Crude oil markets are gaining ground in early morning trading Friday ahead of the daytime session at the New York Mercantile Exchange, as confidence grows that U.S. Treasury Secretary Henry Paulson will succeed in creating a
for the struggling U.S. financial services industry.
West Texas crude for October delivery was trading $2.62 higher at $100.50 a barrel on the Nymex electronic platform, while Brent crude futures were edging up $2.16 at $97.35 a barrel on the ICE exchange.
was up 5 cents at $2.53 a gallon, heating oil was climbing 4 cents at $2.82 a gallon, and natural gas was essentially unchanged at $7.58 per million British thermal units.
The Nymex energy pits will almost certainly be focused Friday on new developments surrounding the health of the U.S. economy and its mega-banks. However, miscellaneous oil-related headlines have been trickling in from other international locales this morning.
Firstly, a recent escalation in the number and ferocity of anti-government rebel attacks in Nigeria forced
Royal Dutch Shell
to issue a warning early Friday that it may not reach its next quarterly earnings target. The British company said that it is facing unforeseen expenses from increased equipment downtime, growing repair costs and impaired cash flows.
, China's second largest oil company by market cap and its largest refiner by product throughput, announced early Friday that it plans to cut crude imports for the remainder of 2008 by 8%, saying that it has enough petroleum in storage to reach its product production targets.
Analysts and traders who have remained bullish on oil's intermediate-term outlook despite its recent downward trend have mostly relied on China's persistently high demand for energy to support their thesis and projections. These individuals will surely not greet Friday morning's news release from Sinopec with warm regards.
Chinese oil companies that contain big downstream operating components have suffered brutal financial wounds during the past 18 months from record-high oil prices.
The Chinese government has subsidized a large portion of all petroleum product costs at the retail level in its effort to provide a boost for the millions of its citizens still living in Third-World conditions.
However, rather than carry the burden of higher oil prices itself, China's Communist Party instead solved the problem by denying its refiners the right to increase product prices sequentially with rising input costs.
Companies like Sinopec and
, which had been growing increasingly competitive with other international integrated firms like
, were dealt a painful handicap by the policy mandate, and their stock shares have been struggling to regain traction ever since.