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Energy market braces for 'national disaster'
Oil analysts and executives are preparing for Hurricane Rita's impact as energy prices rise across the board. Stocks move lower.
The oil industry is bracing for a disaster as Hurricane Rita hit Category 4, with the potential to reach Category 5, and heads towards energy infrastructure in Texas.
"If (Rita) keeps going on its current path, it's going to basically destroy the rest of the (energy complex Hurricane) Katrina didn't," Matthew Simmons, CEO of independent energy investment bank Simmons & Co. International, told CNBC's "Squawk Box."Start investing with $100.
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"It's a problem that could easily be as significant in my opinion, and I hope I'm overly exaggerating this, as Pearl Harbor," Simmons said. It could take two or three years to recover from the two storms, he added.
Given than four oil refineries are already down, Rita "really is a national disaster," Valero Energy (VLO, news, msgs) CEO Bill Greehey told Reuters.
Energy prices rose across the board, with natural gas seeing the biggest spike with concerns about damage to pipelines putting further strain on inventories ahead of winter. The higher energy prices pushed stocks lower. The Dow dropped 0.58%, the Nasdaq composite lost 0.69% and the S&P 500 index fell 0.52%.
Natural gas jumped 41.8 cents to $12.91 per million British thermal units.
The U.S. will go into winter with a lot less natural gas in storage than last year, and a colder-than-normal winter could really send prices spiking, Robert Morris, analyst at Banc of America Securities told CNBC's "Squawk Box."
New York light crude futures rose $1 to $67.20 per barrel. Unleaded gasoline for October delivery climbed 7.34 cent to $2.05 per gallon.
"If it hits the refineries, and we're short refining capacity, you're going to see gasoline prices well over $3 a gallon at the pump," Greehey told Reuters.
"People were worried post-Katrina as we have real tight product supply," Jamal Qureshi, analyst at PFC Energy, told Reuters. "Now we have a hurricane heading for the bigger part of the coastal refinery center, threatening to blow a huge hole in products supply."
Texas accounts for a quarter of oil refining capacity in the United States. Rita's winds have reached 140 miles per hour and the storm is expected to reach landfall Saturday morning.
"Some of those refineries in Texas, they're at sea level. It's a table top, it floods every easily," Ed Silliere, vice president of risk management at Energy Merchant LLC, told Reuters.
Morgan, FedEx tops targets
Morgan Stanley (MWD, news, msgs) reported earnings of $1.21 per share for its fiscal third quarter, which ended in August. Analysts surveyed by Reuters Estimates predicted a profit of $1.05 per share. Revenues rose nearly 29% from the same quarter a year ago to $6.95 billion, ahead of the consensus of $6.3 billion. But the stock fell 0.6% midday.
In other corporate news:
FedEx (FDX, news, msgs) earned $1.25 for its fiscal first quarter, which ended in August, 8 cents higher than the Reuters Estimates consensus. The company sees profit of $1.30 to $1.45 per share for its fiscal second quarter, in line with expectations.
ConAgra (CAG, news, msgs) posted earnings of 31 cents per share in its fiscal first quarter, with analysts looking for 23 cents per share, according to Reuters Estimates. ConAgra also reaffirmed guidance for fiscal 2006. Shares rose nearly 7% in midday trading.
New York Times (NYT, news, msgs) said after the bell Tuesday it will cut 500 jobs. The publisher also said it sees third-quarter earnings of 15 to 20 cents per share, excluding items, below the Reuters Estimates consensus of 25 cents per share. The company also said it sees ad revenues growing in the low-single digits compared to previous guidance of low-single to mid-single digits, Briefing.com reported. The stock sank 6.75%.
Citigroup initiated coverage of Southwest Airlines (LUV, news, msgs) with a "buy" rating, saying they see lots of opportunities in domestic routes as competitors struggle, Briefing.com said.
Bond market thinks it knows better
What's up with the 10-year Treasury? The Federal Reserve hiked short-term interest rates Tuesday, but the price on the benchmark 10-year note rose, pushing its yield lower. That continued this morning as the 10-year Treasury yield sank 0.054% to 4.19%.
It's the classic flattening of the yield curve, CNBC's Rick Santelli reported. Yields on shorter maturities climbed, as usually happens when interest rates rise, but long-term rates fell. The bond market is apparently more worried about the U.S. economy than the Fed.
It could be the impact of Hurricane Katrina causing concern, or the jump in energy prices which could slow economic growth.
"I think it's the fact that the Fed raised a degree of uncertainty in their statement overnight, referring to the uncertain outcome from Katrina," Padhraic Garvey told Reuters. The Fed said most facets of the economy would suffer because of Katrina, but that the effect would be short term.
