Market watch: Russia's support of OPEC boosts energy prices

Energy futures prices surged in international markets Friday after Russian Prime Minister Mikhail Kasyanov announced Russian oil companies are prepared to cut crude exports in support of an expected rollback of production quotas by the Organization of Petroleum Exporting Countries this week.

Nov. 12, 2001

2 min read

By the OGJ Online Staff

HOUSTON, Nov. 12 -- Energy futures prices surged in international markets Friday after Russian Prime Minister Mikhail Kasyanov announced Russian oil companies are prepared to cut crude exports in support of an expected rollback of production quotas by the Organization of Petroleum Exporting Countries this week.

Ali I. Naimi, Saudi Arabia's oil minister, also reiterated that another production cut of 1.5 million b/d at a meeting of OPEC ministers Wednesday in Vienna "could not be ruled out."

Those statements followed reports earlier last week by the American Petroleum Institute and the US Department of Energy indicating unexpectedly strong US demand for petroleum. As a result, Paul Horsnell, head of energy research for JP Morgan Chase & Co., said Friday, "Developments on the supply side of the oil market are becoming more than sufficient to overwhelm the depressive forces on the demand side."

The December contract for benchmark US crude jumped $1.05 to $22.22/bbl Friday on the New York Mercantile Exchange. The January position also rose by $1.09 to $22.46/bbl. Both contracts continued to climb in after-hours electronic trading to $22.46/bbl and $22.71/bbl respectively.

Unleaded gasoline for December delivery also shot up 3.07¢ to 60.71¢/gal in regular trading Friday on the NYMEX. Home heating oil for the same month surged by 1.96¢ to 62.68¢/gal.

However, the natural gas contract for December dropped 3.5¢ to $2.93/Mcf.

In London, the December contract for North Sea Brent oil climbed $1.10 to $21.38/bbl in the International Petroleum Exchange, while the January position rose $1.11 to $21.54/bbl. The natural gas contract for December also inched up 1.8¢ to $3.38/Mcf on the IPE.

The average price for OPEC's basket of seven crudes jumped $1.02 to $19.53/bbl, still far short of the group's targeted price range of $22-$28/bbl.

For the whole week, the average basket price fell to $17.87/bbl from an average $19.04/bbl during the last week of October, OPEC officials reported.

So far this year, OPEC's basket price has averaged $23.99/bbl, including an October average of $19.64/bbl. During all of 2000, the basket price averaged $27.60/bbl.