By Paula Dittrick
Senior Staff Writer
HOUSTON, Mar. 3 -- The energy futures markets ended mixed Friday on the New York Mercantile Exchange amid a week of high volatility while traders anticipated a US-led military strike on Iraq and assessed the impact of a 2-month strike in Venezuela.
Traders said crude oil prices dropped Friday after a roller coaster performance in previous days. Friday's price decline came upon indications that a war on Iraq might be delayed for at least a few weeks.
News broke that Iraq had agreed to dismantle its al-Samoud 2 missiles, which violate a 1991 United Nations resolution limit. Profit-taking maneuvers also drove prices downward Friday despite low US inventory numbers reported previously, traders said.
Crude oil prices for April delivery on NYMEX slipped by 60¢ to $36.60/bbl Friday. On Thursday, prices had surged to $39.99/bbl before retreating (OGJ Online, Feb. 28, 2003). The May contract for benchmark US light, sweet crude Friday dropped by 36¢ to 34.83/bbl.
On Saturday, lawmakers in Turkey narrowly failed to approve a vote that would have allowed US troops to use Turkish territory from which to launch an attack on Iraq. During the weekend, some traders suggested that recent developments made them believe that the US appeared less inclined to stage an attack soon.
Oil prices fell in the trading session early Monday on reports that a UN missile inspection team was on its way to supervise Iraq's destruction of al-Samoud missiles.
Venezuela
Venezuela President Hugo Chávez Friday told Venezolana de Television that $30/bbl was a "perfect" price for oil, Dow Jones Newswires reported. His comment came 12 days before the Organization of Petroleum Exporting Countries is slated to meet in Vienna.
"We have to sell oil at a fair price. $30 a barrel? Perfect," Chávez was quoted as saying while he toured an electric plant in southeastern Venezuela.
Dow Jones reported Chávez as saying the country's current oil production is 2.1 million b/d, nearly two-thirds of prestrike levels of 3.2 million b/d. But a manager at Petroleos de Venezuela SA told Dow Jones that production is 1.5 million b/d.
Refined products closed higher on NYMEX Friday with heating oil for March delivery hitting another record. Unusually cold weather, accompanied by critically low inventory numbers, boosted heating oil prices to new highs repeatedly during trading for the March contract.
Heating oil hit an all-time high of $1.31/gal Friday before settling at $1.26/gal, up by 10.16¢. Unleaded gasoline for March jumped by 1.97¢ to $1.04/gal. April refined products contracts took the front-month position Monday.
"Gasoline crack spreads recently soared to levels unseen in 2 years, and low inventories along with the lack of Venezuelan gasoline exports and high demand are all behind the rally," the Boston-based Energy Security Analysis Inc. consulting group said in a recent report.
US refiners will need to boost utilization rates just to build gasoline stocks to last spring's levels, ESAI said.
"The current rally is a harbinger of things to come during the driving season," said Aaron Brady, ESAI senior analyst. "Inventories are not likely to continue falling counter-seasonally over the new few weeks, but neither will they build substantially."
In London, the April contract for North Sea Brent oil slipped on profit-taking related selling to $32.79/bbl, down by 25¢, on the International Petroleum Exchange. Traders said futures values were likely to rebound back above $33/bbl in coming sessions and test resistance at $34/bbl.
The April natural gas contract gained 0.22¢ to the equivalent of $2.6935/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes rose 15¢ to $32.63/bbl Friday. The basket price has averaged $30.94/bbl so far this year, the OPEC Secretariat reported Monday.
Contact Paula Dittrick at [email protected]
