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Crude prices supported
By Alex Kennedy |
February 3, 2009, Tuesday
|
Print Edition
Print Edition
OIL prices hovered under US$42 a barrel yesterday in Asia as investors weighed the threat of an oil worker strike in the United States against the prospect of more bad economic news this week.
Light sweet crude for March delivery rose 5 US cents to US$41.73 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose 24 cents to settle at US$41.68.
Negotiations over wage increases continued over the weekend, with some 24,000 refinery workers agreeing to postpone a strike for at least a day. The United Steelworkers agreed to a rolling 24-hour extension of talks.
Workers plan to show up for scheduled shifts yesterday, though a strike would affect 60 refineries. The United States' biggest refiner, Valero Energy Corp, said it would shut down some facilities if workers walk out, as did European oil company BP PLC.
"The threat of an oil workers' union strike is helping support prices in the short term," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "If refineries shut down, prices for crude products will go higher."
After a year when oil prices soared to a record near US$150 a barrel in July only to collapse to US$33 in December, crude has traded in the low US$40s for the last week or so as investors eye weakening crude demand matching OPEC production cuts.
The Organization of Petroleum Exporting Countries has promised to slash output by 4.2 million barrels since September, and officials have suggested that the group may reduce quotas again soon.
Saudi Arabia, OPEC's biggest exporter, has led the production drop.
"OPEC producers seem to have a rather high level of compliance with the cuts, especially Saudi Arabia," Shum said.
Light sweet crude for March delivery rose 5 US cents to US$41.73 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose 24 cents to settle at US$41.68.
Negotiations over wage increases continued over the weekend, with some 24,000 refinery workers agreeing to postpone a strike for at least a day. The United Steelworkers agreed to a rolling 24-hour extension of talks.
Workers plan to show up for scheduled shifts yesterday, though a strike would affect 60 refineries. The United States' biggest refiner, Valero Energy Corp, said it would shut down some facilities if workers walk out, as did European oil company BP PLC.
"The threat of an oil workers' union strike is helping support prices in the short term," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "If refineries shut down, prices for crude products will go higher."
After a year when oil prices soared to a record near US$150 a barrel in July only to collapse to US$33 in December, crude has traded in the low US$40s for the last week or so as investors eye weakening crude demand matching OPEC production cuts.
The Organization of Petroleum Exporting Countries has promised to slash output by 4.2 million barrels since September, and officials have suggested that the group may reduce quotas again soon.
Saudi Arabia, OPEC's biggest exporter, has led the production drop.
"OPEC producers seem to have a rather high level of compliance with the cuts, especially Saudi Arabia," Shum said.
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