Activity was mixed on international energy futures markets Monday, in the wake of the decision by the Organization of Petroleum Exporting Countries to increase oil production for the fourth time this year.
Much of the latest hike of 500,000 b/d, effective Tuesday, was already discounted by drops in market prices Friday, analysts said. The latest production increase also was slightly offset by market fears of disruption of Iraq's oil exports.
Iraq is exempted from the latest OPEC production increase. But it had threatened to suspend production unless the United Nations approves the proposed switch of its oil account to euros rather than dollars.
The December contract for benchmark US light, sweet crudes inched up 7� Monday to $32.81/bbl on the New York Mercantile Exchange, while the January contract lost 5� to $31.63/bbl.
The November contract for home heating oil lost 1.09� to 96.93�/gal on the NYMEX, while unleaded gasoline for the same month declined 0.66� to 95.36�/gal.
The December contract for natural gas pulled back 16.7� to $4.49/Mcf as traders assumed recent warmer weather would help increase injections of gas into storage for the winter heating season that officially starts Wednesday. But despite recent erosion below $5/Mcf, US and Canadian producers are shedding no tears over today's still strong gas price levels.
In London, the December contract for North Sea Brent gained 19� to $31.38/bbl on the International Petroleum Exchange. The November natural gas contract also inched up 5� to the equivalent of $3.76/Mcf.
On the Singapore exchange, the December contract for North Sea Brent crude was up 19� to settle at $30.54/bbl.
The average price of OPEC's basket of seven crudes was down 42� to $39.49/bbl.
OPEC members made their first production hike of the year with an increase of 1.45 million b/d in April, which essentially wiped out production cuts among cartel members in 1999.
That was followed by hikes of 708,000 b/d in July and 800,000 b/d effective Oct. 1.
Iraq, OPEC's maverick member, is capable of producing 3 million b/d, although some question how long it could sustain that level of production. However, Iraqi officials claim they could rapidly increase production to 6 million b/d if UN sanctions against that country were lifted (OGJ Online, July 11, 2000).
