Dow Jones story on crude oil market. Some caution might be warranted since the rumored weekend meeting was apparently denied by a Gulf source and by the Venezuelan oil minister.
Crude Oil Jumps Over $1 A Barrel On Rumored Oil Producers Meeting
NEW YORK -(Dow Jones)- Crude-oil futures jumped by more than $1 a barrel, while petroleum-products futures also finished sharply higher Wednesday on the New York Mercantile Exchange, amid rumors that OPEC and non-OPEC oil producers will meet to discuss reductions of world oil output.
News services reported that there would be a meeting in Riyadh this weekend between OPEC and non-OPEC oil producers to discuss cutting production to bring about a recovery in historically low crude oil prices. The reports were said to be denied by a Gulf source, but there was still confusion over the matter. The reports weren't confirmed. Comments from Venezuela's oil minister Erwin Arrieta dismissing Venezuelan press reports of the meeting failed to take the steam out of the rally. Arrieta called the reports lies.
"We may not be getting the full story. But the way the market took off makes it seem like there is something to those reports," said Ed Kevelson, an energy analyst with Paribas Futures in New York.
April crude oil soared $1.13 to settle at $14.34 a barrel. May crude oil finished up $1.11 at $14.61 a barrel.
Among oil products, April unleaded gasoline jumped 3.76 cents to settle at 48.65. April heating oil closed up 2.57 cents at 41.05 cents a gallon.
April natural gas added 8.4 cents to end at $2.239 per million BTUs.
Venezuela's Arrieta also confirmed that he would attend OPEC's ministerial monitoring subcommittee March 30. Venezuela in early March declined to attend the meeting, which had originally been scheduled for March 16, as did Saudi Arabia, the world's largest oil producer and OPEC's most influential member. At that time, the market took the news bearishly because with the two countries absent from the meeting, there was little chance the cartel could decide to cut production.
In other news, the director of state-owned company Petroleos Mexicanos, also known as Pemex, said Wednesday that world oil producers need to moderate crude output to confront the crisis in world oil prices. At a ceremony to mark the 60th anniversary of the 1938 expropriation of the Mexican oil industry, Adrian Lajous said Mexico was currently producing 3.2 million barrels of crude per day.
In an address at the Nuevo Pemex natural gas processing plant, Lajous called for dialogue with other producers to address the present low prices.
"Now, there is a feeling in the market that world oil producers are moving toward production cuts. At the least, they are showing us that they are concerned about falling oil prices and that improves the chances of output cuts taking place," said Tom Bentz, an energy analyst with Cresvale International, a New York trading house.
Traders added that supportive oil inventory reports from the American Petroleum Institute and the U.S. Department of Energy, in addition to technicals indicating an oversold market, played a part in the rebound.
The API report, released Tuesday evening, showed crude oil stocks dropped 1.331 million barrels during the week ended March 13. The DOE report, released early Wednesday, showed a larger draw of 2.1 million barrels. Many analysts had expected crude oil stocks to climb. In products, gasoline skyrocketed as a bullish 3.8-million-barrels draw reported in DOE inventory data Wednesday brought in heavy short covering to the gasoline pit.
Wednesday's partial recovery continued a rebound near the close of Tuesday's trading when April crude dropped to a new, nine-year low of $12.80 a barrel at midafternoon but then turned higher.
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