Monthly Average of US Benchmark Crude Nears Highest Level Since 1990
(PRN) -- The monthly average price of West Texas Intermediate (WTI) crude, as assessed by Platts, rose 24 cents for March delivery, to $34.37-34.39 per barrel. Platts is the global energy information division of The McGraw-Hill Companies (NYSE: MHP).
The monthly average for the key United States benchmark crude is the second highest since Platts began assessing US crude markets in the early 1980's. Crude for delivery in November 1990, in the months leading up to the first Gulf War, was more than $36.50/bbl.
"Not only was the price for March delivery the highest since the first Gulf War, but the market closed the month particularly strong," said John Kingston, global director of oil at Platts. "The Platts March WTI assessment for Wednesday (February 25) of $37.42-$37.44 per barrel, the final day of trading for next month's delivery, is the highest since the days leading up to the start of the war in Iraq, when the price was only a few cents higher than Wednesday's mark. That makes it the second-highest since the first Gulf War, when prices spiked above $40."
At this point, there are few signs on the horizon of a pending decline in prices, Kingston said. OPEC is readying a cut in production; demand in the US, as reported recently by the Department of Energy and the American Petroleum Institute, remains extremely strong, and inventories continue to drop. "There also have been loading problems in Iraq, as well as a slowing in the rate of production growth there, so hopes that a recovering Iraqi industry would soften high prices for consumers are not coming to pass," he said. Additionally, the transition to summer gasoline in New York and Connecticut is just beginning, and with 2004 marking the first time that ethanol is being blended into that grade, it creates the possibility of supply disruptions, he said.
Regionally, not all grades of crude shared equally in the jump in prices. Light Louisiana Sweet crude, produced onshore in Louisiana and in the shallow waters off the state's coast, declined 77 cents, to an average of $24.24- $24.38. But Wyoming Sweet, the benchmark crude in the Rocky Mountains, rose 25 cents, to $32.38-$32.46, while Line 63, a key grade in California, outpaced the rise in WTI, climbing 42 cents per barrel to $32.71-$32.75 on a California market lifted by supply disruptions from Alaska. Alaskan North Slope crude is not priced on the same pipeline basis as other grades, but its price delivered by tanker into California during the last month rose approximately 40 cents from the corresponding period a month earlier.
Platts' monthly averages for West Texas Intermediate and related grades is calculated on the basis of the 26th through the 25th, reflecting actual trading activities for a given month. Monthly trading in US crudes delivered on pipelines closes on the 25th or the business day closest to it. For example, March crude trading ends on February 25, when all shipments on US crude pipelines must be arranged with pipeline operators. By contrast, crude trading on the New York Mercantile Exchange for a particular month closes three business days prior to that scheduling deadline.