By OGJ editors
HOUSTON, Oct. 2 -- The front-month crude contract settled slightly higher Sept. 29 despite Venezuela's announcement that day of plans to trim production. Price levels had been volatile for some time.
Analysts in the Houston office of Raymond James & Associates Inc. said, "After an all-time closing high of $77.03/bbl on July 14, front-month West Texas Intermediate crude oil futures have plunged over 20% (in just over 2 months) to close recently in the low $60s."
In both dollars and percentages, the overall fall of crude prices since July 14 marked the steepest sustained decline since late 2004 when oil fell to levels around $40/bbl from $55/bbl, they said.
"Recognizing that oil in [the fourth quarter] is likely to average below our $68/bbl forecast, we lowered it [on Sept. 25] to $62, but we again reaffirm our confidence in our $70 forecast for 2007," RJA analysts said.
They noted little immediate market response to last week's announcements from Nigeria, which plans to cut oil production by 120,000 b/d, and Venezuela, which plans to trim oil production by 50,000 b/d.
Oil prices did, however rise slightly on US markets following Venezeula's announcement, largely because numerous analysts agreed that abundant oil supplies exist worldwide.
Venezuela President Hugo Chavez suggested an "appropriate" oil price is $50-60/bbl.
Energy prices
The November contract for benchmark US light, sweet crudes closed at $62.91/bbl, up 15¢ for the day on the New York Mercantile Exchange. The December contract gained 38¢ to $64.15/bbl.
On the US spot market, West Texas Intermediate at Cushing, Okla., was up 15¢ to $62.92/bbl. Unleaded gasoline for October delivery rose 4.81¢ to $1.5492/gal on NYMEX. Heating oil for the same month slipped by 2.92¢ to close at $1.6846/gal.
The new front-month November gas contract rose by 22.8¢ to $5.62/MMbtu on NYMEX.
In London, the November IPE contract for North Sea Brent fell 6¢ to $62.48/bbl. The October gas oil contract fell by $10.25 to $546.25/tonne.
The average price for OPEC's basket of 11 benchmark crudes dropped by 19¢ to $57.38/bbl.
