By the OGJ Online Staff
HOUSTON, Feb. 21 -- Oil futures prices fell Wednesday as traders worried whether Russia's private oil companies will challenge the Organization of Petroleum Exporting Countries for a bigger share of world markets.
A meeting Wednesday between Russian government officials and the oil companies they no longer control ended without any commitment to restrain the country's crude exports beyond March. OPEC members have been counting on the Russians to cooperate in reducing oil supplies through June to shore up world prices.
However, it now appears that the Russian companies' need for foreign exchange may push them into a price war that OPEC members had hoped to avoid. The Russian producers apparently are pinning their hopes on a recovery of the US economy that would boost demand for oil during the second quarter of this year, sooner than most analysts are predicting.
The expiring March contract for benchmark US sweet, light crudes dropped 59¢s; to $20.29/bbl on the New York Mercantile Exchange, where the April contract also fell 69¢s; to $20.43/bbl Wednesday.
However, the new near-month April position rebounded to $20.78/bbl in after-hours electronic trading, following an unexpectedly bullish report on US petroleum inventories by the American Petroleum Institute. The May crude contract also bounced back to $20.94/bbl after earlier losing 65¢s; to $20.62/bbl.
Unleaded gasoline for March delivery dropped 1.81¢s; to 57.44¢s;/gal during regular trading Wednesday on the NYMEX. Home heating oil for the same month lost 1.31¢s; to 53.09/gal. The March natural gas contract slipped 1.2¢s; to $2.39/Mcf.
Following the close of that session, API reported US oil inventories fell by nearly 4.5 million bbl to a total 316.2 million bbl last week. Distillate fuel, including home heating oil, also was down 1.6 million bbl to 139.2 million bbl for the week. However, unleaded gasoline stocks increased by 580,000 bbl to 218.2 million bbl.
US refineries were operating at 88.5% capacity last week, down from 87.8% the previous week and 90.1% a year ago, API officials said.
In London, the April contract for North Sea Brent oil dropped 66¢s; from the opening level of $20.30/bbl, which was also the day's high, to close at $19.86/bbl on the International Petroleum Exchange. The March natural gas contract also lost 3.5¢s; to the equivalent of $2.44/Mcf on the IPE.
The average price for OPEC's basket of seven crudes retreated by 34¢s; to $18.47/bbl Wednesday.
