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6/5/98 Crude-Oil Futures Finish Flat, Petroleum-Products End Lower On
NEW YORK -(Dow Jones)- Crude-oil futures settled little changed and petroleum-products futures ended modestly lower Friday on the New York Mercantile Exchange, as the excitement over a second round of oil production cuts faded.
Oil ministers from Saudi Arabia, Venezuela, and non-OPEC Mexico met in Amsterdam Thursday and agreed to cut oil production by 450,000 barrels a day. The United Arab Emirates and Kuwait are likely to cut their output another 150,000 b/d, Venezuelan oil minister Erwin Arrieta said Friday.
Many market observers were skeptical that the deals could generate sustained support. "The reality of the situation is starting to creep back into the market. We don't have a single barrel cut from production as the result of Thursday's announcement, and we have no improvement on the demand side," said an energy analyst in Washington, D.C.
July crude oil closed down 5 cents at $15.07 a barrel. August crude oil inched up 2 cents to end at $15.71 a barrel.
Outer month contracts improved markedly over the July and August contracts. September crude gained 14 cents a barrel to settle at $16.25, while October crude rose 17 cents to $16.63.
The oversupply in the market needs to be worked down before production cuts can be felt in the market, and that isn't likely to happen in time to rally July crude, said an analyst, explaining why the front-month contracts were unable to keep pace with the back months. There is also the sense that the full brunt of the production cuts, if they occur, won't be felt in inventory until August is off the board.
Among products: July unleaded gasoline closed down 0.33 cent at 49.56 cents a gallon. July heating oil shed 0.17 cent to settle at 39.33 cents a gallon.
July natural gas inched up 0.7 cent at $2.027 per million BTUs.
The last round of production cuts agreed to on March 31 by OPEC and non-OPEC producers fell short of expectations. The deal called for cuts of around 1.7 million b/d, but producers came up with cuts of 800,000 to 1 million b/d, according to various industry surveys.
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