Daily Comments
Crude-oil futures ended higher Thursday on Hurricane Earl while a fire at a GoM oil platform turned a mild rebound into a rally
03.09.2010 8:12:00
Light, sweet crude for October delivery advanced USD 1.11 and closed at USD 75.02/bbl. London Brent crude settled up 58 cents at USD 76.93, with its premium to US crude remaining high due to bloated US inventories.
Crude oil futures posted more gains yesterday as Hurricane Earl threatened US East Coast refineries and a fire damaged an offshore O&G platform in the Gulf of Mexico. News of the fire at the Mariner Energy facility off the coast of Louisiana sparked buying before midday. The market was slightly in decline before the Mariner Platform news broke, but rallied sharply on this event. Oil garnered further support from concerns about Hurricane Earl, which was threatening 1.1 mn bpd of refining capacity along the East Coast.
Canadian energy companies were also preparing for the storm, with EnCana suspending workers on a drilling rig in Nova Scotia.
The latest advisory from National Hurricane Center showed Hurricane Earl in the western Atlantic about 245 miles south of Cape Hatteras, North Carolina, weakened to a Category Three storm, as winds slipped to 125 miles per hour. They were 145 mph earlier Thursday. Earl was due to pass near the Outer Banks Thursday night before turning gradually toward the north-northeast to sweep up the East Coast on today.
Earlier, crude futures bounced back from intraday lows after data on jobless benefit claims and home sales lifted Wall Street. Traders remained cautious about the economy ahead of today's key nonfarm payrolls and unemployment data. This report is expected it to be pivotal not only for stock and bond investors but also for the Federal Reserve, which is weighing whether to take further steps to boost the struggling US economy. If this number comes out stronger than expected, it sets the tone for the next few weeks and sets a range for the bond market. If the opposite is true, it could point to whether the Fed embarks on a new round of quantitative easing. The government is expected to report that nonfarm payrolls dropped by 100,000 in August, the third straight month of job declines, with private sector employment increasing by only 41,000, according to the consensus forecast.
Moving forward, all eyes are on this key jobs report, and we think crude prices will take their cue today from these numbers.
