Market Watch: June 27

Oil futures prices declined Monday in New York and London as traders took profits on the markets' previous gains. Several analysts claimed the correction of recent over-valuations was long overdue, pending the decision by members of the Organization of Petroleum Exporting Countries to increase production July 1.


Oil futures prices declined Monday in New York and London as traders took profits on the markets' previous gains. Several analysts claimed the correction of recent over-valuations was long overdue, pending the decision by members of the Organization of Petroleum Exporting Countries to increase production July 1.

On the New York Mercantile Exchange, the August contract for the benchmark blend of light sweet crudes lost 62�, closing at $31.63/bbl. The September contract was down 44� to $30.41/bbl. That decline continued in after-hours electronic trading, with both contracts down to $31.48/bbl and $30/bbl, respectively.

In London, the August contract for North Sea Brent closed at $29.75/bbl, down 64� in a day of volatile price moves on the International Petroleum Exchange.

IPE prices were boosted earlier by reports of an explosion at Kuwait's largest refinery at Mina Al-Ahmadi. But prices then fell when it became clear that Kuwaiti exports of refined products would not fall dramatically.

Brokers reported that, although market sentiment remained bullish, there is growing expectation that OPEC might again increase production within a few months in another attempt to curb prices.

In Singapore, a correction was recorded by North Sea Brent crude oil futures which fell below the $30/bbl level for the first time in a week.

The Singapore Brent August contract fell by 79� to $29.60/bbl, while the September position also dropped by 79� to $28.62.

Traders said the market was also expecting pressure from speculative players, while investment funds were viewing the oil sector with a more lucrative return.

Despite today's correction, traders were expecting oil prices to hold close to the $30/bbl mark in the coming weeks.

The average price for OPEC's basket of seven crudes was down 50� to $29.50/bbl.

NYMEX prices for refined petroleum products also declined, with the July contract for unleaded gasoline falling 2.93� to $1.517/gal with the restarting of two refineries in New Jersey and Pennsylvania. Those plants had been shut down for unscheduled repairs for the last few days.

The July NYMEX contract for home heating oil also was down 0.56� to 80.08�/gal. But the July contract for natural gas soared 11.2� to $4.56/Mcf.

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