MARKET WATCHCrude, other energy futures prices continue to slide

Futures prices for crude oil and other energy commodities continued their week-long downward slide Friday on the New York Mercantile Exchange. Rising energy stocks in the US as well as the June 3 compromise agreement made by members of the Organization of Petroleum Exporting Countries to raise its production both factored into the declining market.

June 7, 2004

2 min read

By OGJ editors
HOUSTON, June 7 -- Futures prices for crude oil and other energy commodities continued their week-long downward slide Friday on the New York Mercantile Exchange. Rising energy stocks in the US as well as the June 3 compromise agreement made by members of the Organization of Petroleum Exporting Countries to raise its production both factored into the declining market.

OPEC members June 3 announced plans to raise their total crude production quota immediately by 2 million b/d, with another hike of 500,000 b/d starting in August (OGJ Online, June 4, 2004).

"We are determined and we are committed to providing enough oil to satisfy demand for crude oil," said Adel Al-Jubeir, foreign affairs advisor to Crown Prince Abdullah, in a June 3 press release from the Royal Embassy of Saudi Arabia. "If prices are too high, customers are hurt, economic growth slows, demand for crude oil slows, and the world economy is damaged," he added.

Algerian Energy and Mines Minister Chakib Khelil said that the decision by OPEC to raise production was both logical and suitable, especially when considering the conditions of the current oil maket.

Energy prices
The July contract for benchmark US light, sweet crudes slipped by 79¢ to $38.49/bbl Friday on NYMEX. That was down $3.84 compared with the record $42.33/bbl closing price for the near-month crude contract set June 1 (OGJ Online, June 2, 2004).

The August crude contract lost 70¢ to $38.53/bbl Friday. On the US spot market, West Texas Intermediate at Cushing, Okla., was off by 70¢ to $38.60/bbl.

Gasoline for July delivery fell by 5.75¢ to $1.18/gal Friday on NYMEX. Heating oil for the same month dropped 1.3¢ to 98.23¢/gal. The July natural gas contract, meanwhile, dipped 10.23¢ to $6.26/Mcf.

Markets responded well to a recent call made by US Sec. of Energy Spencer Abraham asking US refiners to maintain full capacity to stave off the possibility of any gasoline shortages this summer

In London Friday, the July contract for North Sea Brent crude fell by 73¢ to $35.67/bbl on the International Petroleum Exchange. Trading for the day ranged from the high of $36.28/bbl to a low of $35.65/bbl. The July natural gas contract lost 5.4¢ to the equivalent of $3.834/Mcf on IPE.

The average price for OPEC's basket of seven benchmark crudes fell to $36.49/bbl last week, compared with $36.70/bbl in the last week of May.