Sam Fletcher
Senior Writer
HOUSTON, June 10 -- Markets were mixed Monday, as oil futures prices rose with continued talk of possible production reductions and natural gas futures prices declined in profit taking.
Obaid Bin Saif Al-Nasseri, UAE energy minister, said Monday there is currently surplus oil production estimated at 1.5 million b/d. "OPEC should be prepared to take necessary measures to strike a balance between supply and demand and thereby maintain prices that are acceptable to consumers and producers alike," he said.
OPEC ministers are scheduled to meet Wednesday in Doha, Qatar, to discuss market conditions. "There is a big uncertainty in the market—that's why prices are high. They are not high because of the fundamentals of the market," said Chakib Khelil, Algeria's energy minister, as he arrived Monday for that meeting.
However, Abdullah Bin Hamad Al Attiyah, Qatar's energy minister and OPEC's conference president, disagreed that current oil prices are "very high" and that OPEC members need to take action to reduce prices. He noted that the falling value of the US dollar, in which oil is traded, has resulted in the loss of potential income to oil producing countries.
Venezuela maneuvers
Meanwhile, Rafael Ramirez, the energy minister of Venezuela, said support by non-OPEC producers for OPEC's oil policies was "ratified" Monday at his meeting in Madrid with energy ministers from Saudi Arabia and Mexico. Reports of that meeting by OPEC's official news agency made no mention of representatives from other non-OPEC countries attending. However, Ramirez was scheduled to meet Tuesday with government authorities in Norway on his way to the OPEC meeting in Qatar. Ramirez also is scheduled to visit Russia in July.
While in Madrid, Ramirez and Alí Rodríguez Araque, president of Petroleos de Venezuela SA, Venezuela's national oil company, met with some 80 businessmen to discuss the potential for outside investments in Venezuela's oil and gas operations.
PDVSA offers numerous business opportunities to private investors in upstream development areas on land, the Atlantic continental shelf and the Caribbean platform, "as well as in gas projects and downstream refining," said Luis Vierma, Venezuela's deputy energy minister, at a recent business conference in London.
New York prices
The July contract for benchmark US sweet, light crudes gained 17¢ to $31.45/bbl Monday on the New York Mercantile Exchange, while the August position increased by 22¢ to $30.48/bbl. Gasoline for July delivery was up 0.3¢ to 89.65¢/gal. However, heating oil for the same month dipped by 0.28¢ to 77.9¢/gal Monday.
The July natural gas contract dropped 19.6¢ to $6.31/Mcf Monday in profit taking on NYMEX. That market was "pressured down by a steady stream of long liquidation, a lagging cash market, and mostly mild weather forecasts for this week that should limit demand," analysts said Tuesday at Enerfax Daily. "There was a lot of speculative length in the market, and some of them decided to take profits because of some mild weather forecasts for this week."
They reported, "While technical traders said the longer-term trend was still higher, the market is overbought and due for a pullback, particularly after a 4% rise last week and no broad-based heat wave this week to boost demand. Support is pegged first at last week's low and double bottom of $6.22(/Mcf). Further buying is expected at $6(/Mcf)."
Refinery fire
Murphy Oil USA Inc. said its Meraux refinery in St. Bernard Parish, La., was "shut down and secured" following a fire that started about 2 a.m. Tuesday. Company officials said the fire affected both the vacuum and the residuum oil supercritical extraction (ROSE) units.
They reported the fire in the vacuum unit was extinguished by 5:15 a.m. Tuesday, while the fire in the ROSE unit was contained to a small area with firefighters working to extinguish it. There were no estimates Tuesday of damage to the refinery, and only minor injuries to two employees were reported. Murphy Oil USA is a subsidiary of Murphy Oil Corp., El Dorado, Ark.
Last week, Paul Horsnell at J.P. Morgan Securities Inc., London, noted that US refinery utilization rates were running at 98% during the week ended May 30, "which in effect means that the refinery system is now running at its full potential and probably beyond its sustainable potential."
He said, "Put another way, there is at the moment absolutely no slack within the US oil system, and no margin for unscheduled refinery glitches or logistical problems" (OGJ Online, June 5, 2003)
Other prices
In London, the July contract for North Sea Brent inched up 8¢ to $27.85/bbl Monday on the International Petroleum Exchange. However, the July natural gas contract dipped by 2.2¢ to the equivalent of $2.82/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes increased by 23¢ to $27.53/bbl Monday.
OPEC's basket price for all of last week averaged $26.86/bbl, up 39¢ from the previous week's average. So far this year, OPEC's basket price has averaged $28.30/bbl compared with an average price of $24.36/bbl for all of 2002.
Contact Sam Fletcher at [email protected]
