Market watch, Oct. 20

International energy futures weakened Thursday, as Venezuelan President Hugo Chavez reiterated that members of the Organization of Petroleum Exporting Countries are committed to reducing oil prices to $22-$28/bbl.


International energy futures weakened Thursday, as Venezuelan President Hugo Chavez reiterated that members of the Organization of Petroleum Exporting Countries are committed to reducing oil prices to $22-$28/bbl.

The New York Mercantile Exchange's November contract for benchmark US light, sweet crude declined 57� to $32.91/bbl, while the December contract was down the same amount to $31.90/bbl.

However, both contracts gained in after-hours electronic trading to $33.12/bbl and $32.09/bbl, respectively.

Home heating oil for November delivery also slipped on the NYMEX, down 1.41� to 95.18�/gal, following an earlier report by the American Petroleum Institute that refineries are running flat out, with the highest production ever of distillates.

The November contract for unleaded gasoline lost 0.56� to 93.65�/gal, while natural gas for the same month dropped 27.7� to $4.95/Mcf on the NYMEX.

In London on the International Petroleum Exchange, the December contract for North Sea Brent crude was down 36� to $30.74/bbl on the basis of the earlier API report and evidence of warmer weather in the United States. The November contract for natural gas also lost 12� to the equivalent of $3.78/Mcf on the IPE.

On the Singapore Exchange, the December contract for North Sea Brent crude settled at $30.74/bbl, down 36�, and the January position finished at $30.40, down 41�.

But the average price for OPEC's basket of seven crudes was up 8� to $30.52/bbl on Thursday.

Chavez said OPEC's target range of $22-$28/bbl is a fair value based on supply and demand. He said recent high prices for oil around the globe are primarily the result of market speculation, high taxes in consuming countries, and problems with refineries.

Qatari Minister of Energy and Industry Abdullah Bin Hamad Al Attiyah made similar charges Thursday at the close of his visit to India. He said the 10-year high in crude prices during September was the result of an "artificial market" created by speculators that has raised international prices for oil by 10%-15%

Al Attiyah said OPEC's production hikes this year had put about 2 million b/d of excess crude into world markets. But speculators and artificial market forces have manipulated prices to an unsustainable high that is harming economic interests of developing countries, he said.

Ways of stabilizing oil prices and cutting into that artificial market will be discussed at next month's meeting of OPEC members and representatives of major consuming nations in Riyadh, he said.

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