Market watch: Oil prices improve with US economic growth

Energy futures prices generally improved Friday with estimates of much stronger-than-expected US economic growth in the first few months of this year.

April 29, 2002

2 min read

By OGJ editors

HOUSTON, Apr. 29 -- Energy futures prices generally improved Friday with estimates of much stronger-than-expected US economic growth in the first few months of this year.

However, officials cautioned that the same fast pace would not be attainable during the rest of 2002.

On the New York Mercantile Exchange, the June contract for crude gained 38¢ to $27.11/bbl, while the July contract was up 36¢ to $26.78/bbl. However, both contracts declined to $26.85/bbl and $26.48/bbl, respectively, in after-hours electronic trading.

Unleaded gasoline for May delivery jumped 2.02¢ to 81.39¢/gal Friday on NYMEX. Heating oil for the same month increased by 0.7¢ to 67.9¢/gal. The June natural gas contract inched up 2.4¢ to $3.32/Mcf.

In London, futures prices for North Sea Brent oil moved above $26/bbl on the International Petroleum Exchange, on expectations that demand will remain buoyant and production will be restrained through the third quarter. The June Brent contract gained 26¢ to $26.19/bbl. The new near-month June natural gas contract dipped by 0.6¢ to the equivalent of $1.97/Mcf.

But London analysts warned Friday that any bearish indicators of overproduction could trigger selling that would push oil prices down around $25.50/bbl. In early trading Monday, the June Brent contract was trading at $26.09/bbl on IPE, with news of reduced political tensions in the Middle East.

The average price for the Organization of Petroleum Exporting Countries' basket of seven crudes gained 26¢ to $25.42/bbl Friday. For all of last week, however, that basket price averaged $25.01/bbl, up strongly from $23.54/bbl the previous week.

So far this year, OPEC's basket price has averaged $20.95/bbl, compared with an average $23.12/bbl for all of 2001.

Over the weekend, Chakib Khelil, Algeria's minister for energy and mines, said current oil prices reflect the prevailing political stress in the Middle East more than market realities. However, he said prices would likely remain at the present level with a strong increase in US fuel consumption this summer.

Khelil also ruled out his possible candidacy for the position of secretary general of OPEC. He said Algeria had no proposals for the replacement of Alí Rodríguez Araque, OPEC's present secretary general who last week was also named as the new president of Petroleos de Venezuela SA, Venezuela's national oil company.