By the OGJ Online Staff
HOUSTON, Oct. 26 -- Energy futures prices fell Thursday on international markets, countering Wednesday's small rally, with indecisive traders apparently beginning another see-saw pattern of daily price swings.
However, the Organization of Petroleum Exporting Countries may be preparing to seize control of world oil markets by slashing another 1 million b/d of production within the next few weeks, said Paul Horsnell with J.P. Morgan Chase & Co. in London.
"The combination of an actual cut in October (through greater compliance by members with current production quotas) with a further promised cut in November could be fairly potent," Horsnell said in a report Friday.
Based on supply and demand data published by the International Energy Agency, he said, there apparently is greater demand for oil and less supply at present than during the fourth quarter of 2000 when benchmark US crude averaged $31.90/bbl. The only real difference between the two periods, Horsnell said, is the prevalent perception among traders now that world demand for oil will soon decline.
Thus, he said, OPEC will reduce the supply of real barrels of oil to counter "what are at the moment just psychological barrels of lost demand."
Meanwhile, UN officials report that for the first time they have hard evidence that Iraq tried to smuggle $10 million worth of oil into the world market in violation of UN sanctions. UN and US officials long have suspected that Iraq was smuggling as much as $2 billion of oil annually.
The current phase of the UN oil-for-aide program expires at the end of November. Often in the past, Iraq has temporarily halted oil shipments at that time and threatened longer shutdowns in an effort to get UN officials to ease restrictions.
The December contract for benchmark US light, sweet crudes lost 32¢ Thursday to $22.01/bbl on the New York Mercantile Exchange. The January oil contract was down 31¢ to $22.19/bbl.
Unleaded gasoline for November delivery dropped 1.83¢ to 58.57¢/gal, while home heating oil for the same month retreated 0.68¢ to 63.24¢/gal. The November natural gas contract dipped 4.3¢ to $2.94/Mcf on the NYMEX.
In London, the December position for North Sea Brent crude lost 25¢ to $21.01/bbl on the International Petroleum Exchange. The November natural gas contract gave up 3.3¢ to $2.88/Mcf on the IPE.