Oil prices have been relatively quiet this week as the markets attempted to sort out the impact of Superstorm Sandy. At the close Wednesday NY oil was trading at 86.24, up 56 cents for the day, and London was at $109.35. The seven refineries in New Jersey that were closed in front of the advancing storm suffered little damage and will all be back in operation shortly. There has been no word on the status of the port facilities that serve the refinery and the New York area to import crude and to ship refined products around the region.
The weekly stocks report was delayed until Thursday due to the government shutdown, but API and Wall Street Oil analysts are expecting crude inventories to increase on the order of 2 million barrels while gasoline stocks slip a bit. On Wednesday, gasoline futures surged by 20 cents a gallon during a short squeeze brought on by the expiration of the November contract. Futures prices eventually fell back to close at $2.76 a gallon.
The full impact of the storm on the NY oil products market has yet to be sorted out. With the refineries back in business the issue becomes how much demand for gasoline will be hurt by the flooding and power outages.
Natural gas prices continued to slide this week on the theory that the power outages will reduce the utilities’ demand. Inventories of heating oil remain tight, Arctic Air is flowing across Europe, and the EIA is forecasting that consumption will be 16 to 18 percent above last year’s mild winter.
The ceasefire that was supposed to take place in Syria did not work very well with fighting now as intense as ever. The government has begun to bomb insurgents and their supporters in suburban Damascus for the first time. The Free Syrian Army claims that the government can no longer mount effective ground attacks and is holding on only through indiscriminate bombing and artillery shelling.
There seems to be a little progress in the Iranian nuclear confrontation with Israeli Defense Minister Barak announcing that Tehran is no longer pushing as hard to develop a nuclear weapon and that the “moment of truth” has been pushed back by 8 to 10 months. Tehran announced on Tuesday that closing the Strait of Hormuz was not linked to the sanctions as some Iranian politicians have been hinting for the last few months.
Greek socialist lawmakers have voted to accept the highly controversial austerity measures that the EU has been demanding as its price for a continuation of the bailout loans. The move increases the likelihood that the next tranche of the bailout needed to avert government bankruptcy at the end of November will come through.