Market Watch: Energy futures prices fall as OPEC mulls cuts

Energy futures prices continued their downward tumble on international markets Wednesday, fueled by the American Petroleum Institute's weekly survey that showed US crude inventories 10% higher than a year ago. But the fall was checked by reports that OPEC ministers are again discussing a possible production cut.

Oct. 4, 2001

2 min read

By the OGJ Online Staff

HOUSTON, Oct. 4 -- Energy futures prices continued their downward tumble on international markets Wednesday, fueled by the American Petroleum Institute's earlier report that US crude inventories are 10% higher than year-ago levels.

But the fall was checked when Ali Rodriguez Araque, secretary general of the Organization of Petroleum Exporting Countries, reported member ministers were consulting by telephone about another possible production cut to boost prices.

Providing all agree, OPEC members could activate their price defense mechanism to trim another 500,000 b/d from their total production if the average price for the cartel's basket of seven crudes remains below the floor price of $22/bbl for 10 consecutive trading days. The OPEC basket averaged $19.65/bbl Wednesday, down 65¢ for the day, marking its eighth day below the group's targeted price range.

However, some analysts said a 500,000 b/d reduction wouldn't be enough to halt a continuing decline in world oil prices.

The November contract for benchmark US sweet, light crudes dropped 71¢ to $22.08/bbl on the New York Mercantile Exchange, while the December contract was down 67¢ to $22.44/bbl. However, both contracts rebounded slightly in after-hours electronic trading to $22.12/bbl and $22.48/bbl, respectively.

Unleaded gasoline for November delivery plunged 1.12¢ to 62.93¢/gal on the NYMEX. Home heating oil for the same month lost 0.71¢ to 63.95¢/gal. However, the November natural gas contract regained 5.2¢ to $2.32/Mcf.

In London, futures prices for North Sea Brent crude quickly slipped below the $22/bbl level Wednesday to test support at $21.50/bbl on the International Petroleum Exchange. The November Brent contract closed at $21.52/bbl, down 53¢ for the day after trading in a range of $21.29-$21.94/bbl.

The November natural gas contract gained 1.2¢ to the equivalent of $3.47/Mcf on the IPE.