One Fin Energy Basket: Last week the One Financial Energy Basket, which tracks the performance of US Crude, Natural Gas, Heating Oil and RBOB Gasoline, finished the week down due to a sell-off in the price of crude oil as some Hurricane Gustav missed refineries in the Gulf of Mexico.

Crude Oil: Crude oil prices tumbled to a 5 month low last week on signs a global economic slowdown may erode demand for energy products and the dollar rallied, whilst Hurricane Gustav caused less disruption to refineries in the Gulf of Mexico than many had feared.

Prices are down 27 percent from the record $147.27 reached on 11 July. The dollar’s decline earlier this year prompted investors to buy commodities, helping to push crude oil, gold, corn and gasoline to records. Demand for crude will increase 1 percent in 2009, the slowest in seven years, according to a 15 August OPEC forecast, as high oil prices stunt growth.

The Organization of Petroleum Exporting Countries, the supplier of 40 percent of the world’s oil, will probably keep producing at a record pace. The group will likely reject calls from Venezuela and Iran to trim supplies at its meeting on 9 September in Vienna, according to analysts. The OPEC members with quotas produced about 592,000 barrels a day more than their official limit of 29.673 million last month. All the countries except Saudi Arabia are pumping at close to capacity to meet rising demand and compensate for declining supplies from Nigeria, Iran and Venezuela.

Hedge funds, pensions funds and other speculators may have had “enough of the commodity business’’ and will sell assets, driving the price of oil to below $100 a barrel, economist Dennis Gartman said. “A lot of portfolio managers and pension funds that started owning commodities generally owned a lot of crude oil and they are finally saying, `You know what? This is not quite what it is cracked up to be,’’’ he added. “The markets wants to go under $100, and I think it’s going to go at least there.’’ Investors are “just saying, `We’ve had enough of this commodity business. This is no fun. We were told this was an asset class, and it’s proven not to be,’’’ said Gartman. Crude oil fell earlier in the week after Royal Dutch Shell Plc and ConocoPhillips said that Hurricane Gustav caused no damage to platforms in the Gulf of Mexico. Exxon Mobil said workers are returning to facilities that weren’t in the direct path of Gustav. Shell said that initial reports indicate no major damage to the oil producer’s onshore facilities in Louisiana. ConocoPhillips said there was no “significant damage’’ to its Magnolia platform in the Gulf.

This week OPEC, the supplier of 40 percent of the world’s oil, will probably keep producing at a near record pace as $106-a-barrel crude squeezes the global economy. “Our position is to leave everything unchanged,’’ Ecuador’s Energy and Mines Minister Galo Chiriboga told reporters on Sunday. “We believe the market is well supplied.’’ The 13-nation Organization of Petroleum Exporting Countries will keep production unchanged at a meeting on Tuesday in Vienna, according to analysts. Iran and Venezuela will urge the group to trim supplies to prevent oil prices retreating below $100 a barrel. Some members including Iran and Venezuela have asked the group to consider output cuts following the 27 percent decline in prices from their record on 11 July. The crude oil market is oversupplied and OPEC will review output, Iranian Oil Minister Gholamhossein Nozari said.

Natural Gas: Natural gas prices fell last week as Hurricane Gustav caused less damage than expected, the dollar strengthened and inventory data showed a build in the amount of gas in storage in the US. Prices dropped following a government report showed a bigger-than-average increase in U.S. supplies. Stockpiles gained 90 billion cubic feet in the week ended 29 August to 2.847 trillion cubic feet, said the Energy Department report. The average gain for this time of year is 59 billion. Utilities and storage companies add to supplies in the summer and fall to meet needs in the winter, when demand peaks. Gas supplies were 102 billion cubic feet, or 3.7 percent, above the fiveyear average and 148 billion cubic feet, or 4.9 percent, below the same period last year, the report showed. The five-year average in storage to start the winter demand period on 1 November is 3.327 trillion cubic feet.

Natural gas found support on Thursday as lower prices attracted buyers and on concern Hurricane Ike will move toward the Gulf of Mexico. Hurricane Ike, now in the Atlantic, may take a path toward Florida, the National Hurricane Center in Miami said. Ike is a Category 4 storm, the second strongest on the 5-step Saffir-Simpson intensity scale.

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