By the OGJ Online Staff
HOUSTON, Mar. 18 -- Energy futures prices were mixed in international markets Friday upon news that the Organization of Petroleum Exporting Countries agreed to adhere to existing oil production quotas through June and scheduled a special meeting June 26 in Vienna.
"Contrary to the predictions of the oil price bears, OPEC unity remains solid," Steve Pfeifer, analyst with Merrill Lynch & Co. said in a research note, adding that the Friday meeting "confirmed that the organization's top priority is stabilizing oil markets in the face of the worst global economy in 20 years."
A recovering economy and growing oil demand during the second half of 2002 and into 2003 will put OPEC in a situation similar to the one in 2000 when lackluster non-OPEC supply growth and recovering demand required higher OPEC volumes to maintain balanced markets and to reverse price spikes of over $35/bbl, he said.
"Our supply-demand model suggests that OPEC may need to raise production by 2 million b/d by the fourth quarter to avoid a significant inventory deficit and price spikes," Pfeifer said.
Meanwhile, other analysts agreed that the scheduling of an extraordinary meeting indicates that OPEC's production might be increased at those talks as the world economy and global oil demand recover.
The April contract for benchmark US light, sweet crude slipped by 5¢ to $24.51/bbl Friday on the New York Mercantile Exchange. The May contract also was down, by 5¢, to $24.85. Both continued to drop in after-hours electronic trading to $24.36/bbl and $24.70.bbl, respectively.
Heating oil lost 0.94¢ to 64.76¢/gal during the regular NYMEX trading session. Unleaded gasoline for the same month rose by 0.95¢ to 80.90¢/gal. The April natural gas contract jumped by 15.20¢ to $3.08/Mcf.
In London, futures prices for North Sea Brent oil closed lower but remained firmly at about $24/bbl on the International Petroleum Exchange. Brokers said the ease with which OPEC members reached a consensus on production levels helped convince the market to take OPEC more seriously as having an influence on the direction of oil prices.
The April Brent oil contract closed at $24.55/bbl, down by 12¢ for the day. It rallied to $24.85/bbl at one point Friday upon news of the OPEC ceiling confirmation even though the confirmation was widely anticipated.
The April natural gas contract slipped slightly by 0.01¢ to the equivalent of $2.24/Mcf on the IPE.
The average price for OPEC's basket of seven crudes rose by 6¢ to $22.85/bbl Friday.
