By OGJ editors
HOUSTON, Aug. 5 -- After reaching above the record-setting $44/bbl mark Tuesday on the New York Mercantile Exchange, crude oil futures prices Wednesday then reversed, falling by $1.32 to $42.83/bbl.
The September contract for benchmark US sweet, light crudes dropped to $42.83/bbl in Wednesday's trading session on NYMEX. October's crude contract stood at $42.30/bbl, down $1.36 from the previous day.
An announcement made Wednesday by Purnomo Yusgiantoro, OPEC conference president and Indonesian minister of energy and mineral resources, stated that OPEC is growing concerned about the current high prices of crude as well as gasoline and was still capable of boosting production by as much as 1.5 million b/d to help ease lofty prices.
Yusgiantoro added that OPEC ministers at a Sept. 15 meeting in Vienna would discuss measures to check the rise in international oil prices. He said it's possible for OPEC to lower crude prices, but the success of its efforts hinges upon supply and demand factors.
"Minister Naimi has said Saudi Arabia can increase production but they cannot do it immediately," Yusgiantoro said, referring to Saudi oil minister Ali al-Naimi.
Rafael Ramirez, Venezuela's oil minister, said he would move to lift OPEC's price band at the group's upcoming September meeting in Vienna. Market prices have exceeded OPEC's current price band of $22-28/bbl (for an OPEC basket of crudes) since Dec. 2, 2003. The band agreement calls for the group to adjust production by increments of 500,000 b/d for each dollar that prices fall outside that band for 20 consecutive trading days.
Ramirez did not say what the new price band should be. However, it was recently suggested by one Venezuelan official that the band should be readjusted to $28-35/bbl.
The average price for OPEC's basket of seven benchmark crudes stood at $39.29/bbl on Wednesday. So far this year, OPEC's basket price has averaged $33.08/bbl.
Irani pipeline damaged
Contributing to price skittishness last week was another pipeline attack in Iraq.
Iraq's Northern Oil Co. said Tuesday that another attack had damaged a northern pipeline just as it was about to resume shipping crude from the Kirkuk oil fields to Ceyhan, Turkey, following repairs of damage caused by an earlier attack. No details of the latest attack were immediately available.
Earlier, Iraqi Oil Minister Thamer al-Ghadhban reported it would take Iraq 4 years to increase its oil production to 4 million b/d. "We have now a production capacity of 2.8 million b/d; we need to spend a lot of money. . .and a time span of 4 years from now in order to produce 4 million b/d," he was quoted as saying in Iraq's state-run Al-Sabah newspaper.
Iraq currently is producing 2.6 million b/d of crude and exporting 1.7 million b/d through its southern terminals, which are running at capacity (OGJ Online, Aug. 2, 2004).
Stocks mixed
Contributing to oil supply uncertainty was a mixed report on US stocks.
The US Energy Information Administration reported Wednesday that US crude oil inventories fell by 1.9 million bbl to 298.6 million bbl during the week ended July 30 from the previous week.
At this level, EIA said, US crude stocks are in the bottom half of the average range for this time of year. Gasoline inventories, meanwhile, rose by 2.4 million bbl, near the upper end of the average range for that period.
Energy prices
On the US spot market, West Texas Intermediate at Cushing, Okla., fell by $1.32 to $42.83/bbl.
Refined petroleum products also closed lower on NYMEX with September heating oil slipping 2.59¢ to finish at $1.16/gal, while unleaded gasoline for the same month pulled back by 8.32¢ to settle at $1.20/gal.
The NYMEX natural gas contract for September delivery lost 15.5¢ to close at $5.66/Mcf.
In London, the September contract for North Sea Brent crude dropped by 94¢ to $39.70/Mcf Wednesday on the International Petroleum Exchange. Gas oil for August delivery gained $1.50 to $379.75/tonne. The September natural gas contract held steady at the equivalent of $3.85/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes decreased by 4¢ to $39.29/bbl Wednesday.
