Mon May 10 09:47 ET
NYMEX Oil Pre-Opg: Lower; rise seen later on IEA, Kosovo
OPENING CALL: Crude oil futures: Down 5-10 cents per barrel
Heating oil: Up 15-25 points per gallon
Gasoline: Up 15-25 points per gallon
By Mary Chung, Bridge News
New York--May 10--NYMEX crude futures are expected to open lower, extending
last week's technical correction, despite supportive IEA figures showing that
OPEC cut output by 1.58 million barrels per day in April. Some brokers said the
market could turn higher after the opening, helped by the IEA data and
heightening tensions in Kosovo following the NATO bombing of the Chinese Embassy
in Belgrade.
* * *
OPEC countries reduced their crude oil production by 1.58 million bpd in
April to 26.24 million bpd as "vigorous" implementation of the latest round of
output cutbacks began, the International Energy Agency said in its latest
monthly report today.
The IEA said OPEC's compliance with agreed production cuts was 85% in April,
if cumulative production levels are compared with cumulative target levels.
However, if measuring the April declines in production, they amount to some 1.7
million bpd among the 10 OPEC countries, which constitutes full compliance with
the agreed cuts.
The IEA noted that current signals indicate that even measured in terms of
levels, compliance in May could well be over 90%.
Several brokers said the IEA numbers could help the market retrace
2-sessions of losses.
"At this stage, we're not sure whether the correction is over but the IEA
numbers are very supportive," one broker said. "It showed the highest
(compliance) numbers so far," the broker said.
However, other brokers said the market may have already factored in a "high
OPEC compliance rate" and will mostly shrug off the IEA numbers.
"Sure it's supportive but we had other news reports saying that production
cuts were around or over 80%," one broker said. "So I don't know how much effect
it will have today."
The market is also focussing on increasing tensions in Kosovo as Russian
emissary on Kosovo Viktor Chernomyrdin said he will meet with "all Chinese
leaders" to smooth over NATO's accidental bombing of the Chinese embassy in
Belgrade, which killed 3 and injured 20 late Friday evening.
On Friday, the market had digested news that a peaceful solution to end the
Kosovo conflict was near. However, the bombing was a setback to the peace
negotiations, brokers said.
"The Kosovo situation has heightened again, which could help the market," a
broker said.
Jun crude could rally to test resistance at $18.40, which could trigger more
stop-loss orders to buy, several brokers said. "If we break $18.40, we're off to
the races again," a broker said.
However, some brokers said if crude doesn't crack $18.30, more selling could
arise, pushing crude prices to test support at $18.00 and later at $17.80.
NYMEX Jun crude ended the overnight Access session down 6c at $18.16. Jun
heating oil ended up 17 points at 43.40c, while Jun gasoline ended up 19 points
at 53.40c.
UPCOMING:
--Jun crude options expire May 17. Jun crude futures expire May 20.
--Jun product options expire May 25, while Jun product futures expire May 28.
--American Petroleum Institute data reports 1600 ET Tuesday, while the US
Department of Energy reports after 0900 ET Wednesday.
|
