Oil futures prices shot up Wednesday on international markets with speculation that the Organization of Petroleum Exporting Countries might make a bigger production cut next week than previously expected.
US Energy Secretary Bill Richardson plans to meet with six OPEC ministers over the weekend to see if the outgoing administration still has the power to jawbone OPEC into a more moderate reduction.
Richardson is scheduled to fly to Paris from Washington, DC, Thursday night to garner support from the International Energy Agency. While there, officials said, he will also meet with Algeria�s oil minister. Richardson then is to fly to Saudi Arabia, Kuwait, Qatar, and the United Arab Emirates to argue against deep cuts in OPEC production until western countries can rebuild their low petroleum inventories. He also is to meet with Venezuela�s oil minister at a yet undetermined location.
Energy analysts, who anticipated a reduction of 1.5 million b/d at OPEC�s Jan. 17 meeting, were startled by Qatari Energy Minister Abdullah Bin Hamad Al Attiya�s call for at least a 2 million b/d cut.
The February contact for benchmark US light, sweet crudes jumped by $1.84 to $29.48/bbl Wednesday on the New York Mercantile Exchange, while the March contract was up $1.51 to $28.21/bbl. Both contracts continued to climb in after-hours electronic trading to $29.59/bbl and $28.32/bbl, respectively.
Home heating oil for February delivery surged by 4.37� to 84.99�/gal while unleaded gasoline for the same month jumped 5.38� to 88.32�/gal.
The price hikes also were stimulated by an American Petroleum Institute report late Tuesday that US oil stocks fell by more than 500,000 bbl during the previous week.
However, the February NYMEX contract for natural gas dipped 6.91� to $9.13/Mcf, despite an American Gas Association report that 167 bcf of US gas was withdrawn from underground storage last week, when temperatures were 30% below those of the same period last year.
US gas storage is now 33% below year-ago levels, with another mass of Arctic air expected to blow across the country in the last half of this month.
In London, the February contract for North Sea Brent crude gained 75� to $25.34/bbl on the International Petroleum Exchange. Analysts said oil is expected to hover in a fairly narrow range between $24.50/bbl and just above $25/bbl until OPEC decides the size of its production cut.
The February natural gas contract edged up 7� to the equivalent of $3.97/Mcf on the IPE.
On the Singapore exchange, Brent crude for February rose 75� to $25.34/bbl. The March contract added 62� to close at $25.08/bbl.
The average price of OPEC�s basket of seven crudes gained 85� to $23.69/bbl on Wednesday.
