Paula Dittrick
Senior Staff Writer
HOUSTON, Mar. 16 -- US front-month crude oil futures prices dropped to settle at below $58/bbl Mar. 15 and gasoline futures tumbled upon concerns about the US economy in general. The declining prices followed a meeting in Vienna of the Organization of Petroleum Exporting Countries at which ministers announced no changes to their production quotas.
OPEC ministers said all indicators show that the market remains well-supplied with crude oil, and that they would continue monitoring market developments (OGJ Online, Mar. 15, 2007). The next scheduled meeting is in September, but an OPEC official said another meeting might be called as early as June.
Meanwhile in the US, a decline in the stock market stirred worries about the US economy and demand for energy. Energy traders said the market was jittery upon a Mortgage Bankers Association report showing that home foreclosures surged to an all-time high in last year's fourth quarter.
Former Federal Reserve Chairman Alan Greenspan said he sees no evidence of a spillover from the troubled housing sector into the broader US economy. His comments came during a Mar. 15 luncheon at the Futures Industry Association conference in Baco Raton, Fla.
"A spillover may still happen, but boy it's hard to find any such evidence," Greenspan told the Associated Press. "I'd expect it to—I'm waiting—but the spillovers are just not there." Greenspan said he is more concerned about the threat of declining house prices than the ailing subprime mortgage market.
Energy prices
The April contract for benchmark US sweet, light crudes fell 61¢ to $57.55/bbl Mar. 15 on the New York Mercantile Exchange—the lowest settlement since Feb. 1. Traders noted that the April contract expired at the end of the trading session, adding to the volatility.
The May contract decreased 51¢ to $59.96/bbl. On the US spot market, West Texas Intermediate was down 61¢ to $57.56/bbl. Heating oil for April delivery dropped by 2¢ to $1.69/gal on NYMEX. The April contract for reformulated blend stock for oxygenate blending (RBOB) tumbled by 4.67¢ to $1.88/gal.
The April natural gas contract declined by 12.4¢ to $6.96/MMbtu on NYMEX. On the US spot market, natural gas at Henry Hub, La., gained 13¢ to $6.98/MMbtu. Traders said demand is expected to weaken soon because spring temperatures are forecast.
In London, the expiring April IPE contract for North Sea Brent crude decreased by 8¢ to $60.98/bbl. April gas oil lost $2.25 to $528.75/tonne.
The average price for OPEC's basket of 11 benchmark crudes climbed 6¢ to $57.20/bbl on Mar. 15.
Contact Paula Dittrick at [email protected].
