By OGJ editors
HOUSTON, Oct. 4 -- Crude oil prices plunged by more than $2/bbl on New York and London futures markets Oct. 3 while traders continue ignoring statements from some oil exporters calling for lower oil production.
Organization of Petroleum Exporting Countries Pres. Edmund Daukoru of Nigeria suggested that other OPEC members follow his country and Venezuela in cutting production levels (OGJ Online, Oct. 2, 2006).
Nigeria and Venezuela made voluntary reductions in their production starting Oct. 1, but the cuts represent less than 1% of OPEC supply.
In addition to OPEC concerns, analysts said the US oil market responded to Colorado State University's announcement that unexpected El Niño conditions put a damper on the 2006 hurricane season.
'Typically, El Niño conditions put an early end to hurricane formation in the Atlantic basin," said William Gray, Colorado State hurricane forecaster. "This year, El Niño has developed faster than almost anyone predicted."
In an Oct. 3 report, the forecasters call for two more named storms, one more hurricane, and no more intense or major hurricanes for the rest of the 2006 hurricane season, which runs through November. A total of 11 storms were forecast for 2006, with six expected to become hurricanes.
Energy prices
The November contract for benchmark US light, sweet crudes on the New York Mercantile Exchange dropped $2.35/bbl, settling at $58.68/bbl after dipping to a low of $58.60 for the trading session. The December contract fell $2.27 to $60.05/bbl.
The Oct. 3 settlement price marked the front-month's lowest close since Feb. 16, yet it remained $1.03/bbl higher than the lowest 2006 NYMEX crude oil front-month closing of $57.65/bbl on Feb. 15.
On the US spot market, West Texas Intermediate at Cushing, Okla., slumped $2.35 to $58.69/bbl. Unleaded gasoline for November delivery dropped by 5.20¢ to $1.4567/gal on NYMEX. Heating oil for the same month declined by 4.79¢ to close at $1.6539/gal.
The November gas contract gained 11.6¢ to $5.759/MMbtu on NYMEX.
In London, the November IPE contract for North Sea Brent fell $2.02 to $58.43/bbl. The October gas contract plunged by $20.50 to $525.00/tonne.
The average price for OPEC's basket of 11 benchmark crudes declined by $2.21 to $54.98/bbl.
