Oil market heated by drop in temperatures

Published November 21st, 2000 - 02:00 GMT

Crude oil prices rose Monday on a market rattled by the prospect of a cold northern hemisphere winter, and as little market-moving news emerged from the International Energy Forum in Riyadh over the weekend. 

 

In New York, the light sweet crude January contract climbed to $35.22 a barrel from $35.03 on Friday. 

 

Benchmark Brent North Sea crude oil for delivery in January was selling for $33.72 a barrel here, up from $33.08 a barrel at the close Friday. Prices had risen as high as $33.95 in initial deals. 

 

In New York, heating oil prices were up 1.6 percent to $1.0962 per gallon, a 21-year high. 

 

The main factor behind the increase in prices was a drop in temperatures in the United States over the weekend, while fears of a slowdown in Iraqi oil exports in protest of a dispute with the United Nations over oil revenues had added to market concern, analysts said. 

 

The meeting of consuming and producing nations hosted by Saudi Arabia -- which ended on Sunday -- did not reach an official consensus on a specific "fair" price for crude, but Saudi Oil Minister Ali Al-Nuaimi stressed that the demands of the two sides were not far apart. 

 

"We are hearing calls from the consumers for a price band between $20-25 (a barrel)." 

 

"We say that $22-28 is acceptable for us, so the difference between our two positions is not great," he said. 

Al-Nuaimi also sought to reassure consuming countries that Saudi Arabia would plug any supply gaps caused by "disaster or political actions." 

 

"We can easily put (out) about 1.8 million (barrels per day) within 90 days," he said, responding to fears of a halt to Iraqi exports. 

 

Further comments from the Saudi's top oil man, which indicated that a majority of the member states of the Organization of Petroleum Exporting Countries (OPEC) had not ruled out further production increases before their next meeting on January 17, also appeared to fall on deaf ears in the market. 

 

"The majority have not ruled out that an increment could take place before the next meeting," in Vienna, Ali Al-Nuaimi told the Middle East Economic Survey (MEES) published in Nicosia on Monday. 

 

The market has been concerned that OPEC was looking to tighten the taps to avoid a glut of crude on the oil market when winter ends. 

 

Indeed, a leading London-based oil think tank said Monday that OPEC may need to cut output in March to sidestep a sharp fall in prices.—AFP. 

©--Agence France Presse. 

 

© 2000 Mena Report (www.menareport.com)

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