MARKET WATCHCrude oil futures prices jump on NYMEX Tuesday

Crude oil future prices jumped Tuesday on the New York Stock Exchange, as the market continues to adjust to last week's announcement from the Organization of Petroleum Exporting Countries to cut production 900,000 b/d, effective Nov. 1.

Oct. 1, 2003

2 min read

By OGJ editors
HOUSTON, Oct. 1 -- Crude oil future prices jumped Tuesday on the New York Stock Exchange, as the market continues to adjust to last week's announcement from the Organization of Petroleum Exporting Countries to cut production 900,000 b/d, effective Nov. 1.

The cut effectively will offset previous action at OPEC's April meeting when members raised production quotas by 900,000 b/d as of June 1 (OGJ Online, Sept. 23, 2003).

In London Tuesday, North Sea Brent crude oil prices futures also rallied on expectations that US oil and refined product stocks could prove insufficient to meet demand this winter.

Analysts and traders worldwide awaited the Wednesday release of the US Energy Information Administration inventory numbers.

Meanwhile, Federal Reserve Bank of Dallas energy economist Stephen Brown said US natural gas prices are likely to remain elevated for several years. In the bank's latest publication, Southwest Economy, Brown said further development of gas resources and infrastructure is necessary to meet growing demand.

He said prices have risen recently because of colder-than-normal winters and greater demand from industry. Brown expects that demand will continue because gas is considered more environmentally desirable than other fuels.

"Opponents of new development are concerned about environmental consequences and see energy conservation as a potential solution to the looming problems in natural gas markets," Brown writes. "A substantial body of research suggests that such conservation is likely to have economic costs at least as high as elevated energy prices and probably higher."

Energy prices
The November contract for benchmark US light, sweet crudes rose by 80¢ to $29.20/bbl Tuesday on NYMEX. The December contract for benchmark US oil climbed by 75¢ to $28.92/bbl.

Unleaded gasoline for October delivery climbed by 4.16¢ to 88.65¢/gal Tuesday on NYMEX. Heating oil for the same month climbed by 2.18¢ to 77.78¢/gal.

The October natural gas contract dropped 6.5¢ to $4.83/Mcf Tuesday on NYMEX.

In London, the November contract for North Sea Brent oil climbed 77¢ to $27.61/bbl Tuesday on the International Petroleum Exchange. The November natural gas contract rose Tuesday on IPE by 4¢ to the equivalent of $4.10/Mcf.

The average price for OPEC's basket of seven benchmark crudes increased by 44¢ to $26.82/bbl Tuesday.