Reader Paul e-mailed about the special, early opening of the NYMEX to permit pre-Gustav trading. As he correctly noted:
I have NEVER heard of a US market opening early due to macro events; the usual move is to CLOSE during exceptional circumstances.
Neither have I. This looks pretty suspicious. Did some influential parties need to rearrange their positions, or did some hope to use a probably-thin market to their advantage? How many were aware of this session when it opened? How much advance notice was there, and how was this disseminated? It is almost certain no questions will be raised. Any reactions from informed readers very much appreciated.
As for the substance, Bloomberg notes that the market reaction is subdued compared to the supposed severity of the storm, although as of this writing it was a Category 3, not the feared Category 5 it seemed likely to become.
“It’s a huge storm, and it’s got the potential to cause all kinds of problems,” said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. “There’s a lot of concern that this is something that could really, really damage infrastructure badly, and this could be another instance of Katria-Rita or worse.”
Crude oil for October delivery rose $1.67, or 1.5 percent, to $117.13 a barrel at 5 p.m. on the New York Mercantile Exchange. Prices are up 22 percent this year.
Gasoline for October delivery gained 6.58 cents, or 2.3 percent, to $2.92 a gallon on the exchange.
To see oil “up two and a half dollars is a muted reaction to what they’re calling the mother of all storms,” Beutel said….
“We’re more prepared for this storm than we ever have been for any hurricane that I remember,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “We’re better prepared, and demand isn’t that strong anyway, so I’m about as optimistic as I can be in this type of disastrous situation.”…..
“You get a couple of rigs shut down, keeled over from this hurricane, and this is going go take days or weeks to fix,” said Brad Samples, a commodity analyst for Summit Energy Inc. in Louisville, Kentucky. “The bigger problem is on the refining side and the potential impact on all the refineries that string along the Gulf Coast.”
Almost half of U.S. refining capacity is centered along the Gulf Coast, and refineries have been operating at less than 90 percent of capacity all year, according to the Energy Department.