Next week could be huge when OPEC announces...
buyselloil- I think we're seeing some profit taking on a nice week. Some are unwilling to bet on what OPEC does and/or the markets reaction to it.
Think about it; for Crude to be this strong - this close to the OPEC meeting; when all the risk vs. reward is on the side of being conservative, taking profits - and not "being in"...
It surely looks like 1.5 M boe , or less imho and I think they really throw the world a small bone with 500K now and 500K in June - pre-announced.
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Energy News
Fri, 24 Mar 2000, 3:08pm EST
Crude Oil Rises on Traders' Concern That OPEC Output Boost Will Be Small
Crude Oil Rises on Expectations OPEC Supply Boost Will Be Small
New York, March 24 (Bloomberg) -- Crude oil rose 3 percent on
signs that new OPEC production targets, to be decided on Monday,
will be too low to meet second-quarter demand and rebuild world
inventories that are the lowest in a decade.
OPEC has agreed to a ``small' rise in production, based on
current quotas, Venezuela's Deputy Foreign Minister Jorge Valero
said today. Since members already exceed output quotas by about
1 million barrels a day, the effect could be to leave world supply
unchanged, traders said. Industrialized nations say they need at
least 2 million barrels a day in new supply.
``I would say `small' is anywhere from a half a million to a
million barrels,' said John Kilduff, senior vice president of
energy risk management at Fimat USA Inc. in New York. ``That's
good news for the bulls.'
Crude oil for May delivery rose as much as 84 cents, or 3.1
percent, to $28.15 a barrel on the New York Mercantile Exchange,
the biggest gain in two weeks. While prices are down 18 percent
since reaching a nine-year high earlier this month, oil still is
up 83 percent from a year ago.
In London, Brent crude oil for May settlement rose as much as
86 cents, or 3.4 percent, to $26.34 a barrel on the International
Petroleum Exchange.
The Organization of Petroleum Exporting Countries oil
ministers will meet in Vienna on Monday to set new production
quotas, to take effect after a yearlong output-reduction agreement
expires March 31. Those cuts eliminated a worldwide glut and
caused prices to more than triple from December 1998 to a peak of
$34.37 on March 8.
More Barrels Needed
The International Energy Agency, a forecasting and analytical
organization for industrialized nations, said this month that OPEC
needs to boost daily output by 2.3 million barrels a day to meet
demand and refill inventories that are around 10-year lows.
OPEC maintains the need is smaller because demand normally
drops in the second quarter with the end of the heating season in
the Northern Hemisphere. The group said yesterday it expects
overall global oil demand this year to rise by about 1.6 million
barrels a day from 1999.
``The overall feeling is that the increase in quotas may be
only slightly more than what they are cheating by,' said Nauman
Barakat, vice president of global energy trading at ABN Amro Inc.
in New York. Even an increase as large as 1.5 million barrels a
day would send prices higher, he said.
A limited rise in output would come as some hardliners in the
group have resisted boosting output, traders said, and OPEC must
maintain unity to be effective.
Emir Sheikh Hamad bin Khalifa al-Thani, leader of Qatar,
OPEC's smallest producer, today said OPEC should keep production
quotas unchanged, citing expectations for lower second-quarter
demand.
Qatar joins other members, such as Iran, the No. 2 OPEC
producer, who have argued that falling prices in the past two
weeks show that there's no need to raise output at Monday's
meeting. A Kuwaiti official said today that the country opposed
increasing quotas.
Venezuela, OPEC's No. 3 producer, plans to propose that oil
ministers meet again in June as part of a series of gatherings to
prepare for a heads-of-state summit in Caracas, said Jorge Valero,
Venezuela's deputy foreign minister.
The possibility of a June producers meeting may signal that
OPEC is considering a smaller output boost now, with incremental
changes possible later in the year.
Refinery Explosion
A fire and explosion rocked Royal Dutch/Shell Group's Godorf
refinery near Cologne, Germany, last night, halving capacity to
85,000 barrels a day. The refinery is Germany's fourth largest.
Prices of oil products rallied after the blast. Gasoil for
April delivery rose as much as $7.25, or 3.5 percent, to $215.50 a
metric ton on the IPE.
The outage could tighten European supplies of refined
products, making less diesel fuel, heating oil and gasoline
available for export to the U.S.
U.S. gasoline stockpiles are 23 million barrels, or 10
percent, below year-ago levels, the American Petroleum Institute
reported this week. Refineries normally crank up output this time
of year to make enough of the motor fuel for the peak summer
driving season.
The Department of Energy has cautioned that with inventories
low, refineries will need to operate at close to maximum rates
this summer to make enough gasoline.
Gasoline for April delivery on the Nymex rose as much as 3.34
cents, or 3.6 percent, to 95.25 cents a gallon. Prices are up 37
percent so far this year. Gasoline futures represent wholesale,
not retail prices.
Record Gasoline Prices
U.S. retail gasoline rose to $1.529 a gallon last week, the
fourth straight weekly record, the DOE reported on Monday, though
the 0.2 cent rise was the smallest since January.
Gasoline prices may be headed still higher, regardless of
what OPEC does Monday, analysts said. That's because it will take
weeks for additional oil to make it from the wellhead to the
nation's refining center along the U.S. Gulf Coast.
So far, there have been few signs that gasoline prices are
affecting customers' choices. This year through February, sport
utility sales rose 13 percent from the year-earlier period,
outpacing the industry-wide rate of 11 percent, Autodata Corp.
said.
Sales of large sport utility vehicles, such as General Motors
Corp.'s Yukon and Ford Motor Co.'s new Excursion, are up 19
percent, followed by a 16 percent gain in small sport utilities,
such as Nissan Motor Co. Ltd.'s Xterra and GM's Chevrolet Tracker.
Overall sales of U.S. cars and light trucks will rise an
estimated 11 percent this month from March 1999, analysts forecast
earlier this week.
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