Sam Fletcher
Senior Writer
HOUSTON, Jan. 31 -- Energy prices plunged on Jan. 28 amid strengthening indications that ministers of the Organization of Petroleum Exporting Countries planned to take no action to reduce production at their Jan. 30 meeting.
Sure enough, to no one's surprise, OPEC ministers agreed to maintain production at 27 million b/d for the 10 members other than Iraq. However, they also voted to suspend temporarily the $22-28/bbl target price band for crude that they instituted in 2000, pending further study. Prices have remained above that nominal $28/bbl cap since December 2003. OPEC ministers also agreed to monitor and discuss crude markets prior to their next scheduled meeting Mar. 16 in Iran.
"We believe OPEC's actions on the price target band and [related] comments again signal that they want to support a West Texas Intermediate spot equivalent oil price in at least the low $40/bbl range," said Robert S. Morris, Banc of America Securities LLC, New York. The previous price band was roughly equivalent to $28-$34/bbl for WTI, he said.
Meanwhile, 57% of 14 million eligible voters went to the polls Jan. 30 in Iraq to elect a new government, despite terrorist threats to kill voters and attacks on several polling centers on election day. Observers said it could take 10 days for the election results to be known.
Energy prices
The March contract for US light, sweet crudes fell by $1.66 to $47.18/bbl Jan. 28 on the New York Mercantile Exchange, the lowest price in six trading sessions. The April contract dropped $1.58 to $47.44/bbl. On the US spot market, WTI at Cushing, Okla., lost $1.66 to $47.19/bbl. Heating oil for February delivery fell by 5.89¢ to $1.34/gal on NYMEX. Gasoline for the same month lost 4.37¢ to $1.31/gal.
The March natural gas contract sank by 9.3¢ to $6.26/MMbtu, pulled down by the falling oil market and predictions of more moderate weather.
In London, the March contract for North Sea Brent crude declined by $1.49 to $44.95/bbl.
The average price for OPEC's basket of seven crudes lost $1.13 to $41.88/bbl on Jan. 28. For all of that week, however, OPEC's basket price increased by $1.25 to $42.67/bbl. So far this year, OPEC's basket price has averaged $40.22/bbl, up from an average $36.05/bbl for all of 2004.
Contact Sam Fletcher at [email protected]
