Market watch: International oil futures rise as Iraq suspends exports

By the OGJ Online Staff

HOUSTON, June 11 -- Oil futures prices rose Friday as more international traders worried about the possible impact on US markets by Iraq's temporary shutdown of crude exports.

However, Alvaro Silva Calderon, Venezuela's energy minister, said Friday, "There is sufficient crude on the market ... in fact there is an oversupply of between 1 (and) 2 million b/d." Silva Calderon made his remarks to reporters in Caracas shortly after he returned from the ministerial meeting of the Organization of Petroleum Exporting Countries in Vienna.

The July contract for benchmark US light, sweet crudes rose 58¢ to $28.33/bbl Friday on the New York Mercantile Exchange. The August contract increased 49¢ to $28.63/bbl.

Home heating oil for July delivery was up 0.73¢ to 76.65¢/gal, but unleaded gasoline for the same month dipped 0.02¢ to 88.83¢/gal. The July natural gas contract gained 13.2¢ to $3.92/Mcf on the NYMEX.

In London, North Sea Brent oil futures rallied to break through the $29/bbl level on the basis of strong technical indicators and anxiety over supplies to the US market.

Earlier in the week, oil prices on the International Petroleum Exchange had not moved significantly in reaction to Iraq's latest stoppage of oil exports in a conflict with UN officials on proposed changes in the sanction rules. However, Iraq's action became a "supportive factor" as the market's mood became more bullish at the end of the week, brokers said.

The July Brent contract settled at $29.44/bbl Friday, up 94¢ for the day, after trading in a range of $28.45-$29.50/bbl. The July natural gas contract lost 3.2¢ to $2.92/Mcf.

The average price for OPEC's basket of seven crudes increased by 29¢ to $26.84/bbl Friday.

For the whole week, that basket price averaged $26.83/bbl, up from $26.65/bbl the previous week. So far this year, the OPEC basket has averaged $24.88/bbl, compared to $27.60/bbl during all of last year.

"We want to see an average of about $25/bbl for this year," said Silva Calderon. As OPEC strengthens, it is more likely to keep world oil prices in the middle of its target band of $22-$28/bbl, he said.

Silva Calderon said President George W. Bush's proposed US energy plan "emphasizes that country's dependence on imported products. This coincides with our own plans. At the moment, we produce 60% crude and 40% products, but we plan to invert these proportions," he said.