Oil and Gas futures reverse early losses to close sharply higher
Hurricane Rita came and
went, thankfully causing much less devastation to Texas and Louisiana than first
expected.
Early reports suggest the damage to oil and
gas production facilities was also less severe than it could have been. Three
refineries in Louisiana were damaged and GlobalSantaFe
(
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PowerRating) reported that 2 of its offshore
oil and gas drilling rigs are missing. The company said its GSF Adriatic VII and GSF High Island III rigs could not be found on their
drilling locations during a search by aircraft Sunday. However, GlobalSantaFe
stated that there were no signs of major damage to its other Gulf of Mexico
rigs.
Nonetheless disruption to production in
the Gulf of Mexico continued to rise, evidenced by the latest Minerals
Management Service
report. 92.55% of 819 manned platforms and 75.37% of 134 rigs currently
operating in the Gulf of Mexico are currently evacuated. Shut-in oil production
is equivalent to 100% of the daily oil production, which is currently
approximately 1.5 million BOPD. Today’s shut-in gas production is equivalent to
78.43% of the daily gas production in the Gulf of Mexico.
After starting the session notably lower,
oil and gas futures reversed to close significantly higher. Heating Oil
+5.29% was the biggest riser, followed by Harbor
Unleaded Gasoline +4.14%, Natural Gas +3.41% and Crude Oil
+2.66%.
Treasury prices were lower as relief set
in about the damage caused by Rita.
10yr T-Note -0.28%, 5yr T-Note -0.15% and 2yr T-Note -0.05%.
The US Dollar was slightly lower, with the Dollar
Index -0.08% declining. Metals prices were mixed. Copper hit a record-high
as concerns rose that supplies won’t meet demand in the wake of hurricane
Katrina and Rita. The London Metal Exchange reported inventories fell 200 metric
tons, the first decline in two weeks.
Copper +2.24%, Gold +0.49%
and Silver +0.41% closed higher. Platinum -1.02% and Palladium
-0.75% closed lower.
All the major grains closed lower.
Wheat -1.13%, Soybeans -0.96% and Corn -0.61%. The softs were
mixed. Lumber -4.60%, Coffee -3.84% and Cocoa -0.89%
declined. Frozen Orange Juice +0.80% and Cotton +0.29% rose.
Livestock was also mixed, Pork Bellies +3.43%
Lean Hogs +0.24% and Live Cattle +0.11% rallied. Feeder Cattle
-0.02% was the exception.
Economic News
Existing Home Sales:
Actual 7.290 M Consensus 7.110 M
Ashton Dorkins