By OGJ editors
HOUSTON, Oct. 5 -- Crude oil futures prices recovered Oct. 4 after a sharp decline the previous day. Traders attributed the Oct. 4 rally to reports that oil exporters had informally agreed to cut production.
The Oct. 5 Financial Times reported that the Organization of Petroleum Exporting Countries plans to cut production by at least 1 million b/d, or at least 4%. An OPEC spokesman said most member nations support a voluntary reduction, and that the change could be ratified during the cartel's scheduled December meeting in Abuja, Nigeria.
"OPEC is going to defend a price floor for its oil of $50-55/bbl," FT reported an OPEC spokesman as saying.
But OPEC's president denied reports of an informal agreement. He said members were considering an emergency meeting.
"We are toying with the idea of an emergency meeting," Edmund Daukoru, the Nigerian oil minister and OPEC's president, told the Wall Street Journal. "We will have to agree on how much, how soon, and how we distribute it among the member countries," he said.
Daukoru said cartel members would not agree to a formal cut in production quotas until after OPEC had met. The production quota for OPEC, excluding Iraq, is 28 million b/d.
OPEC produced 27.7 million b/d in August, the US Energy Information Administration said. Iraq produced 2.2 million b/d in August but was not part of the quota.
Meanwhile, traders said that oil markets also were influenced by reports of militant attacks in Nigeria's oil-rich southern delta, traders said.
An Nigerian army spokesman told Associated Press that dozens of militants sank two military patrol boats on Oct. 2 during an attack that killed five solders and left nine others missing.
US inventories
A weekly EIA inventory report showed an increase in US fuel stockpiles, which was what traders had expected. On Oct. 4, EIA reported commercial US crude inventories rose by 3.3 million bbl to 328.1 million bbl during the week ended Sept. 29.
Gasoline stocks increased by 1.2 million bbl to 215.1 million bbl during the same period. Distillate fuel inventories rose by 200,000 bbl to 151.5 million bbl.
Imports of crude into the US averaged 10.5 million b/d, down 570,000 b.d from the previous week. During the last 4 weeks, crude oil imports have averaged 10.7 million b/d.
Input of crude into US refineries declined by 573,000 b/d to 15.3 million b/d, with refineries operating at 89.9% of capacity. Gasoline production dropped, averaging 8.9 million b/d while distillate fuel production fell slightly, averaging nearly 4.2 million b/d.
Energy prices
The November contract for benchmark US light, sweet crudes on the New York Mercantile Exchange gained 73¢, settling at $59.41/bbl after dipping to a low of $57.75 for the trading session. The December contract rose by 69¢ to $60.74/bbl.
On the US spot market, West Texas Intermediate at Cushing, Okla., climbed 73¢ to $59.42/bbl. Unleaded gasoline for November delivery rose by 4.11¢ to $1.4978/gal on NYMEX. Heating oil for the same month gained 2.31¢ to close at $1.6770/gal.
The November gas contract gained 23.6¢ to $5.995/MMbtu on NYMEX, marking the highest natural gas close since the Sept. 5 settlement price of $5.994 MMbtu.
In London, the November IPE contract for North Sea Brent rose by 79¢ to $59.22/bbl. The October gas contract dropped by 75¢ to $524.25/tonne.
The average price for OPEC's basket of 11 benchmark crudes declined by 88¢ to $54.10/bbl.
