Market watch: Oil prices end lower despite OPEC cut

By the OGJ Online Staff

HOUSTON, Mar. 20�Oil futures prices slipped on international markets Monday despite a Saturday announcement by the Organization of Petroleum Exporting Countries to cut its production by 1 million b/d, effective Apr. 1.

Analysts suggested the decline stemmed partially from the fact that the production cut has yet to be implemented. OPEC members anticipate their production cut will keep prices in the range of $22-28/bbl.

The market also is waiting to see how much of an addition production cut will come from Mexico, Russia, Oman, Angola, and Kazakhstan.

Chakib Khelil, Algeria's energy minister and president of the OPEC conference, has predicted an additional reduction of at least 200,000 b/d from those countries.

The April contract for benchmark US sweet, light crudes dropped 59� to settle at $26.15/bbl Monday on the New York Mercantile Exchange, while the May contract lost 46� to close at $26.46/bbl. Both reversed the trend and climbed in after-hours electronic trading to $26.20/bbl and $26.53/bbl, respectively.

Refined products closed lower on the NYMEX, with home heating oil losing 2.56� to settle at 67.82�/gal and gasoline for April delivery declined by 1.40� to finish at 86.03�/gal.

The April natural gas contract gained 2.8� to end at $5.07/Mcf.

In London, North Sea Brent crude futures also ended Monday lower on the International Petroleum Exchange. The May contract for Brent closed at $24.81/bbl, down by 24� and below the psychological support at $25/bbl. The day's high was $25.40 and the low was $24.73.

On the IPE, the April natural gas contract settled flat at the equivalent of $3.27/Mcf.

The average price for OPEC's basket of seven crudes lost 45� to $22.64/bbl Monday. The average basket price for all of last week was $23.99/bbl, down from $24.58/bbl the previous week.