MARKET WATCHOPEC plans to discuss ways to curb soaring oil prices

Crude futures prices reached above $44/bbl Tuesday on the New York Mercantile Exchange, causing some analysts and traders to question whether the Organization of Petroleum Exporting Countries can control price levels.

Aug. 4, 2004

2 min read

By OGJ editors
HOUSTON, Aug. 4 -- Crude futures prices reached above $44/bbl Tuesday on the New York Mercantile Exchange, causing some analysts and traders to question whether the Organization of Petroleum Exporting Countries can control price levels.

Analysts warned that very high oil prices could possibly threaten global economic growth. Traders said the market helplessly watched the upswing in prices hit a new record briefly of $44.24/bbl on NYMEX.

Rising demand, tension in the Middle East, continued civil disorder in Iraq, and an imbalance in seasonable product supplies are combining to push prices to new highs, traders said.

Purnomo Yusgiantoro, OPEC conference president and Indonesian Minister of Energy and Mineral Resources, said that OPEC ministers at a Sept. 15 meeting in Vienna will discuss measures to check the rise in international oil prices.

He said it's possible for OPEC to lower crude prices, but the success of its efforts hinges upon supply and demand factors.

Energy prices
The September contract for benchmark US sweet, light crudes peaked at $44.24/bbl in Tuesday trading session on NYMEX, then fell to $44.15/bbl at closing, up by 33¢ from Monday's record high finish. The peak was the highest in the contract's 21-year trading history on NYMEX.

The October contract gained 50¢ to $43.66/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., inched up by 32¢ to $44.15/bbl.

Futures prices for petroleum products also closed higher Tuesday, with gasoline for September delivery edging up by 0.04¢ to $1.2866/gal on NYMEX. Heating oil for the same month jumped by 1.73¢ to $1.1815/gal.

The September natural gas contract edged up by 0.03¢ to $5.816/Mcf Tuesday on NYMEX. "Traders are watching a potential tropical weather system with potential to move into the Gulf of Mexico in the next several days," said analysts Wednesday at Enerfax Daily.

In London, the September contract for North Sea Brent crude climbed by 67¢ to $40.64/Mcf Tuesday on the International Petroleum Exchange. Gas oil for August delivery gained $6 to $378.25/tonne. The September natural gas contract held steady at the equivalent of $3.85/Mcf on IPE, which was attributed in part to the value of the US dollar slipping slightly in world currency trading Tuesday.

The average price for OPEC's basket of seven benchmark crudes increased by 29¢ to $39.33/bbl Tuesday.