NYMEX Oil Rebounds from Dip
asia.reuters.com Sun January 12, 2003 08:09 PM ET
SINGAPORE (Reuters) - NYMEX crude futures rebounded from early losses in off-hours trade on Monday as traders discounted OPEC's weekend decision to raise output as unlikely to boost supplies in the key U.S. market for the next few weeks.
U.S. light crude for February delivery dropped to an early intraday low at $31.20 a barrel, down 48 cents from Friday's settlement in New York.
But the dip was short-lived and the market rallied into positive territory, striking an intraday peak so far at $31.80. At 7:57 p.m. EST Sunday, February crude stood 10 cents off at $31.58.
Brokers said OPEC's decision on Sunday to raise group production by almost seven percent, or 1.5 million barrels per day, had already been priced into the market.
Of more concern was that supplies would take four to six weeks to hit U.S. shores, where crude inventories have fallen to near 26-year lows due to an opposition-led strike in Venezuela, which supplies 13 percent of U.S. oil imports.
The strike has removed about two million bpd of crude from world supplies.
"Whatever barrels OPEC adds to the market, they are going to be some time -- weeks -- in getting to the United States where physical inventory is key and it's pretty tight," said Paul Ashby, oil and gas analyst at ABN Amro in Sydney.
Venezuelan oil normally takes about five days to reach the United States.
"I certainly see oil staying above $30 until the Venezuelan situation is sorted out," Ashby said.
OPEC's agreement at an emergency meeting in Vienna brings the cartel's official production ceiling for the 10 members bound by quotas to 24.5 million barrels per day.
But the increase was divided pro-rata among members, meaning that Venezuela, OPEC's third biggest producer, was also granted its share of the higher output limit despite the ongoing strike, which entered its 43rd day on Monday.
Traders are also concerned that many others in OPEC have little, or no, spare capacity to bump up production.
NYMEX oil futures also rebounded from early losses. February heating oil gained 0.02 cents to 86.55 cents a gallon, while February unleaded gasoline futures gained 0.36 cents to 87.55 cents a gallon.
The Tokyo Commodities Exchange was closed on Monday for a holiday.