By OGJ editors
HOUSTON, Jan. 18 -- There was only slight movement in crude prices Jan. 17 with the New York Mercantile Exchange closed for the US holiday observing the birth date of civil rights leader Martin Luther King.
In London, the March contract for North Sea Brent crude gained 7¢ to $45.03/bbl on the International Petroleum Exchange.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes inched up by 1¢ to $41.81/bbl after jumping by 72¢/bbl on Jan. 14. Meanwhile, Iran's Oil Minister Bijan Namdar Zangeneh told reporters that OPEC wouldn't allow its basket price to fall below $34/bbl.
NYMEX reopened for trading Jan. 18, as analysts from Enerfax Daily reported, "Temperatures in both New York and Chicago are expected to remain below normal at least through this week. Also, the Southeast turned much colder over the weekend and should stay cold this week. Some traders remain skeptical of much more upside, expecting high storage inventories to cushion worries about a short-term spike in heating demand. But forecasters say that the end of January and the month of February could bring colder-than-normal readings."
Escalating sabotage of oil facilities in Iraq ahead of the Jan 30 election is one of several factors behind the recent surge in energy prices, said Robert S. Morris, Banc of America Securities LLC, New York. Iraqi officials last week announced plans to cut exports from its southern facilities by 10%, or 160-170,000 b/d for 5 months beginning in February, he said.
However, he noted, production is now back on line in the Draugen oil field in the North Sea where bad weather had kept 140,000 b/d shut in most of last week. "Underlying all of this was confirmation that OPEC has reduced output this month, while comments by some members that the group might decide to cut production further at its upcoming Jan. 30 meeting has kept the market on edge," Morris said.
OPEC may need to reduce production by another 1 million b/d in the second quarter to sustain oil prices at a West Texas Intermediate spot market equivalent price "in the low-$40/bbl range, although the recent surge in oil prices may preclude them from making any such decision at their upcoming summit at the end of this month," Morris said.