Crude and Unusual Punishment

Oil Futures Spike Again
The price of a barrel of oil rose today to just above $80 per barrel, for the first time in history. Crude oil for October delivery rose $1.68, or 2.2 percent, to settle at $79.91 a barrel at 2:54 p.m. on the New York Mercantile Exchange, a record close. Futures also touched the highest intraday price since trading began in 1983. The previous record of $78.77 was reached on Aug. 1.

This after the ever cleaver, OPEC announced yesterday that they planned to open up the wells and pump out an additional 500,000 barrels per day. While this 500,000 barrel per day increase sounds nice, the US Dept of Energy expects this number to fall well short of the increased seasonal demand. So while OPEC made a friendly gesture in reality all they did was shift the supply curve a few places to the left. U.S. oil inventories fell a greater-than-expected 7.01 million barrels to 322.6 million last week, the Energy Department said today.

Still Depressed: OPEC is not to blame [completely] for the jump is oil futures; point the finger at Mother Nature. There are two tropical depressions in the Gulf and inventories took a big hit.

Other prices of interest:
1. Light, sweet crude for October delivery rose $1.68 to settle at a record $79.91 on the New York Mercantile Exchange after rising as high as $80.18 earlier. October gasoline rose 3.49 cents to settle at $2.016 a gallon.

2. Nymex heating oil futures rose 3.64 cents to settle at $2.2191 a gallon, while natural gas futures jumped 50.4 cents to settle at $6.438 per 1,000 cubic feet. Natural gas prices typically react strongly to news of tropical weather due to the concentration of gas infrastructure in the Gulf.

3. Natural gas for October delivery rose 50.4 cents, or 8.5 percent, to $6.438 per million British thermal units in New York, the highest close since Aug. 17.

4. Heating oil for October delivery rose 3.64 cents, or 1.7 percent, to close at a record $2.2191 a gallon in New York. Futures touched $2.2224 a gallon, the highest intraday price since trading began in 1978.

5. In London, October Brent crude gained $1.30 to settle at $77.68 a barrel on the ICE Futures Exchange.

All in all, today was a good day for oil companies, so if you are heavily weighted in energy and oil companies you will see short term gains. I would look at companies in the Northeast, because of the discounts they receive on heating oil. Additionally, companies in states like WY and MA have been doing very well with Nature Gas exploration.

Tips: Ultra Petroleum Inc. (UPL); Avalon Oil and Gas; and SAP. Don't forget, everyone needs software.