earlier Thursday.
Analysts at Fimat said that market estimates ranged from a decline of 80 bln to 140 bln cubic feet, with Fimat looking for a drawdown closer to 123
bln cubic feet and UBS expecting a drop of 110 bln to 120 bln. A year ago, supplies fell 134 bln, Fimat said.
Against this backdrop, natural gas for April delivery fell 4.7 cents to close at 6.601 usd per million British thermal units. The Nymex session's low
of 6.48 usd was above Wednesday's one-year intraday low of 6.45 usd.
Total stocks now stand at 1.887 trln cubic feet, up 393 bln cubic feet from the year-ago level and 664 bln cubic feet above the five-year average, the
government data said.
"This week essentially marks the death knell for winter, and we are entering spring with near-record levels of inventory," said Rakesh Shankar, an
economist at Moody's Economy.com, in a weekly report.
Still, he remained convinced that natural-gas prices will hold above the year-ago levels.
"As the focus shifts to summer heating demand and the injection cycle kicks in, the market will likely be reminded of the production shortages we
persistently suffer in the Gulf Coast," added Shankar. That "will help bring prices back up through the summer months from current lows."
Meanwhile, "the destruction of exploration and drilling rigs in the Gulf, which will limit replenishment capacity, will help keep natural-gas prices
above last year's levels," he said. "Almost 10 pct of natural-gas production will likely remain shut-in" ahead of the 2006 hurricane season, which
early forecasts warn could be an active one.
Whether that happens or not, "the fear of such a season will add a premium to natural-gas prices for the next few months," according to Shankar.
In energy equities Thursday, benchmarks tracking the oil and gas sectors fell, with the Amex Oil Index losing the most ground.
At the same time, gold futures closed higher for the first time in five sessions.
Taking a broad measure of the commodity-futures markets, the Reuters/Jefferies CRB Index was up 0.7 pct at 319.94 points on the New York Board of
The impact in Asia,
Oil prices rose in Asian trading hours after Iran dug in for a confrontation with Western powers over moves to halt its nuclear program, dealers
Prices had fallen below 60 usd a barrel yesterday on news of healthy US crude oil inventories, but fears that the Iranian nuclear dispute could
escalate reversed the trend.
At 12.00 pm (0400 GMT) here, New York's main contract, light sweet crude for delivery in April, was up 0.13 usd at 60.60 usd from its close of 60.47
usd in the US overnight.
"The market is reacting to some rhetoric regarding the Iranian situation," said Victor Shum, a Singapore-based analyst with US energy consultancy
Purvin and Gertz.
"Traders are moving to cover their short positions and so the market is rebounding, even though market fundamentals are really quite conducive for
lower prices," he said.
"This illustrates how edgy the market is, how reactive it is to geo-political events."
Western powers, led by the US, want to curb Iran's nuclear activities amid fears the country aims to develop nuclear weapons, but Tehran has insisted
that its research is for peaceful purposes.
A defiant Iranian President Mahmoud Ahmadinejad declared yesterday: "The time for bullying is over."
He said the West "cannot do a damn thing" against his country.
The UN Security Council was scrambling to agree a united, firm but gradual response to Iran's defiance.
The US said yesterday it will seek a "strong" UN Security Council statement against Iran's nuclear program, and Secretary of State Condoleezza Rice
called Iran Washington's biggest challenge.
If market fundamentals are considered, prices should be going down, Shum said, referring to US crude oil reserves, which are about 10 pct higher than
at this stage a year ago, and are at their highest level since May 1999.
OPEC also decided Wednesday to keep output at a near 25-year high of 28 mLN barrels per day.
"But over the next few days, the saber-rattling will continue over the Iran nuclear issue and so a price fall, if any, won't be very significant,"
"At this moment, the rhetoric is winning, over market fundamentals."
I am sure there will be more articles out there with various types of analysis, but at the end the consumer will be at the end of the barrel paying
the increased price.