By OGJ editors
HOUSTON, Mar. 30 -- Energy futures prices slipped Monday amid uncertainty over the upcoming meeting Wednesday of ministers of the Organization of Petroleum Exporting Countries.
Traders remained nervous over whether OPEC members will sustain the 1 million b/d production cut that they approved in February and that is slated to go in effect Thursday. Some observers claim OPEC members may find "a middle way" to maintain a higher production to deflate current high prices.
However, crude futures prices rallied on the International Petroleum Exchange early Tuesday after comments from some OPEC ministers endorsing the earlier agreement among affected members to reduce of production to 23.5 million b/d, plus eliminate previous overproduction, in order to avoid a price slump later this year.
Crude futures values are likely to hover around $31/bbl until OPEC's final decision is known, analysts said.
"We are keeping our positions open. However, it is up to the ministers to decide whether to implement or defer [the] earlier decision," said Obaid bin Saif Al-Nasseri, the UAE energy minister.
As for recent remarks by US Energy Sec. Spencer Abraham that US officials were meeting with OPEC members prior to Wednesday's session in Vienna., Al-Nasseri said, "As a consumer, the US is free to angle for prices which suit it best. By the same token, OPEC and other producers reserve their right for fair prices."
Because of the weakness of the US dollar against other currencies in Europe and Asia, crude prices in other markets remain considerably lower in reality than in the US. Lower value of the dollar also reduces the value of revenue that OPEC and other international producers receive for their crude.
The May contract for benchmark US sweet, light crudes lost 28¢ to $35.45/bbl Monday on the New York Mercantile Exchange, while the June position retreated by 22¢ to $34.65/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., also was down 28¢ to $35.45/bbl.
Gasoline for April delivery fell by 1.06¢ to $1.1184/gal Monday on NYMEX. Heating oil for the same month lost 0.74¢ to 88.47¢/gal. The April natural gas contract was down 3¢ to $5.37/Mcf.
In London, the May contract for North Sea Brent lost 25¢ to $31.74/bbl Monday on IPE. Gas oil for April delivery declined by $5 to $277.50/tonne. The April natural gas contract gained 6.5¢ to the equivalent of $3.63/Mcf on IPE, however.
The average price for OPEC's basket of seven benchmark crudes was down by 44¢ to $31.13/bbl Monday.