FUTURES MOVERS: Oil prices log a 6% rise for the week--- Futures top $31; natgas down on session, up for week
By Myra P. Saefong, <a href=cbs.marketwatch.com>CBS.MarketWatch.com Last Update: 3:20 PM ET June 6, 2003
SAN FRANCISCO (CBS.MW) -- Oil futures closed above $31 a barrel Friday to end the week with a 6 percent gain ahead of OPEC's decision on production levels next week.
On the New York Mercantile Exchange, crude for July delivery traded as high as $31.15 a barrel, a level not seen in futures prices since April 1. The contract closed at $31.28 a barrel, up 54 cents. It ended last week at $29.56.
July unleaded gasoline also rose by 0.83 cent to close at 89.35 cents a gallon and July heating oil closed at 78.18 cents a gallon, up 0.95 cent.
OPEC members are scheduled to consider production targets at their meeting June 11 in Doha, Qatar.
Over the past week, "OPEC members have been sending mixed messages on whether they should cut at next week's meeting," Michael Fitzpatrick, an analyst at Fimat USA told clients in a note Friday.
Some oil producers have said they'll push for a quota cut, while others said a reduction isn't needed at this time with prices still in the cartel's $22 to $28 a barrel target range for its basket prices of seven types of crude oils.
Among those arguing that a cut isn't needed are Indonesia and Venezuela, according to Fizpatrick.
But on Thursday, Kuwait reportedly said it will urge its fellow OPEC member nations to adopt another production cut. A day before that, Qatar said the cartel won't likely change the quota, according to news reports.
And it was on Tuesday that OPEC President Abdullah al-Attiyah was quoted as saying the cartel might not need to cut production because Iraq's output hasn't resumed at prewar levels.
Still, "all indications suggest OPEC is ready, willing and able to cut production at a moment's notice," said Phil Flynn, senior analyst at Alaron Trading in Chicago.
Non-OPEC member weighs in
OPEC may get help from non-OPEC producer Mexico, Flynn said.
The "group of three" -- Saudi Arabia, Mexico and Venezuela -- were meeting in Madrid on Friday.
After the energy futures market closed, no news on the Madrid meeting surfaced.
Tim Evans, senior analyst at IFR Pegasus in New York, takes the lack of news from the meeting as a "neutral to bearish" sign.
"If they had something bullish to report, we are sure they would publicize it," he said.
Still Evans said the Saudis and Venezuelans can "sweet talk" the Mexicans all they want, "but if OPEC is not cutting quotas, then Mexico is unlikely to reduce either production or exports on their own."
Iraq uncertainty lingers
OPEC also has a tough decision to make with uncertainty surround Iraq's oil production.
Iraq reportedly received a great deal of interest in the planned sale of about 10 million barrels of oil that's currently in storage. Read the Financial Times story.
But news that northern oil exports may be shut down for two months has surfaced on reports that thieves stole pipeline equipment that links Iraqi oil fields to the world market, said Alaron's Flynn.
Evans noted that the 10 million-barrel tender out of storage would "certainly give the market something to chew on" as it ponders Iraq's return to the "ongoing export market."
U.S. supplies climb
On another front, recent concerns of tightening U.S. supplies were eased quite a bit Wednesday when the Energy Department reported a 2.3 million-barrel rise in motor gasoline inventories last week. Separately, the API pegged the size of the week's increase at 3 million barrels.
Even after the latest build, however, total gasoline inventories stand at 207.3 million barrels -- 5.2 percent below their year-ago level, the government said.
The Energy Department said refinery utilization rose 2.8 percent from the previous week to 98 percent of capacity. The American Petroleum Institute said refineries were running at 97.2 percent of capacity, up from 94.9 percent a week earlier.
Crude-oil refinery inputs were at 16.1 million barrels per day -- their highest level ever recorded, the government said.
Meanwhile, crude inventories rose 2.8 million barrels to 289 million barrels in the latest week, the Energy Department said. Total supplies remain 11.4 percent below the year-ago level. The API reported a 2 million-barrel rise to 288.4 million barrels. See full story.
Crude imports rose by nearly 500,000 barrels per day last week to average more than 10.5 million barrels, the government said, adding that the rise is likely due to the "relatively large" imports from Saudi Arabia and higher imports from Venezuela.
IFR Pegasus' Evans said the lack of Iraqi oil "does not put the market in a deficit, as the 10.5 million barrel per day in U.S. imports last week should attest."
Evans believes the oil market is already "essentially dead, it just doesn't know it yet."
"It can turn lower now, or crash and burn from a higher altitude later, but it cannot sustain the current level in our view," he added.
Natural gas prices fall back
Elsewhere on Nymex, natural gas for July delivery fell by 1.1 cents to close $6.51 per million British thermal units following a triple-digit increase in last week's supplies. A week ago, prices closed at $6.25.
Many energy experts believe the natural-gas market is overbought "particularly without any broad-based heat wave around to boost air conditioning demand," said Fimat's Fitzpatrick.
Early Thursday, the government said natural-gas supplies in storage rose by 114 billion cubic feet during the week ended May 30. Market estimates called for a build of 95 billion to 110 billion cubic feet.
Total supplies of 1.199 trillion cubic feet in storage are still 755 billion cubic feet less than the year-ago level and 484 billion below the five-year average, the Energy Department said.
In the equity arena, oil-service shares traded lower, as reflected by activity in the Philadelphia Oil Service Index ($OSX: news, chart, profile). See Energy Stocks.
Elsewhere, Nymex gold futures ended the week with about a $1-an-ounce loss on the back of an upbeat unemployment report. See Metals Stocks.
The Reuters/CRB Index, a broad-based measure tracking commodity futures prices, rose by 0.5 percent to 237.4. Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.
More FUTURES MOVERS •Oil futures close below $31 4:12pm ET 06/13/03 •Nymex oil closes under $32; natural gas drops 10% 3:28pm ET 06/12/03 •Oil closes atop $32; stocks fall, OPEC output untouched 3:11pm ET 06/11/03 •Oil futures close higher; OPEC summit in closer view 3:42pm ET 06/10/03 •Oil prices close off a three-month high 3:57pm ET 06/09/03
Latest Industry News Get Alerted on News in this Industry •The man who would be El Paso's CEO 1:19am ET 06/14/03 •Xcel unit disciplines employees for false reporting 4:46pm ET 06/13/03 •Profit-taking sinks energy sector at close 4:25pm ET 06/13/03 •Oil futures close below $31 4:12pm ET 06/13/03 •U.S. trade gap shrinks in April; oil curbs imports 10:37am ET 06/13/03 FREE OFFERS FOR CBS MARKETWATCH MEMBERS!! Interested in receiving FREE offers from companies like Forbes, Wall Street Journal, 21st Century Alert, Financial Times, and Barron's? Visit our Membership Benefit to sign up for any FREE offers available to members. Sponsored Links List your site here Your Stock Market Losses Might Be Recoverable - If you have lost more than $50,000 in the stock market due to the negligence of a professional investment advisor, contact us to receive a free case evaluation. Stock Timing: Up Over 600% Since January 2000 - Whether you invest in stocks or mutual funds, using a regular or a retirement account, TimingCube can help you achieve your goals and dreams. Our Market Timing Signal is your key to long-term profits. Over 60? Cut Taxes and Have More Income - Free newsletter on cutting taxes, picking mutual funds, cutting cost of long term care insurance, stock selection, IRA distributions and more for those ready to retire or already retired. Your Source for Stock Charts and Financial Tools - High quality, award-wining financial charts for online investors and technical analysts. Our easy-to-read, comprehensive education area explains how stock charts can improve your investing today.