10-4-13 11:20 AM EDT | Email Article

By Myra P. Saefong, MarketWatch


SAN FRANCISCO (MarketWatch) -- Crude-oil futures edged higher Friday, set for a weekly gain as energy companies evacuated oil and natural-gas rigs in the Gulf of Mexico in preparation for a possible hurricane, raising concerns over energy supplies.


Crude oil for November delivery (CLX3) added 57 cents, or 0.6%, to trade at $103.88 a barrel on the New York Mercantile Exchange. Prices, which fell 0.7% on Thursday, were on track for a gain of roughly 1% for the week.


While the oil-price impact based on the Gulf of Mexico threat was "muted, there are still risks," said Phil Flynn, senior market analyst at Price Futures Group. "We have to be wary that the market is not underestimating this storm as it's projected path puts it right into Louisiana and the entrance to refinery row," he said. Tropical Storm Karen was located around 275 miles south-southwest of the mouth of the Mississippi River as of Friday morning. A hurricane watch was in effect for Grand Isle, La. to the west of Destin, Fla., according to the National Hurricane Center.


Anadarko Petroleum Corp. (APC) and Exxon Mobil Corp. (XOM) are among the companies that have slowed or shut down Gulf production, while BP PLC (BP), Royal Dutch Shell PLC (RDSA) and Chevron Corp. (CVX) have called in offshore staff, according to media reports. (Read more about the energy company evacuations: http://blogs.marketwatch.com/energy-ticker/2013/10/03/energy-companies-begin-evacuations-as-tropical-storm-karen-strengthens/.)


For now, petroleum products traded little changed after modest gains in the previous session.


Heating oil for November delivery (HOX3) was nearly flat at $3 a gallon, trading around 0.7% higher for the week. November gasoline (RBX3) fell less than 1 cent to $2.63 a gallon, trading down 1.1% for the week.


November natural gas (NGX13) added 2.5 cents, or 0.7%, to $3.52 per million British thermal units, set for a weekly los of around 1.8%. On Thursday, the U.S. Energy Information Administration reported a 101 billion-cubic-foot climb in supplies, which was a bit more than the market expected.


The energy market continued to worry about weaker demand as the U.S. government shutdown "takes its toll, yet at the same time the falling dollar is lending support," said Flynn. The dollar index (DXY) moved a bit higher Friday against most other currencies, but was trading lower for the week.


With the government shutdown, the market didn't get its monthly U.S. jobs report so it will be "virtually impossible" for the Federal Reserve to taper its bond-buying program at the next meeting later this month, said Flynn.


Meanwhile, on a technical level, the spot-month contract for oil has rallied after a test of short-term support at $102.07, according to Darin Newsom, senior analyst at DTN, a commodity-market research company. "At the same time, momentum indicators (daily stochastics) showed the market to be oversold after falling from its high of $112.24."


"Add in the uncertainty created by the government shutdown, and traders are covering some of their recently established short-futures positions, leading to a modest rally," he said. But "fundamentally the market continues to grow more bearish, as indicated by downtrend in the futures spreads."

-Myra P. Saefong; 415-439-6400; AskNewswires@dowjones.com


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10-04-13 1120ET

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