-- Kim Khan and Charley Blaine
Oil analysts and executives are preparing for Hurricane Rita's impact as energy prices rise across the board. Stocks move lower.
The oil industry is bracing for a disaster as Hurricane Rita hit Category 4, with the potential to reach Category 5, and heads towards energy infrastructure in Texas.
"If (Rita) keeps going on its current path, it's going to basically destroy the rest of the (energy complex Hurricane) Katrina didn't," Matthew Simmons, CEO of independent energy investment bank Simmons & Co. International, told CNBC's "Squawk Box."Start investing with $100.
Explore our
new ETF center.
"It's a problem that could easily be as significant in my opinion, and I hope I'm overly exaggerating this, as Pearl Harbor," Simmons said. It could take two or three years to recover from the two storms, he added.
Given than four oil refineries are already down, Rita "really is a national disaster," Valero Energy (VLO, news, msgs) CEO Bill Greehey told Reuters.
Energy prices rose across the board, with natural gas seeing the biggest spike with concerns about damage to pipelines putting further strain on inventories ahead of winter. The higher energy prices pushed stocks lower. The Dow dropped 0.58%, the Nasdaq composite lost 0.69% and the S&P 500 index fell 0.52%.
Natural gas jumped 41.8 cents to $12.91 per million British thermal units.
The U.S. will go into winter with a lot less natural gas in storage than last year, and a colder-than-normal winter could really send prices spiking, Robert Morris, analyst at Banc of America Securities told CNBC's "Squawk Box."
New York light crude futures rose $1 to $67.20 per barrel. Unleaded gasoline for October delivery climbed 7.34 cent to $2.05 per gallon.
"If it hits the refineries, and we're short refining capacity, you're going to see gasoline prices well over $3 a gallon at the pump," Greehey told Reuters.
"People were worried post-Katrina as we have real tight product supply," Jamal Qureshi, analyst at PFC Energy, told Reuters. "Now we have a hurricane heading for the bigger part of the coastal refinery center, threatening to blow a huge hole in products supply."
Texas accounts for a quarter of oil refining capacity in the United States. Rita's winds have reached 140 miles per hour and the storm is expected to reach landfall Saturday morning.
"Some of those refineries in Texas, they're at sea level. It's a table top, it floods every easily," Ed Silliere, vice president of risk management at Energy Merchant LLC, told Reuters.
Morgan, FedEx tops targets
Morgan Stanley (MWD, news, msgs) reported earnings of $1.21 per share for its fiscal third quarter, which ended in August. Analysts surveyed by Reuters Estimates predicted a profit of $1.05 per share. Revenues rose nearly 29% from the same quarter a year ago to $6.95 billion, ahead of the consensus of $6.3 billion. But the stock fell 0.6% midday.
In other corporate news:
FedEx (FDX, news, msgs) earned $1.25 for its fiscal first quarter, which ended in August, 8 cents higher than the Reuters Estimates consensus. The company sees profit of $1.30 to $1.45 per share for its fiscal second quarter, in line with expectations.
ConAgra (CAG, news, msgs) posted earnings of 31 cents per share in its fiscal first quarter, with analysts looking for 23 cents per share, according to Reuters Estimates. ConAgra also reaffirmed guidance for fiscal 2006. Shares rose nearly 7% in midday trading.
New York Times (NYT, news, msgs) said after the bell Tuesday it will cut 500 jobs. The publisher also said it sees third-quarter earnings of 15 to 20 cents per share, excluding items, below the Reuters Estimates consensus of 25 cents per share. The company also said it sees ad revenues growing in the low-single digits compared to previous guidance of low-single to mid-single digits, Briefing.com reported. The stock sank 6.75%.
Citigroup initiated coverage of Southwest Airlines (LUV, news, msgs) with a "buy" rating, saying they see lots of opportunities in domestic routes as competitors struggle, Briefing.com said.
Bond market thinks it knows better
What's up with the 10-year Treasury? The Federal Reserve hiked short-term interest rates Tuesday, but the price on the benchmark 10-year note rose, pushing its yield lower. That continued this morning as the 10-year Treasury yield sank 0.054% to 4.19%.
It's the classic flattening of the yield curve, CNBC's Rick Santelli reported. Yields on shorter maturities climbed, as usually happens when interest rates rise, but long-term rates fell. The bond market is apparently more worried about the U.S. economy than the Fed.
It could be the impact of Hurricane Katrina causing concern, or the jump in energy prices which could slow economic growth.
"I think it's the fact that the Fed raised a degree of uncertainty in their statement overnight, referring to the uncertain outcome from Katrina," Padhraic Garvey told Reuters. The Fed said most facets of the economy would suffer because of Katrina, but that the effect would be short term.
-- Kim Khan and Charley Blaine
