Market watch: Energy futures prices continue downward trend
By OGJ editors
HOUSTON, May 28 -- Energy futures prices continued their downward slide on the London market Monday, despite claims by Algeria's energy minister that traders remain focused on possible disruption of Middle East supplies, rather than on pending production increases by Russia and Norway.
Moreover, Chakib Khelil, Algeria's minister of energy and mines, told reporters Monday, "The increase (in demand) in the US seems good, and consumption will be very high, compared with last year."
He said, "It is not necessary to increase production, because supply and demand are in balance." However, Khelil also was quoted by the Algerian Press Service as saying, "For the second quarter, OPEC will analyze the situation and will see if it is necessary to increase its production."
The July contract for North Sea Brent crude lost 24¢ to $24.94/bbl Monday on the International Petroleum Exchange in London, following a loss of 21¢ Friday on predictions that US demand for gasoline would be disappointingly low this summer. That market also was impacted by Russia's confirmation that it plans to increase oil exports by 15% at the end of June.
The June natural gas contract dipped 0.89¢ Monday to the equivalent of $1.76/Mcf on the IPE.
The New York Mercantile Exchange was closed Monday for the US Memorial Day holiday, which signaled the official start of the US summer driving season. On Friday, however, the July contract for benchmark US light, sweet crude dropped 27¢ to $25.88/bbl, while the August position was down 25¢ to $25.98/bbl.
Unleaded gasoline for June delivery gained 0.18¢ to 79.01¢/gal Friday on NYMEX, but heating oil for the same month was down 0.55¢ to 65.95¢/bbl. The June natural gas contract lost 9.1¢ to $3.35/Mcf.
Profit-taking Friday ahead of the 3-day weekend weakened NYMEX futures prices for crude and heating oil, analysts said. With US gasoline inventories now higher than last year, they said, traders apparently are confident that they won't see a repeat of 2001 price spikes.
The average price for OPEC's basket of seven crudes lost 5¢ to $24.02/bbl Monday, after dropping 19¢ Friday. For last week as a whole, however, OPEC's average basket price was down $1.18 to $24.58/bbl.
So far this year, OPEC's basket price has averaged $21.79/bbl, compared with an average price of $23.12/bbl for 2001 as a whole.
OPEC leadership
Khelil, a candidate for the post of OPEC secretary general, also said members had reached a consensus on who is to succeed Alí Rodríguez Araque in that position. He provided no details, however.
Meanwhile, Rodríguez, who was recently named president of Petroleos de Venezuela SA, played down suggestions that Venezuela's national oil company might sell some of its shares on the stock market or parts of its operations to ease its financial problems.
In a separate interview, Rodríguez said, "A company that has a base of reserves of 77 billion bbl of proven reserves, that counts on assets that amply exceed $32 billion, is hardly likely to be bankrupt, independently of the possibility that at some moment it could have cash flow problems."