Crude Oil Falls as Saudi Minister Says OPEC Keeping Market Well-Supplied
April 24 (Bloomberg) -- Crude oil fell from a record as the Organization of Petroleum Exporting Countries said that the producer group is providing consumers with adequate supplies.
``We are giving them all they ask for and what they can process,'' OPEC President Edmund Daukoru said after the group held an informal meeting today. Saudi Oil Minister Ali al-Naimi said the world is well-supplied. Oil has jumped on concern about Iran's nuclear program. Iran's President, Mahmoud Ahmadinejad, said his country was against weapons of mass destruction.
``We've gotten some positive supply statements from OPEC today,'' said Jason Schenker, an economist at Wachovia Corp. in Charlotte, North Carolina. ``OPEC ministers are being reasonable and reassuring about supply. Geopolitical tensions have boosted prices because there is no supply problem for crude right now.''
Crude oil for June delivery fell $1.22, or 1.6 percent, to $73.95 a barrel at 12:04 p.m. on the New York Mercantile Exchange, the biggest decline in a month. Oil touched $75.35, tying the record reached on April 21. Futures touched records in the last four days of trading last week. Trading began in 1983. Prices are 34 percent higher than a year ago.
``Under normal circumstances a move of 70 cents in either direction would be a big deal, but that's no longer the case,'' said Tom Bentz, an oil broker with BNP Paribas Commodity Futures Inc. in New York. ``There's a lot of support in the $72.60 to $72.75 area and until we break through you won't see a significant pullback.''
The June contract's lows were between $72.65 and $72.73 in the last three days of trading.
Continuing Rally
``I don't know where the rally ends,'' said Eugene X. Hodge, a managing director at John Hancock Financial Services Inc. in Boston, who manages a $4.3 billion oil and gas company bond portfolio. ``There's nothing on the horizon that points to a substantial fall in prices. It takes time for a supply response to occur.''
OPEC declined to back a proposal by Kuwait for the group to offer all its idle capacity to the market, Daukoru told reporters after the meeting held on the sidelines of the International Energy Forum in Doha, Qatar, a gathering of more than 50 producing and consuming nations.
``There is no demand for extra oil. There are no buyers, even for light crude,'' Saudi Arabia's al-Naimi told reporters after OPEC gathered. Saudi Arabia is the world's biggest oil exporter and vies with Russia for the spot of top producer.
Brent crude oil for June settlement fell 74 cents, or 1 percent, to $73.83 a barrel on the London-based ICE Futures exchange. Futures touched $74.79 a barrel on April 21, the highest since the contract began trading in 1988.
Crude oil in New York first topped $50 a barrel in September 2004. Prices fell as low as $10.35 in December 1998 when the Asian economic crisis slashed demand and OPEC members ignored production quotas.
No Bargain
``The geopolitical situation and the switch to ethanol are aligning to keep prices high,'' Hodge said. ``If prices drop by a third we'll be looking at $50, which wouldn't have been a bargain a couple years ago.''
Refiners are performing maintenance on units and storage tanks were emptied to make room for gasoline blended with ethanol. The introduction of new gasoline blends may make it harder for refiners to meet demand this year. Gasoline using MTBE, or methyl tertiary butyl ether, is being phased out.
Gasoline for May delivery fell 3.89 cents, or 1.7 percent, to $2.1995 a gallon in New York. Futures touched $2.255 on April 21, the highest since Sept. 29. Gasoline is up 33 percent in a year.
To contact the reporter on this story:
Mark Shenk in New York at mshenk1@bloomberg.net
Last Updated: April 24, 2006 12:12 EDT
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