Crude Gains on Possible Cuts
Tuesday, 9 March 1999
(AP)
CRUDE OIL futures gained a second day Tuesday on the New York
Mercantile Exchange, but finished well off early highs, as market
participants tried to determine how serious world oil producers are about
ending a global supply glut.
On other markets, coffee and coffee futures advanced.
Crude matched four-month highs reached a day earlier as investors
struggled over whether the Organization of Petroleum Exporting Countries
would at its March 23 meeting in Vienna propose additional output cuts in
a bid to shore up prices.
There was talk oil ministers had agreed on Iran's production targets, a
move that could pave the way for a new round of cuts.
In the past year, world oil producers have removed about 3 million barrels
daily from the market, but analysts have said that has been mitigated by
increased output from Iraq and cheating among those who have pledged
cuts. And beyond that, some say demand is so weak that at least 1.2
million barrels daily above the 3 million would need to be cut to
significantly increase prices.
Crude also rose in nervous trading tied to the late-afternoon release of
industry group American Petroleum Institute's weekly inventory data.
Investors were taken by surprise last week when the group reported a
sharp decline in crude inventories, which erased what had been a long
year-over-year surplus.
Energy futures have suffered for months as overproduction combined with
back-to-back mild winters in major U.S. heating regions torpedoed prices
and sharply reduce oil companies' profit margins.
Crude oil for April delivery rose 22 cents, or 1.6 percent, to $13.85 a
barrel, the highest since Nov. 6; April unleaded gasoline rose 0.29 cent to
42.90 cents a gallon; April heating oil rose 0.23 cent to 36 cents a gallon;
April natural gas rose 7 cents to $1.929 for each 1,000 cubic feet.
Coffee futures rose sharply on the Board of Trade of the City of New
York amid concern about the state of the midseason crop in Colombia, the
world's largest producer of the gourmet-style arabica beans favored by
American consumers.
Colombia growers are reporting the Mitaca, or mid-crop coffee harvest,
may be as much as 20 percent lower than last year's harvest following
heavy rains during the crucial flowering period.
Market participants also bid prices higher as freight workers in Colombia
considered striking, a move that would delay shipments. While the peak
consumption period in both Europe and the United States is winding down,
roasters in recent weeks have let inventories dwindle as they sat on the
sidelines awaiting lower prices.
May arabica coffee rose 2.05 cents to $1.062 a pound.
Copper gained on the New York Mercantile Exchange amid a third day of
sharp declines in warehouse supplies, buoying optimism that recent
demand weakness may be reversing itself.
The London Metal Exchange reported inventories in its warehouses fell
1,550 metric tons overnight Monday to 697,050 metric tons, with most of
that coming out of Singapore.
Market participants pointed to heavy buying out of South Korea and
China, which could be a sign that economic weakness in Asia may be
showing some signs of recovery.
Copper is used in wiring and plumbing, mainly in the construction sector,
but has seen its fortunes fade after global economic troubles sharply
curtailed demand in what had been the fastest-growing region of the world.
May high-grade copper rose .45 cent to 63.10 cents a pound. |
