To: The Perfect Hedge who wrote (9849 ) 1/27/1998 1:13:00 PM From: Tulvio Durand Read Replies (1) | Respond to
Interesting tidbits from yesterday's WSJ Interactive
Crude oil futures rallied on Monday amid concerns about potential conflict in the Middle East, and as several OPEC ministers convened a meeting to discuss ways to reverse a monthslong slide in oil prices.
The Clinton Administration warned Monday that it is running out of diplomatic options to convince Iraq to abandon its program to build weapons of mass destruction. Iraq has refused to give United Nations arms inspectors access to presidential sites thought to contain elements of Baghdad's outlawed weapons program.
"Time is running out on Iraq and that brought a flurry of panicked buying into the market," said Scott Ryll, an energy analyst with GSC Energy in Atlanta. Military strikes against Iraq could spark a larger conflict, which could threaten oil supply from the Middle East or jeopardize oil-for-food sales, speculated Nymex traders.
The oil-for-food program allows Baghdad to sell around $2 billion in oil every six months to purchase humanitarian aid for Iraqis. While acknowledging that Iraq was the catalyst for the buying of crude oil futures, one analyst said the oversold condition of the market, after months of selling, left prices poised to rally.
"All the speculators that wanted to sell were out of the market by Friday, which left bears unable to bring prices lower. When the Iraq news hit Monday, bears took their profits and we pushed higher," said Tom Blakeslee, an energy analyst with Eildon Associates in Baltimore.
Meanwhile, officials from several member states of the Organziation of Petroleum Exporting Countries met to discuss ways to lift the price of crude oil. Despite Monday's gains, the price of crude has fallen lately, in the aftermath of an OPEC agreement last year to lift its production quotas.
Some market observers are concerned that a full emergency meeting of OPEC ministers will be called. (WSJ Interactive)
