Market Watch: Stock buildup, OPEC uncertainties depress energy prices

Energy futures prices declined Tuesday with rumors that key oil-producing countries outside the Organization of Petroleum Exporting Countries might cooperate with the cartel to reduce global production of crude.

Oct. 24, 2001

2 min read

By the OGJ Online Staff

HOUSTON, Oct. 24 -- Energy futures prices declined Tuesday with rumors that key oil-producing countries outside the Organization of Petroleum Exporting Countries might cooperate with the cartel to reduce global production of crude.

OPEC ministers are scheduled to meet Monday in Vienna with representatives from non-member countries; Russia, Mexico, Oman, and Kazakhstan. Venezuelan President Hugo Chavez indicated OPEC members Saudi Arabia, Algeria, Libya, and Iran are willing to participate in a reduction of 1 million b/d of oil if non-OPEC countries will also reduce production.

However, most analysts apparently believe it will be hard for OPEC and non-OPEC producers to resist political pressure from the US and other industrialized nations to maintain production.

The December contract for benchmark US sweet, light crudes dropped 41¢ Tuesday to $21.85/bbl on the New York Mercantile Exchange. The January contract also lost 38¢ to $22.06/bbl during the regular trading sessions. Both contracts continued to slip in after-hours electronic trading to $21.60/bbl and $21.77/bbl, respectively, following a bearish report on US inventories.

The American Petroleum Association said late Tuesday US stocks of crude climbed by 4.9 million bbl last week. US inventories of unleaded gasoline also rose by 965,000 bbl, while heating oil stocks increased by 556,000 bbl.

During Tuesday's regular trading session on the NYMEX, unleaded gasoline for November delivery lost 0.78¢ to 59.01¢/gal. Home heating oil for the same month dropped 0.51¢ to 62.11¢/gal. The November natural gas contract retreated by 12.6¢ to $2.68/Mcf.

In London, futures prices for North Sea Brent crude also declined in fairly range-bound trading on the International Petroleum Exchange. With no new positive factors to encourage buyers, brokers said, light selling was enough to erode gains from earlier small rallies.

The December contract for North Sea Brent oil lost 11¢ to $20.94/bbl. The November natural gas contract dropped 7.1¢ to the equivalent of $2.93/Mcf on the IPE.

The average price for OPEC's basket of seven crudes retreated by 16¢ to $19.10/bbl.