Prices Dn On OPEC Comments, Weather
(Updates with price tables.)
NEW YORK (Dow Jones)--Oil prices fell sharply Monday on both sides of the
Atlantic as OPEC appeared to talk down the market and U.S. Northeast
temperatures rose.
Under apparent pressure from major consuming nations, officials of several
OPEC member countries said oil prices have reached excessively high levels and
indicated that the cartel has no intention of immediately reducing supply.
At the New York Mercantile Exchange, crude futures for March delivery dropped
$1.20 to $45.28 a barrel, the lowest settlement for a front-month contract
since Jan. 5.
On London's International Petroleum Exchange, March Brent futures slid 85
cents to settle at $43.04 a barrel.
Adding to the downward pressure on crude futures was a selloff in refined
products amid growing supply and moderating temperatures in the Northeast, the
nation's largest heating oil consuming market. Heating oil futures for March
delivery fell 4.36 cents to $1.2306 a gallon, while gasoline futures for the
same month slid 4.83 cents to $1.2122 a gallon.
The most pointed comment regarding high oil prices came from Iran,
traditionally one of the more hawkish members of OPEC. The country's oil
minister, Bijan Namdar Zangeneh, was quoted by a government information network
as saying that oil prices have no reason to be above $40.00 a barrel.
"The factors conducive to the rise in prices do not have any economic basis,
and in my opinion, normally they will have to drop to the level of OPEC's oil
basket, that is below $40 per barrel," he said.
Similar comments by other OPEC officials stand at odds with the latest
thinking in the market. A price spike of more than 20% in January was partly
based on "a perception that OPEC was going to cut production and establish $40
as a price floor," said Phil Flynn, an oil trader and analyst at brokerage
Alaron Trading Corp. in Chicago. "Now they're creating doubts about it."
But Flynn and other analysts said the OPEC comments may be no more than an
attempt to placate the concerns of major industralized nations without having
to increase supply. "OPEC also suggested that a decline below $35.00 in Nymex
pricing would bring about a supply change, but it is doubtful the cartel would
endure such a precipitous drop before they take action," said Mike Fitzpatrick,
a vice president at brokerage Fimat Futures USA in New York.
At its Jan. 30 meeting, OPEC decided to leave output quotas unchanged at 27
million barrels a day but said it would reassess the situation in March.
While officials haven't said whether they will cut output in March, analysts
largely expect OPEC to lower output ahead of the second quarter, traditionally
the weakest demand period of the year. |
