Oil, gas react to war, cold
Business today.com by Donna Goodison Tuesday, April 8, 2003
Optimism about the United States' success in its war with Iraq continued to put a damper on the crude oil and gasoline markets yesterday.
Meantime, an unexpected April cold snap ran up natural gas prices that had been plummeting steadily.
Commodity crude oil prices fell 66 cents, or 2.3 percent, to $27.96 a barrel in day 20 of the Iraq conflict.
``I think that the market also took into account that Venezuela has been successful in resuscitating their production, as well as Nigeria (doing the same),'' said Mike Fitzpatrick, an energy analyst at Fimat USA Inc. in New York.
News from the OPEC oil cartel sparked a rally shortly before noon.
Crude oil prices on the New York Mercantile Exchange revved up to a high for the day of $28.70 a barrel, after OPEC's leader said the group was considering an emergency April 24 meeting to possibly cut output.
The market is facing a glut, not a shortage,'' Abdullah Hamad bin Al-Attiyah, OPEC's president, told reporters in Paris. We are seeing the oil price drop dramatically.''
Oil prices have plunged 30 percent from a $39.99 high on Feb. 27, as OPEC members boosted production, and market jitters about the war eased.
It's going to be a tough time restraining inventory in the second quarter,'' Fitzpatrick said. Traditionally, demand is lowest in the second quarter.''
Commodity gasoline prices were down 2.93 cents, or 3.4 percent, at 84.10 cents a gallon yesterday. Crude oil prices account for between 40 and 50 percent of gasoline prices.
Retail prices at the gasoline pumps also are dropping.
Massachusetts' average price for unleaded regular has eased 1.5 cents from a month ago, falling to $1.662 cents a gallon on Friday, from $1.677 a gallon, according to the American Automobile Association.
Friday's price was still 18 percent higher than a year ago, however, when gas in the Bay State cost $1.388 a gallon.
``Clearly you're starting to see more reasonable prices available, but it tends to go down a little more slowly than prices go up,'' said Arthur Kinsman, a spokesman for AAA Southern New England.
Seven out of 10 Americans say this year's higher gas prices have not prompted them to change their driving habits, according to an AAA survey released last week.
``Among the approximately one third who said they did alter their plans, it was a matter of consolidating errands and trips made by car,'' Kinsman said.
Natural gas prices went up 19 cents, or 3.8 percent, to $5.13 per million thermal units yesterday after hitting a low of $4.88 last week.
The fundamental behind this was bigger demand than they thought, because the weather turned cold this past three days,'' said Lannie Cohen, of Capitol Commodity Services Inc. in Indianapolis. The supplies were kind of low, and it caught everyone off guard.''