Market Watch, May 16
Oil futures prices continued to climb, with NYMEX crude again nearing $30/bbl as OPEC officials indicate no plans to increase production above current 'satisfactory' levels. OPEC members gave a cold shoulder to US officials pushing for the organization to again increase production.
Oil futures prices continued to climb, with crude futures on the New York Mercantile Exchange again nearing $30/bbl as OPEC officials indicated no plans to increase production above current "satisfactory" levels.
After meeting with US Energy Sec. Bill Richardson, Venezuelan Energy Minister Al�odr�ez Araque said Monday that OPEC members do not favor another production hike during the group's June ministerial meeting in Vienna to review the current production agreement. Richardson expressed concerns about higher oil prices in his meeting with Rodr�ez, who is OPEC conference president.
Earlier, OPEC Sec. Gen. Rilwanu Lukman said the present level of international oil prices is "satisfactory to OPEC members."
Having already agreed in March to hike production by 1.45 million b/d, OPEC members and other major oil producing countries apparently fear that another increase would trigger a substantial fall in prices, rather than stabilize them.
In NYMEX trading, the June contract rose 30� to $29.92/bbl Monday, while the July contract was up 34� to $29.73/bbl.
Refined products also closed higher. Home heating oil was up 0.42� to 77.25�/gal, while unleaded gasoline rose 2.75� to 96.79�/gal.
NYMEX natural gas for June delivery increased 4.2� to $3.40/MMbtu Monday.
In London Monday, North Sea Brent crude for June delivery closed at $28.33/bbl, up 28� from Friday's close, in a day of volatile trading on the International Petroleum Exchange. Prices had weakened to $27.48/bbl earlier in the day on a technical correction following Friday's increase. But with reports of Rodr�ez's statement, prices rebounded to a high of $28.52/bbl.
The basket price for seven OPEC crudes increased to $28.14/bbl Monday, up from $27.88/bbl last week.
However, in an interview published Monday in the Pan-Arab Al Hayat newspaper, Lukman said the average international price oil had been little more than $24/bbl for a month�far from the $28/bbl upper limit set by OPEC through its pricing mechanism. "Based on this reality, fresh procedures [by OPEC to increase production] are ruled out. The price is still at the minimum satisfactory level to us," said Lukman, who is Nigeria's presidential adviser on petroleum and energy.
OPEC officials have said they will not allow the OPEC basket price to drop below $22/bbl or exceed $28/bbl, based on an average of 20 market days.
"Any increase in OPEC oil production is not possible, except in the event of strong volatility on the market," said Obaid bin Saif al-Nasseri, petroleum minister for the United Arab Emirates.
"We are satisfied with the level prices have reached and we are interested in maintaining stable oil prices in the future," he said Monday, after meeting with a team of officials led by David Goldwyn, assistant secretary for international affairs in the US Department of Energy.
Goldwyn gave Al-Nasseri a letter from Richardson concerning "cooperation between the US and the UAE in energy issues." Goldwyn is scheduled to visit Saudi Arabia, Kuwait, and other oil-producing states during a Middle East tour, presumably carrying similar messages.