Market watch: Algerian push for production increase dampens oil futures prices
By OGJ editors
HOUSTON, Aug. 6 -- Energy futures prices weakened Monday—continuing a recent market trend of up one session and down the next—as traders reacted to Algeria's request over the weekend for a higher production quota from the Organization of Petroleum Exporting Countries.
Algeria's current quota is 693,000 b/d, but its production capacity is 1.1 million b/d, said Chakib Khelil, the country's energy minister. Khelil said Algeria has "always" supported unified action by OPEC members and has no intention of violating its production quota.
Moreover, Algeria's request will be considered at the September meeting of OPEC ministers, who already are generally expected to increase members' quotas in order to satisfy growing demand for oil worldwide. That meeting is scheduled Sept. 19 in Osaka, Japan, to coincide with the International Energy Forum set for Sept. 21-23.
However, Algeria's official request to increase production, coupled with recent speculation that Nigeria might be poised to pull out of OPEC, was interpreted as a bearish trend by traders, analysts said Tuesday. Nigerian officials in government, its oil industry, and OPEC have strongly denied speculation that country plans to drop its OPEC membership.
Some apparent easing of tensions between the US and Iraq also undermined energy futures prices Monday, analysts reported.
The September contract for benchmark US sweet, light crudes dropped 26¢ to $26.58/bbl on the New York Mercantile Exchange. The October contract was down 31¢ to $26.03/bbl.
Heating oil for September delivery fell 1.02¢ to 66.64¢/gal. Unleaded gasoline for the same month lost 0.66¢ to 76.82¢/gal.
The September natural gas contract dropped 18.8¢ to $2.68/Mcf on NYMEX.
In London, the September contract for North Sea Brent crude declined by 42¢ to $24.89/bbl on the International Petroleum Exchange. The September natural gas contract dipped by 2.5¢ to the equivalent of $2/Mcf on the IPE.
The average price for OPEC's basket of seven benchmark crudes lost 6¢ to $24.77/bbl Monday.