Market watch: Oil futures prices gain with evidence of production cuts
By the OGJ Online Staff
HOUSTON, Jan. 29 -- Oil futures prices continued to rise in international markets Monday, as analysts and observers reported production among members of the Organization of Petroleum Exporting Countries declined some 1.4 million b/d this month from December levels.
As a result, traders may take more seriously current talk among OPEC members of a possible additional curtailment of output within the next few months if prices don't soon stabilize.
Oil prices fell about 30% because of weak demand caused by the economic downturn following the Sept. 11 terrorists attacks in New York and Washington, DC, said Nasser Al Sharhan, acting undersecretary of the United Arab Emirates Ministry of Petroleum and Mineral Resources.
"Oil prices retreated from a level of around $25/bbl for the average OPEC basket before the events of September to around $17/bbl at present, despite continued efforts by OPEC to reduce such instability and restore balance to the market," said Al Sharhan at a meeting of energy experts Monday in Abu Dhabi, sponsored by the International Energy Agency.
He apparently was referring to the latest weekly average price that was down 12¢ to $17.60/bbl (OGJ Online, Jan. 28, 2002). The average daily price Monday for OPEC's basket of seven crudes was up 21¢ to $18.72/bbl.
The March contract for benchmark US sweet, light crudes inched up 6¢ to $20.05/bbl Monday on the New York Mercantile Exchange. The April oil contract also gained 11¢ to $20.34/bbl. Both positions increased to $20.07/bbl and $20.35/bbl, respectively, in after-hours electronic trading.
However, refined petroleum products closed lower on the NYMEX, with home heating oil for March delivery down 0.6¢ to 53.13¢/gal. Unleaded gasoline for the same month lost 0.17¢ to 58.11¢/gal. The February natural gas contract dropped 12.9¢ to $1.91/Mcf.
In London, futures prices for North Sea Brent oil strengthened on the International Petroleum Exchange with indications that OPEC is on track with its pledge to reduce production quotas by 1.5 million b/d.
The March contract for North Sea Brent gained 28¢ to close at $19.65/bbl Monday, after trading in a fairly narrow range of $19.40-$19.75/bbl through the day. The February natural gas contract fell 19.4¢ to the equivalent of $3.16/Mcf Monday on the IPE.