Market watch: OPEC inaction boosts oil futures prices
Oil futures prices rose on international markets after the Organization of Petroleum Exporting Countries said Tuesday it would make no changes in current production. OPEC ministers promised to continue monitoring world oil markets until another meeting July 3 in Vienna to reconsider production quotas.
By the OGJ Online Staff
HOUSTON, June 6 -- Oil futures prices rose on international markets after members of the Organization of Petroleum Exporting Countries said Tuesday they'll make no changes in their current production.
OPEC ministers said they will continue to monitor world oil markets, however, and will meet again July 3 in Vienna to reconsider their production quotas.
At the end of the 1-day meeting, Chakib Khelil, Algeria's energy minister and also OPEC's conference president, said no action was necessary since global stocks of both oil and petroleum products are "at satisfactory levels" and likely to remain so through the rest of this year. Moreover, he said, world oil prices have been within OPEC's target range of $22-$28/bbl all year, averaging $24.80/bbl so far.
The average price for OPEC's basket of seven crudes dipped 2¢ to $27.03/bbl Tuesday.
On the New York Mercantile Exchange, the July contract for benchmark US light, sweet crudes increased 11¢ to $28.24/bbl. That's on top of a gain of 20¢ Monday, but still does not make up for a 44¢ loss to profit-taking Friday. The August contract for benchmark US crudes gained 17¢ to $28.58/bbl Tuesday, surpassing Friday's close.
Heating oil for July delivery also was up 1.03¢ to 76.95¢/gal, but unleaded gasoline for the same month dropped 0.23¢ to 90.54¢/gal.
The July natural gas contract continued to tumble, down 17.7¢ to $3.89/Mcf on the NYMEX.
In London, the July contract for North Sea Brent crude climbed 42¢ to $29.68/bbl on the International Petroleum Exchange, while the July natural gas contract was essentially unchanged at the equivalent of $3.04/Mcf.
OPEC seems to be acting responsibly in its apparent willingness to keep monitoring oil supply and demand, said London brokers. That should keep oil futures hovering around $29/bbl in that market for the near term, they said.
European Union officials said Tuesday they are concerned that Iraq temporarily suspended its oil exports but remain confident that other OPEC members would act to ensure stability of international oil markets.
However, in his opening remarks at the OPEC conference, Khelil complained of "excessive levels of fuel taxation" that are keeping product prices high "in many European countries." He said, "We call on these high-tax governments to review their distortionary fiscal policies."
In both the US and Europe, Khelil said, "The producer's share of the final consumer price is much diminished, to their obvious detriment. The inequity of all this is clear, particularly in the light of all our efforts to restore stability to the market at price levels that will neither trigger inflation in the consuming countries nor slow down global economic growth."
Moreover, he said, "It is worrying that this taxation is also being progressively applied to (natural) gas as well as oil products. Meanwhile, we are keeping a close eye on the liberalization of the (natural) gas markets in Europe and Asia, and the impact this could have on the oil market."