Market watch: Market buoyed by OPEC production cut

By the OGJ Online Staff

HOUSTON, Sept. 4 -- International energy futures markets were in a bullish mood both before and after the extended US Labor Day weekend as traders focused on official starts of the winter heating season and the latest 1 million b/d reduction in production by the Organization of Petroleum Exporting Countries.

The New York Mercantile Exchange was closed Monday for Labor Day but prices for oil and refined products rose Friday ahead of the holiday, which historically marks the end of the summer driving season as refiners switch their production emphasis from gasoline to home heating oil.

The October contract for US benchmark light, sweet crudes climbed 65¢ to $27.20/bbl on the NYMEX, while the November contract was up 62¢ to $27.35/bbl in Friday's trading.

Home heating oil for October delivery jumped 1.38¢ to 76.63¢/gal Friday, and unleaded gasoline for the same month advanced 0.84¢ to 80.57¢/gal.

However, the October natural gas contract dipped by 1.5¢ to $2.38/Mcf.

In London, the October contract for North Sea Brent crude gained 32¢ to $26.41/bbl Friday and another 13¢ to $26.54/bbl Monday on the International Petroleum Exchange. The October natural gas contract lost 5.3¢ to the equivalent of $2.97/Mcf Monday on the IPE.

Brokers predicted Brent futures would remain fairly stable above $26/bbl, boosted by healthy demand as refiners gear up for the winter heating season. The 1 million b/d production cut that OPEC members agreed to in July and that officially became effective Saturday is expected to tighten world oil supplies within weeks.

However, the average price for OPEC's basket of seven crudes dropped 7¢ Friday and another 3¢ Monday to $24.66/bbl.