An'update' on the oil saga - stayed tuned for further developments/EDIT...
Oil prices continue to head lower
By Paul Solman
Published: July 5 2000 11:38GMT | Last Updated: July 5 2000 12:14GMT
Oil prices fell further in London on Wednesday, as the market continued to
react to this week's announcement by Saudi Arabia that it was prepared to
put an extra 500,000 barrels a day on to the world market.
Benchmark August Brent crude was $28.57 a barrel at 1100 GMT, down
101 cents from Tuesday's close.
The price has lost $2.53 since the Saudis made their surprise announcement after the
market shut on Monday night, but analysts and traders said there was still no sign of a
sudden sell-off.
"People have had the opportunity to get out of the market but they haven't taken it," one
trader said. "I think they are still crunching demand numbers to see what an extra 500,000
barrels could mean."
Market watchers are also focusing on the New York Mercantile Exchange which opens at
1230 GMT after a two-day hiatus for the US Independence Day celebrations.
Nymex light crude futures fell in Asian-based trading on the exchange's electronic,
out-of-hours system, though again the loss of around $1.50 was relatively subdued.
Meanwhile, the United Arab Emirates, Kuwait and Algeria are likely to join Saudi Arabia in the
output increase, according to news agencies, which quoted Opec sources on Wednesday.
Unlike many of Opec's members who are producing oil at full capacity, the three countries
are believed to be able to raise oil output.
Iranian officials said on Wednesday that they believed the Opec output increase of 708,000
barrels a day, agreed in Vienna last month, would be enough to bring prices down from the
$30 level of recent weeks.
Iran's latest statement follows comments on Tuesday attacking Saudi Arabia for failing to
consult Opec members before making its announcement.
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Comment:
Agree with some analysts that the affect of the Saudi pledge to increase supply will probably be felt more in the fall - on home heating oil prices.
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This summary/excerpt from an USATODAY.com article provides a similar comment - with some rationale:
Gas may cost less by August
A surprise announcement by Saudi Arabia that it may soon boost oil
production by 500,000 barrels a day could knock 10 cents or more off the
pump price of gasoline in the United States by sometime in August, analysts
say. But some oil market experts warn drivers not to get too excited yet. With
U.S. refineries running flat out to make gasoline already, they may not be able
to use the extra Saudi oil to make any more, which means prices might stay
right where they are. Top-grade crude oil has been trading at more than $32 a
barrel recently, unbudged by OPEC's June 21 decision to boost production by
708,000 barrels a day. |
