Market watch, Sept. 14
Brent crude oil futures slipped sharply yesterday on the International Petroleum Exchange in London following Organization of Petroleum Exporting Countries conference Pres. Al�odr�ez Araque's assurance that the oil exporting organization could raise output by a further 2 million b/d if 'needed' by the market.
LONDON�Brent crude oil futures slipped sharply yesterday on the International Petroleum Exchange in London following Organization of Petroleum Exporting Countries (OPEC) conference Pres. Al�odr�ez Araque's assurance that the oil exporting organization could raise output by a further 2 million b/d if "needed" by the market.
Despite Rodr�ez's indication that OPEC at present feels no need for any such a production hike, October Brent crude oil futures on the IPE, which had opened the day at $32.01/bbl, retreated 51� to $31.50/bbl by close of trading.
The OPEC News Agency (OPECNA) reported Rodr�ez's reiteration that the organization was "committed to bringing crude oil prices into the range of $22-28/bbl." Rodr�ez, according to OPECNA, maintains that prices will be driven down into that range by the output increase agreed to in Vienna on Sept. 10 "within the next few months."
After concerted international pressure, OPEC's 11 heads of delegation signed up last week to a middle-way agreement that will raise its collective daily crude output by 800,000 b/d starting in October (OGJ Online, Sept. 11, 2000). At the conference, the organization penned in a meeting for Nov. 12 to size up whether a further production increase is needed.
Meanwhile, yesterday in Tehran, Iranian Petroleum Minister Bijan Namdar Zangeneh, was reported by OPECNA as confirming that certain OPEC members had produced oil beyond their quotas in August, as many analysts had suspected, neutering the effect on price of the organization's June output hike.
According to OPECNA, the minister warned, "Violation of the decisions reached by all members will neither be to the benefit of the offending country nor the other members." Zangeneh said OPEC would "produce as much crude as it could, in line with [its] strategies, so as to bring the price to the level it favored."
The minister was reportedly optimistic that the US presidential elections and the seasonal "decrease in consumption with the approach of spring" would slow the upward trend in the oil price.
Other price changes
Also in IPE trading Wednesday, October gas oil dropped to settle at $319/tonne, down $11.25, and natural gas dipped the equivalent of 1.7� to end at $3.002/Mcf.
News that the US is considering opening the tap on its Strategic Petroleum Reserve was also seen by analysts as having a hand placing a downward pressure on oil prices. Energy futures prices weakened in trading on the New York Mercantile Exchange Wednesday.
The October contract for benchmark light, sweet crude declined 46� to settle at $33.82/bbl, while the November contract stood at $32.68, down 74�. Refined petroleum products also closed lower, with October home heating oil losing 3.61� to finish at $1.0107/gal, and unleaded gasoline for the same month declining 0.56� to rest at 93.34�/gal.
The rise in heating oil stocks this week, coming swiftly after US President Bill Clinton's pledge to consider releasing some of the SPR crude to avoid shortages this winter, took the steam out of the latest price rally. However, NYMEX natural gas for October delivery advanced by 4.7� to end at $5.06/Mcf.
In after-hours electronic access trading in New York, light, sweet crude oil was fetching $33.94/bbl for the October position and $32.79 for the November contract, both up from the NYMEX close.
On the Singapore Exchange, Brent crude for October closed at $31.53/bbl, while the November contract settled at $32.
The price of the OPEC basket of seven crudes stood at $30.40/bbl Wednesday, compared with $31.18 the previous day.