MARKET WATCHCrude futures prices climb in New York
By OGJ editors
HOUSTON, July 20 -- Crude futures prices continued to climb in technical trading Monday, a day ahead of expiry of the August contract in the New York market, with investment funds buying on rumors of rising demand.
Statements by President George W. Bush that the US will investigate whether Iran aided the Sept. 11, 2001, terrorists, also boosted the market. Traders feared increased tension between the US and one of the world's biggest crude producers.
Meanwhile, the Organization of Petroleum Exporting Countries said Monday it expects its extra production capacity to increase to as much as 3.5 million b/d in 2005, through the combination of increased oil stocks, a projected slowdown in demand growth, and capacity increases among the group's members.
The current production capacity among the 10 OPEC members subject to quota restrictions is 28.8 million b/d, according to secondary sources, and is expected to increase by 1 million b/d next year through substantial contributions from Saudi Arabia, Iran, and Nigeria. Iraq, which is not now subject to production quota restrictions, averaged production of 2.08 million b/d in the first half of this year, OPEC reported.
OPEC also issued its first forecast for world demand in 2005 at 1.66 million b/d more than its current estimate of 82.56 million b/d for 2004.
Energy prices
The August contract for benchmark sweet, light crudes closed at $41.64/bbl, up by 39¢ for the day after hitting as high as $41.90/bbl Monday on the New York Mercantile Exchange. The September position increased by 14¢ to $41.44/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., jumped by 42¢ to $41.45/bbl.
Heating oil for home delivery gained 0.96¢ to $1.1055/gal. Monday on NYMEX, but gasoline for the same month lost 0.88¢ to $1.2917/gal. The August natural gas contract fell by 6.9¢ to $5.82/Mcf, "as traders returned from the weekend to find no significant change [in] the relatively mild weather outlook," said analysts Tuesday at Enerfax Daily.
Natural gas futures prices "fell to their lowest level since late April, down by 10.8% in the last month as the market is growing increasingly confident that the danger of supply tightness this summer is becoming just a remote possibility," they said.
In London, the September contract for North Sea Brent crude dipped by 10¢ to $37.90/bbl Monday on the International Petroleum Exchange. Gas oil for August delivery slipped by $1 to $351.75/tonne. The August natural gas contract lost 3.2¢ to the equivalent of $4.07/Mcf on IPE.
The average price for OPEC's basket of seven benchmark crudes increased by 8¢ to $36.89/bbl Monday.