Sam Fletcher
Senior Writer
HOUSTON, Oct. 16 -- Crude prices continued a 2-day rally Oct. 13 on the New York market with reports of reduced production by Norway and confusion over a possible 1 million b/d production cut by the Organization of Petroleum Exporting Countries.
Crude prices were up in early trading Oct. 16 after OPEC announced an emergency meeting Oct. 19 in Qatar. "The purpose of the cartel's get-together would be to work out the intricacies and details of the intended cut," said analysts in the Houston office or Raymond James & Associates Inc. "OPEC's first plan to cut production since April 2004 was discussed more than a week ago, but oil ministers have been debating whether to cut from actual output of roughly 27.5 million b/d or from the group's notional 28 million b/d quota ceiling. The results of the meeting should help shrug off the uncertainties related to the cut that have been hanging over the market in the last couple of weeks," they said.
Meanwhile, safety authorities in Norway ordered production shut down at two offshore platforms operated by Statoil ASA and Royal Dutch Shell PLC, reportedly over concerns about lifeboat standards. That has reduced Norwegian production by 280,000 b/d from 2.7 million b/d of oil and natural gas liquids.
Crude markets also were buoyed by reports last week of the first decline in US distillate inventories since early August and unseasonably cold weather in the US Northeast (OGJ Online, Oct. 12, 2006). Nonetheless, crude futures prices ended the week 2% lower. Gas futures were trading higher in the Oct. 16 session after Northeast weather turned colder than expected. A state of emergency was declared in Buffalo, NY, where 2 ft of snow triggered power outages.
Energy prices
The November contract for benchmark US light, sweet crudes gained 71¢ to $58.57/bbl Oct. 13 on the New York Mercantile Exchange. The December contract advanced by 62¢ to $60.30/bbl. Heating oil for November delivery increased by 3.01¢ to $1.72/gal on NYMEX. Unleaded gasoline for the same month was up by 1.75¢ to $1.47/gal.
The November gas contract continued to fall, however, down 12.3¢ to $5.66/MMbtu on NYMEX.
In London, the November IPE contract for North Sea Brent increased 76¢ to $59.52/bbl. The November contract for gas oil was up $10 to $550/tonne.
The average price for OPEC's basket of 11 benchmark crudes gained 71¢ to $54.90/bbl on Oct. 13. So far this year, OPEC's basket price has averaged $62.37/bbl.
Contact Sam Fletcher at [email protected].
