While the price for natural gas has receded quickly from the post-hurricane highs of last summer, oil prices have been a different story.
Crude-oil future contracts on the New York Mercantile Exchange climbed about a dollar yesterday, settling at a four-month high of almost $67 a barrel. Benchmark light, sweet crude-oil futures for February rose $1.10 to settle at $66.83 a barrel, which was the highest closing price since mid-September. Although inventory data indicates that U.S. crude and product stocks are at above-average levels, market jitters remain over the possibility that international oil supplies could be disrupted further as a result of political problems in both Iran and Nigeria.
Clear Thinkers favorite James Hamilton is thinking about what the rise in oil prices indicates, and he continues to believe that the current oil price rise is demand-driven, unlike the speculative bubbles of past spikes.
Houston's Clear Thinkers
Longtime Houston attorney Tom Kirkendall's observations on developments in law, business, medicine, culture, sports, and other matters of general interest to the Houston business, professional, and academic communities.
My two cents on this is that there are two factors driving the price. Demand is of course up due to expanding economic demands, at the same time, not all of the GOM capacity is back on line and some of it never will be, some of the older less productive fields that were damaged during Ivan/Katrina/Rita are not economically viable to be repaired/restored and will instead be plugged and abandoned. Individually these wells don’t account for much but combined, they represent a small but not insignificant amount of capacity. Others that are in the grey area of viability are still being assessed. One of those is Chevron’s Typhoon which capsized. BP’s Thunderhorse is not yet online. therefore we are still in a period in which demand is outstipping supply. an a month or two when Thunderhorse comes online and some of the questionable fields are assessed, the landscape will change some.