Commodity Corner: Oil Gets Boost from China, Pipeline Closure
The October crude oil futures price increased by nearly 1% Monday on news about China's industrial production growth rate.
Oil settled at $77.19 a barrel, a 74-cent increased from Friday, after the National Bureau of Statistics of China reported the country's August 2010 industrial production rate was 13.9% higher than the comparable figure for August 2009. Broken down by various sectors, the government agency reported year-on-year increases of 12.9% in raw chemical material and chemical product manufacturing; 20.1% in transport equipment manufacturing; and 14.9% in the production and supply of electricity, gas, and water.
Also supporting the oil futures price Monday was the ongoing closure of a key segment of Enbridge's Lakehead System near Chicago following a leak reported last Thursday. Enbridge announced Monday that it had recovered all but approximately 50 of the 6,100 barrels of crude that had leaked from the pipeline. The company had no current estimate of when it might restart the line, but it was working with shippers to divert crude oil volumes to other available pipelines and storage facilities.
Oil traded within a range from $76.36 to $78.04 Monday.
A suddenly active Atlantic hurricane season, and the possibility that energy infrastructure in the Gulf of Mexico will be in the path of a tropical system, helped to nudge the natural gas price toward $4.00 Monday. Gas for October delivery settled at $3.94 per thousand cubic feet, a six-cent gain from Friday, with the existence of three systems circulating in the tropics. In the west-central Caribbean, a broad, poorly organized low-pressure system was moving west-northwestward Monday afternoon. The National Hurricane Center was giving the system a medium chance (40%) of developing into a tropical cyclone by Wednesday afternoon.
Out in the mid-Atlantic, Hurricane Igor was packing maximum sustained winds of 150 miles per hour late Monday morning. Forecasters were expecting the storm to follow a northwestward track and become centered approximately 500 miles northeast of the Lesser Antilles by Thursday morning. Another system, Tropical Storm Julia, was churning near the Cape Verde Islands Monday afternoon and moving in a west-northwestward direction at 13 miles per hour. Thanks in part to shearing conditions produced by Igor, forecast models anticipate that Julia will become a low-end hurricane and then weaken into a tropical storm.
The October natural gas futures price fluctuated from $3.80 to $3.97.
Gasoline futures increased by a penny to settle at $1.98 a gallon Monday. The intraday range for gasoline was $1.97 to $2.01.