By OGJ editors
HOUSTON, Mar. 15 -- Crude oil futures prices fell in New York and London markets Friday upon reports of an amendment to the US Senate budget bill that calls for a halt to filling the US Strategic Petroleum Reserve.
The initial new reports triggered traders to sell off crude, but then subsequent reports about opposition to the nonbinding Senate amendment to the fiscal year 2005 budget, eased some selling pressure by the trading session's close Friday.
The budget bill will go to conference while the US House of Representatives develops its budget bill. Analysts said that the market already was at a heightened sensitivity level in reaction to bombings in Madrid Thursday.
Meanwhile, the UAE said that the Organization of Petroleum Exporting Countroes could delay a decision to cut its output ceiling on Apr. 1 if oil prices remain high and stocks remain low.
"OPEC could revise its decision if there are new developments between now and the next meeting," on Mar. 31 in Vienna, "and if the Ministers feel it is necessary to revise this decision," said UAE Petroleum and Mineral Resources Minister Obaid bin Saif Al-Nasseri.
On Feb. 10, OPEC decided to cut its output ceiling of 24.5 million b/d by 1 million b/d starting Apr. 1. That decision still stands, but Al-Nasseri told OPECNA that current price levels justify a review of that decision.
Replying to a question about what conditions might prompt OPEC to delay a production cut, Al-Nasseri said: "The first would be the price level, the second would be the stocks level," in major consuming countries, including the US.
"We have to discuss this amongst ourselves before we decide what price should trigger the delay of applying the cut," he said. "When the prices go up, this means OPEC will put more oil on the market, we will try not to see it too high for the consumer," he said.
The April crude contract dropped by 59¢ to $36.19/bbl Friday on NYMEX, while the May position lost 57¢ to $35.57/bbl. At one point during trading Friday, the April contract dropped to $35.30/bbl.
On the US spot market, West Texas Intermediate at Cushing, Okla., dropped 60¢ to $36.18/bbl.
Gasoline for April delivery declined by 2.30¢ to $1.0973/gal Friday on NYMEX. Heating oil for the same month slipped by 1.15¢ to 87.89¢/gal. The April natural gas contract declined by 4.7¢ to $5.596/Mcf.
Enerfax Daily analysts said Monday that natural gas prices were pressured by mild weather forecasts for New York and Chicago. In addition, a softer crude market also influenced gas prices.
In London, the April contract for North Sea Brent crude settled lower on the International Petroleum Exchange following news about the SRP. April Brent futures settled Friday at $32.24/bbl, down 59¢ from the previous close.
In addition, the US dollar continued to slip in value compared with other currencies. Analysts said oil futures could continue to fall early this week, but then prices are expected to rebound later in the week if US oil inventories prove bullish again.
Gas oil for April delivery dropped $7.50 to $265.75/tonne. However, the April natural gas contract fell by 1¢ to $3.60/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes decreased by 1¢ to $31.94/bbl Friday.