Market watch: Iraq's inaction raises prices
Futures prices for oil and refined products improved Friday as international traders worried about Iraq's refusal to resume its oil exports. The August contract for benchmark US light, sweet crudes gained 69¢ to $26.25/bbl on the New York Mercantile Exchange.
By the OGJ Online Staff
HOUSTON, July 2 -- Futures prices for oil and refined products improved Friday as international traders worried about Iraq's refusal to resume its oil exports.
Signs of increased tensions between Iraq and United Nations officials appear to have more effect on the market than Tuesday's scheduled meeting of ministers from the Organization of Petroleum Exporting Countries in Vienna. There is virtually no expectation among market analysts that OPEC will increase oil production this year.
The August contract for benchmark US light, sweet crudes gained 69¢ to $26.25/bbl on the New York Mercantile Exchange, and the September contract was up 48¢ to $26.09/bbl.
Home heating oil for July delivery jumped 0.96¢ to 70.9¢/gal, while unleaded gasoline for the same month rose 0.29¢ to 72.11¢/gal.
However, the August natural gas contract dropped 18.4¢ to $3.10/Mcf Friday on the NYMEX.
Financial analysts at Simmons & Co. International, Houston, lowered their annual price projection for US natural gas to $3.50/Mcf from previous estimates of $4/Mcf. That should reduce earnings by about 20% among gas producers and curtail North American drilling activity -- at least the marginal prospects -- through 2002, they said Friday (OGJ Online, June 29, 2001).
In a separate report, Williams Capital Group LP, New York, said that, even if US natural gas supplies grow by 1%-3-% annually, the number of new gas-fired US power generation plants scheduled to begin operations by 2005 will outstrip available gas supplies (OGJ Online, June 29, 2001).
In London, the August contract for North Sea Brent crude gained 68¢ to $26.08/bbl on the International Petroleum Exchange. But another bearish accounting of US inventories this week could easily erase those gains, analysts said. The August contract for natural gas dipped 3.2¢ to the equivalent of $2.52/Mcf Friday on the IPE.
The average price for OPEC's basket of seven crudes rose by 53¢ to $24.44/bbl Friday.
For the full week, however, that basket price averaged $24.94/bbl. So far this year, officials said, OPEC's basket price has averaged $25/bbl, compared with $27.60/bbl for all of 2000.