Market watch: London market gains
Uncertainty over possible production cuts by the Organization of Petroleum Exporting Countries and potential military problems with Iraq moved Brent oil futures through the $27/bbl cap Monday on the International Petroleum Exchange in London.
By the OGJ Online Staff
HOUSTON, Feb. 20�Uncertainty over possible production cuts by the Organization of Petroleum Exporting Countries and potential military problems with Iraq moved Brent oil futures through the $27/bbl cap Monday on the International Petroleum Exchange in London.
The April contract for North Sea Brent settled at $27.31/bbl, up 42� for the day after trading in a range of $27.07-$27.62/bbl on the IPE. The March natural gas contract also gained 7� to the equivalent of $3.80/Mcf.
The New York Mercantile Exchange was closed Monday for the holiday.
The average price for OPEC�s basket of seven crudes also was up 38� to $25.28/bbl on Monday.
Crude oil prices declined last week in the face of fears of a slowing US economy, combined with lower demand estimates by the International Energy Agency, said Robert Morris, chief energy analyst for Salomon Smith Barney Inc., in his weekly exploration and production industry report Tuesday.
Venezuelan President Hugo Chavez is trying to rally support within OPEC for another production cut at the group�s March 16 summit meeting in Vienna to soften the impact of the seasonal drop in demand during the second quarter.
�However, the jury is still out on whether OPEC will decide to further reduce output,� Morris said. �Any clear indication as to OPEC�s intentions � is unlikely to emerge until the Vienna summit nears.�
Meanwhile, he said, the drawdown of US natural gas storage last week indicates a reversal of much of the incremental fuel switching that occurred in January. Morris said US gas storage is still likely to be at a level of 700-800 bcf at the end of March when the seasonal heating season ends, down from 1 tcf a year ago.