MARKET WATCH: Crude temporarily tops $101/bbl but uncertainty haunts market
Energy prices climbed Dec. 13 with front-month crude surging above $101/bbl in the New York market before closing above $100/bbl, up 2.3% for the day.
In Houston, analysts with Raymond James & Associates Inc. credited the crude price jump to false rumors that Iran had closed the Strait of Hormuz, a choke-point for shipment of Saudi Arabian crude. The strength of the crude market and forecasts of colder weather for the next 2 weeks lifted natural gas prices 0.8%, they said.
Olivier Jakob at Petromatrix in Zug, Switzerland, reported the New York crude futures market “experienced a less-than-1-min price surge of $1.60/bbl” that sent various observers scrambling for an explanation. “It was suggested that there was a rumor that the Federal Reserve would announce [a third round of quantitative easing] QE3 or that there was a rumor that Iran was closing the Strait of Hormuz (that was the news of Dec. 12, not of Dec. 13),” he said.
However, Jakob said, “Buying on rumors usually lasts more than 30 sec, and nobody was buying when those rumors really started (i.e. after the price-move); furthermore, the market did not really correct lower when the US Navy confirmed that all was fine in the Strait of Hormuz or when the Fed announced nothing new.”
Iran is the second biggest producer in OPEC and Oman is the largest Middle East producer outside the group. US Treasury Secretary Timothy F. Geithner said yesterday that the world has enough oil available to soften the blow of any disruption.