Market watch: Oil prices rise as Mexico vows production cut
International oil futures prices rebounded Friday as Mexico announced it would cut its oil production by 40,000 b/d Apr. 1 in cooperation with the planned rollback by the Organization of Petroleum Exporting Countries.
By the OGJ Online Staff
HOUSTON, Mar. 26�International oil futures prices rebounded Friday as Mexico announced it would cut its oil production by 40,000 b/d Apr. 1 in cooperation with the planned roll-back by the Organization of Petroleum Exporting Countries.
The May contract for benchmark US sweet, light crudes jumped 76� to $27.30/bbl on the New York Mercantile Exchange, while the June contract was up 67� to $27.38/bbl.
That more than offset respective losses of 26� and 15� the previous day, when traders were operating on fears that a slowdown in the world economy would reduce demand for oil.
Mexico is the fourth largest supplier of imported oil to the US, said officials at the American Petroleum Institute. Last year, Mexico produced 3.5 million b/d, of which the US imported nearly 1.4 million b/d for 6.6% of its total oil demand.
However, some analysts doubt that Mexico will actually reduce production at a time it is exploring relations with the new administration of President George W. Bush.
Gen. Raul Munoz, director of Petroleos Mexicanos, the national oil company, earlier said that the slowing US economy would influence Mexico�s final decision on production. While Mexico has cooperated with OPEC in the past, it did not participate in the production cut earlier this year.
Meanwhile, refined products futures continued to climb, with home heating oil for April delivery surging 3.97� to 76.6�/gal. Unleaded gasoline for the same month gained 1.6� to 92.56�/gal.
The April natural gas contract advanced another 6.1� to $5.27/Mcf on the NYMEX.
In London, a largely technical recovery pushed North Sea Brent oil futures above the $25/bbl mark on the International Petroleum Exchange. The May contract for Brent crude closed at $25.38/bbl Friday, up 75� for the day after trading in the range of $24.80-$25.58/bbl.
London brokers reported that buying was steady Friday, despite the relative lack of strong indicators to move the oil market. However, they claimed more substantially bullish developments are needed to continue that rally.
The April natural gas contract gained 7� Friday to the equivalent of $3.39/Mcf on the IPE.
The average price for OPEC�s basket of seven crudes increased 67� to $23.52/bbl Friday. But the average basket price for the whole week declined to $22.80/bbl from $23.88/bbl the previous week, officials reported.
So far this year, OPEC�s basket price has averaged $24.43/bbl, compared to an average $27.60/bbl for all of 2000.