MARKET WATCHOil futures price hits a high for the month ahead of Easter holiday

Sam Fletcher
Senior Writer

HOUSTON, Apr.21 -- For the first time this month, oil futures prices shot above $30/bbl Thursday on the New York Mercantile Exchange as traders bought contracts ahead of the long Easter weekend so as not to be caught short.

Attention is focused on the scheduled meeting Thursday of ministers from the Organization of Petroleum Exporting Countries in Vienna. Market analysts generally expect that the 10 active OPEC countries, minus Iraq, will agree to reduce production in the face of an anticipated decline in world demand for oil during the second quarter of this year. Officials in Iran and Indonesia have called for a production cut at the upcoming meeting. Meanwhile, Russia's energy minister said that country, although not a member, is willing to discuss production cuts with OPEC.

Traders also anticipate that it will take at least a couple of months for Iraq to resume exporting oil, albeit at a possibly reduced volume. Most industry observers don't expect any quick or sizeable increase in Iraq's oil production and exports above previous levels.

Meanwhile, Kofi Annan, secretary general of the United Nations, said the UN and the European Union must work together to heal international rifts triggered by the war in Iraq. "No issue has so divided the world since the end of the cold war," said Annan at a EU conference in Athens last week.

"It is vital that we heal that division now. The world cannot afford a long period of recrimination," he said.

EU members approved an official statement that "the UN must play a central role, including in the process leading towards self-government for the Iraqi people, utilizing its capacity and experiences in post-conflict nation building."

Market prices
The May contract for benchmark US light, sweet crudes jumped by $1.37 to $30.55/bbl Thursday on NYMEX, while the June position advanced by $1.01 to $28.54/bbl Thursday. Unleaded gasoline for May delivery shot up 3.39¢ to 90.66¢/gal. Heating oil for the same month increased by 0.87¢ to 77.36¢/gal.

The May natural gas contract inched up 3.39¢ to $5.71/Mcf Thursday on NYMEX. "The market opened lower (Thursday) but quickly jumped to the high for the day of $5.83(/Mcf) soon after the (US Energy Information Administration) reported a storage withdrawal of 48 bcf (during the week ended Apr. 11), much more than expected. But the buying failed to follow through, and it took short-covering (buying commodities to close out a short sale) by locals to maintain market gains toward highs last seen in early March," analysts said Monday at Enerfax Daily.

"According to the EIA, the total of 623 bcf (of gas remaining) in storage last week is the lowest storage level ever," the analysts said. However, they noted that the American Gas Association, which used to track US gas storage before the EIA took over that task, had reported a low of 546 bcf in storage in 1996.

"The (latest EIA) report surprised a number of traders and triggered buying by trade and locals before locals turned around and took profits. Cash was weak, but soaring crude oil futures helped keep a floor under the natural gas market," Enerfax analysts reported.

In London, the June contract for North Sea Brent oil gained 86¢ to $25.88/bbl Thursday on the International Petroleum Exchange. The May natural gas contract increased by 0.6¢ to the equivalent of $2.61/Mcf on IPE.

The average price for OPEC's basket of seven benchmark crudes increased by 54¢ to $26.25/bbl Thursday.

The New York and London markets were closed on Good Friday.

Contact Sam Fletcher at [email protected]