By OGJ editors
HOUSTON, Apr. 2 -- Crude oil prices fell sharply on the New York Mercantile Exchange Tuesday amid hopes that Nigerian oil production would begin to return to normal because a strike set there for Tuesday was canceled.
The Nigerian Labor Congress called off the strike. Although it did not resolve the situation that Nigeria's crude oil production already is down by 40%, traders said many people viewed the development as a sign that a resolution could come soon.
Fighting between ethnic groups near Warri in the Niger Delta prompted multinational oil companies to pull out employees nearly 2 weeks ago. Nigerian President Olusegun Obasanjo was expected to meet with representatives of the Ijaw and Itsekiri tribes in Abuja next week.
Meanwhile, as US forces Tuesday resumed their advance on Baghdad, Iraqi President Saddam Hussein issued a written message urging Iraqi citizens to fight US and British troops.
The message was read by Information Minister Mohammed Saeed al-Sahaf on Iraqi television. Saddam's absence on television sparked some speculation that he might have been killed during allied forces' earlier bombing attacks on Baghdad.
The May contract for benchmark US sweet, light crudes fell by $1.26 to $29.78/bbl Tuesday on NYMEX, while the June contract was down by 96¢ to $28.23/bbl. Heating oil for May delivery slipped by 2.99¢ to 74.09¢/gal. Unleaded gasoline for the same month fell by 4.28¢ to 91.42¢/gal.
The May natural gas contract gained 6.5¢ to $5.13/Mcf on NYMEX. "The market is expected to continue range trading. It. . .still anticipates more short covering," said analysts Wednesday at the Enerfax Daily. "Storage inventory remains the market's driving factor."
Natural gas prices on NYMEX Tuesday opened at $5.07/Mcf and traded in a range of $5.02-5.16/Mcf. Despite mild weather forecasts, traders said they expect worries about declining US gas production and low US storage to lead to more upside in the future.
In London, the May contract for North Sea Brent oil lost 82¢ to $26.38/bbl Tuesday on the International Petroleum Exchange. The day's high was $27.56/bbl and the low $26.25/bbl.
The May natural gas contract gained 7¢ to the equivalent of $2.68/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes dipped by 42¢ to $26.80/bbl Tuesday.