By OGJ editors
HOUSTON, Apr. 15 -- Oil futures prices began a rebound today after dropping sharply at the end of last week when Venezuelan President Hugo Chavez resigned under military pressure and a transitional government was named for what proved to be less than 48 hr.
"One of the most significant events that led to Chavez's ouster was the initiation of a strike by hundreds of white-collar workers from the state controlled oil company Petroleos de Venezuela SA," said Paul Cheng, analyst with Lehman Bros. Inc.
"We think it will lead to a change in oil policy toward increasing production and employment rather than maximizing oil prices," Cheng said Friday, noting the administrative change did not signal the immediate termination of compliance with the Organization of Petroleum Exporting Countries' production quotas. Chavez had played a role in helping OPEC achieve unity, Cheng noted.
"Thus, we think this should have a negative impact on global oil prices in both the short- and long-term. That said, oil prices could stay [at] $23-24/bbl (West Texas Intermediate) over the next several quarters as Middle East tensions continue to run high," Cheng said.
On Friday, traders believed the new government would end the oil workers' strike and increase the nation's oil production and exports. Pedro Carmona was named to lead a transitional government, but he resigned amid violent protests by pro-Chavez demonstrators during the weekend, allowing the return of Chavez.
Analysts quickly reversed course in light of the rapidly unfolding developments.
RBC Capital Markets, in comments published this morning, noted that Chavez's return to power will provide a catalyst for upward pressure on oil markets.
"In our view, oil and prices and energy stocks will most likely rally, as we foresee no immediate change in Venezuela's national oil policy," RBC analysts said.
An early sign of that trend came in trading today on London's International Petroleum Exchange. In early trading in London today, Brent crude for May delivery was up 23¢ to $24.52/bbl and for June delivery was up 47¢ to $23.94/bbl.
The rally followed a slump for most oil-related commodities at the close of last week.
The May contract for benchmark US sweet, light crudes on Friday dropped by $1.52 to $23.47/bbl on the New York Mercantile Exchange, while the June contract declined $1.50 to $23.69/bbl. Both positions rebounded in after-hours electronic trading, to $24.35/bbl and $24.50/bbl, respectively.
Heating oil for May delivery dropped by 4.66¢ to 60.06¢/gal during the regular NYMEX session Friday. Unleaded gasoline for the same month slumped by 5.91¢/gal to 72.96¢/gal. The May natural gas contract was up by 2.2¢ to $3.13/Mcf.
In London on Friday, North Sea Brent prices fell on the International Petroleum Exchange. The May Brent contract dropped 75¢ to $24.29/bbl. The May natural gas contract rose by 0.9¢ to the equivalent of $1.72/Mcf on the IPE.
The average price for the OPEC basket of seven crudes dropped $1.28 to $22.24/bbl Friday. OPEC figures show the price of the basket up to Apr. 11 had averaged $20.51/bbl. For the month of March, the basket price averaged $22.62/bbl, vs. $18.89/bbl in February and $18.33/bbl in January.
