Market watch, July 19

Petroleum future markets rebounded worldwide Tuesday, wiping out most of the previous day's losses as traders decided the Organization of Petroleum Exporting Countries may not be on the verge of another production hike after all.

Jul 19th, 2000


Petroleum future markets rebounded worldwide Tuesday, wiping out most of the previous day's losses as traders decided the Organization of Petroleum Exporting Countries may not be on the verge of another production hike after all.

That recovery was aided by an American Petroleum Institute report that US oil stocks declined by 764,000 bbl last week, instead of increasing as expected by most traders. The API also reported US gasoline inventories were down for the week.

The August benchmark contract for US crude shot up by $1.11 to $31.94/bbl on the New York Mercantile Exchange, a rebound nearly twice as large as Monday's 57� loss. The September contract also gained 88� to $30.64/bbl, wiping out its previous 67� loss.

Those prices remained unchanged in after-hours electronic trading.

The August contract for heating oil also jumped 1.29� to 80.55�/gal, recouping most of its previous 1.64� loss. Unleaded gasoline also shot up 2.17� to 98.14�/gal, compared to the earlier 0.33� loss.

Natural gas for August delivery regained 4.2� to $4.04/Mcf, following a 14.8� loss on Monday.

In London, the September contract for North Sea Brent shot up 76� to $29.32/bbl on the International Petroleum Exchange, wiping out the previous 67� loss.

Prices were moving higher in midday trading Wednesday on the IPE. Observers said that market is again likely to test the $30/bbl price barrier unless it suddenly turns bearish once more.

However, the August natural gas contract Tuesday lost 2� to the equivalent of $2.73/Mcf on the IPE.

In overnight trading on the Singapore Exchange, the September contract for North Sea Brent jumped 76� to $29.32/bbl, with the October contract was up 68� to $28.82/bbl.

Petroleum markets bounced back from their previous declines after OPEC apparently put a hold on a proposed production increase when the price for its basket of crude dipped below $28/bbl to $27.46/bbl Monday. On Tuesday, that average basket price regained 63� to $28.09/bbl.

However, Iran�the second most influential OPEC member behind Saudi Arabia�maintained that even a brief drop below $28/bbl was enough to set aside the production hike of 500,000 b/d proposed Monday by Ali Rodriguez Araque, conference president for the cartel.

More in Economics & Markets