The expiration of October trading certainly played a disproportionate role in the record one-day gain, as it exercised a huge pressure on short positions. The meteoric rise also illuminates how much the vacillation is due to speculative activity.
Though ConocoPhillips (NYSE:COP) and Placid Refining Company are both receiving hundreds of thousands of barrels of crude from America’s federal reserves to continue refinery operations, and two rigs in the Gulf have been knocked adrift, the overall impact of Ike appears fairly benevolent to energy companies.
Oil prices are being pushed upwards by the impending arrival of tropical storm Gustav in the Gulf of Mexico. Gustav is projected to become “the largest hurricane in the Gulf of Mexico since Katrina”. Workers are already being evacuated from oil and gas rigs in the area, which has pushed up NYMEX oil futures past $117.
After four weeks of refreshing slippage, NYMEX oil futures began to edge upward into the $120 per barrel range. It appears the rise was largely predicated on two factors.
Less mixed has been the effects of the long oil trading boom on the New York Mercantile Exchange itself. NYMEX Holding Inc (NYSE:NMX) has more than doubled its quarterly profit since last year. The market is in the process of being acquired by CME Group Inc (NASDAQ:CME).
Diversity is a strength in any portfolio. Big multinationals can anchor your portfolio with steady returns, while some exposure to juniors in different regions gives you the chance for a big score.
This past week saw a drawdown of barrel prices on the NYMEX. If your investments include significant exposure outside the commodities sector this is welcome news. The retreating price was largely caused by less demand, especially in the United States.
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