Market watch: Talk of OPEC action boosts energy prices

International energy futures prices rebounded Friday amid early speculation that the Organization of Petroleum Exporting Countries might again reduce production. The August contract for benchmark US light, sweet crudes gained 89¢ to $25.59/bbl on the New York Mercantile Exchange.

July 23, 2001

2 min read

By the OGJ Online Staff

HOUSTON, July 23 -- International energy futures prices rebounded Friday amid early speculation that the Organization of Petroleum Exporting Countries might again reduce production.

OPEC Sec. Gen. Ali Rodr�ez Araque confirmed Monday earlier reports that OPEC members are considering an extraordinary meeting in early August that could result in a production cut. He said several OPEC ministers agreed that a reduction of oil supplies is needed to buoy prices (OGJ Online, July 23, 2001).

Rodr�ez said Monday there are no specific figures yet for the proposed cut. However, Ali al-Naimi, Saudi Arabia's oil minister, said Saturday that OPEC members were discussing a cut of 1 million to 1.5 million b/d effective Sept. 1.

On Friday, the August contract for benchmark US light, sweet crudes gained 89¢ to $25.59/bbl on the New York Mercantile Exchange, while the September contract jumped $1.16 to $25.94/bbl.

Unleaded gasoline for August delivery also added 2.17¢ to 72.38¢/gal, and home heating oil for the same month rose 1.31¢ to 68.11¢/gal.

The August contract for natural gas increased by 1.6¢ to $2.96/Mcf on the NYMEX.

In London, the price for North Sea Brent crude rose largely on a technical correction after dipping near $24/bbl on the International Petroleum Exchange, brokers said. The September contract for Brent crude settled at $24.64/bbl, up 59¢ for the day after trading in a range of $24.15-$24.80/bbl. Indications by OPEC of a pending production cut could boost prices above $25/bbl again on the IPE, analysts said Friday.

The August natural gas contract lost 4.9¢ Friday to the equivalent of $2.79/Mcf on the IPE.

The average price for OPEC's basket of seven crudes gained 15¢ to $22.93/bbl Friday. But OPEC's average basket price for the full week was down more than $1 to $23.07/bbl.

So far this year, OPEC's basket price has averaged $24.88/bbl, near the mid-point of its targeted price band. That's well below an average $27.60/bbl for all of 2000, but up from $17.47/bbl in 1999.