Bloomberg: Crude oil rose for a fourth day after Iran’s oil minister said OPEC may reduce production when it meets next month. By Bill Murray
Feb. 18 (Bloomberg) — Crude oil rose for a fourth day after Iran’s oil minister said OPEC may reduce production when it meets next month.
The Organization of Petroleum Exporting Countries typically cuts output in the second quarter to counter a drop in demand at the end the Northern Hemisphere’s winter, Gholamhossein Nozari said yesterday. The group, whose members produce more than 40 percent of the world’s oil, will gather in Vienna on March 5.
“You have some OPEC countries such as Iran and Venezuela that are supporting cuts and those countries get listened to,” said Andy Sommer, an analyst with HSH Nordbank in Hamburg. Oil prices will rise to more than $100 a barrel should OPEC cut production, he said.
Crude oil for March delivery rose as much as 95 cents, or 1 percent, to $96.45 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $95.90 a barrel at 5 p.m. local time. There was no floor trading in New York today because of the Presidents’ Day holiday.
Brent crude for April settlement rose 28 cents, or 0.3 percent, to settle at $94.91 a barrel on London’s ICE Futures Europe exchange at 1:40 p.m. New York time.
New York oil futures reached a record $100.09 a barrel on Jan. 3. Prices dropped as low as $86.24 this month as U.S. oil and gasoline stockpiles rose amid concern that a recession in the world’s largest energy consumer will hurt demand.
“Cutting production has been the normal process every year in March,” Nozari told reporters in Tehran yesterday.
OPEC last week lowered its 2008 oil demand growth forecast to 1.4 percent citing the risk of recession in the U.S. Daily demand in the second-quarter will decline by about 1.6 million barrels from the first-quarter, the group’s monthly report said.
An explosion rocked Alon USA Energy Inc.’s refinery in Big Spring, Texas, early today, a dispatcher with the local sheriff’s department said.
The refinery, which can process 70,000 barrels of oil a day, is located about 290 miles (467 kilometers) west of Dallas. It serves markets in West Texas, Arizona and New Mexico.
Prices climbed 4.1 percent last week amid concern that Venezuela’s government may cut supplies to the U.S. because of a legal dispute with Exxon Mobil Corp. Royal Dutch Shell Plc said earlier this month it may not be able to meet its commitments to export Nigerian oil as militant action continues to disrupt output in Africa’s largest producer.
“The European crude market has been very strong due to lower supply from the North Sea and West Africa,” said Ehsan Ul-Haq, head of research with Vienna-based JBC Energy. “The U.S. market is being driven mainly by fears of recession and Venezuela.”
Exxon Mobil Corp. and state-owned Petroleos de Venezuela SA, known as PDVSA, are disputing Exxon’s compensation for its stake in a heavy crude oil venture that was nationalized last year. The U.S. company won court orders freezing $12.3 billion in PDVSA’s assets.
Venezuela’s President Hugo Chavez said that his country has no plans to stop selling oil to the U.S.
“All I’ve said is that, if the U.S. attacks us, we’ll have to decide not to send one drop of oil to the U.S.,” he said yesterday in comments broadcast by Venezuelan state television.
OPEC’s decision to cut production may be guided by its most recent oil market report published Feb. 15. It said average demand for oil from OPEC this year may fall by 400,000 barrels a day to 31.5 million as slowing demand from the U.S. and additional non-OPEC output decreases the need for its supplies.
Gasoline supplies in the U.S. rose 1.7 million barrels for the week ended Feb. 8 to 229.3 million barrels, leaving stockpiles 1.8 percent higher than a year ago, the U.S. Energy Department said last week.
Gasoline for March delivery rose as much as 3.32 cents, or 1.3 percent, to $2.527 a gallon in New York after an explosion occurred at Alon USA Energy Inc.’s 70,000 barrel-a-day refinery in Big Spring, Texas. A company spokesman said the incident was being investigated.