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OPEC to meet on possible cut
By Christian Schmollinger |
March 14, 2009, Saturday
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Print Edition
CRUDE oil traded near US$47 a barrel, set for a fourth week of gains, as the Organization of the Petroleum Exporting Countries prepares to meet this weekend to consider a cut in output.
The global oil market is oversupplied and OPEC will lower production if needed, Shokri Ghanem, who chairs Libya's state-run National Oil Corp, said on Thursday. Other ministers have called for the group to halt reductions. United States crude stockpiles rose last week amid a 3.5-percent drop in demand, the Energy Department reported on Wednesday.
"The dynamic is a real supply and demand struggle at the moment," said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd in Melbourne. "The market sees the downside risks still apply to demand, but there is upside risk to supply if OPEC comes through with a cut."
Oil drops
Crude oil for April delivery was at US$46.73 a barrel, down 30 US cents on the New York Mercantile Exchange yesterday. On Thursday, futures rose US$4.70, or 11 percent, to US$47.03 a barrel, the most since February 19. Prices have advanced 4.7 percent this year and gained 2.6 percent this week.
Futures dropped 7.4 percent on Wednesday after the US government report showed a bigger-than-expected inventory gain. Daily crude-oil price swings are widening. Futures fell or rose by 4 percent or more on 24 trading days since the beginning of the year, compared with three days in the same period last year, according to data complied by Bloomberg News.
"There's no surprise the volatility is coming because you have large outstanding long and short positions," ANZ's Pervan said. "The net positions can swing from long to short in a very quick period of time so that creates additional volatility."
Oil also gained on Thursday as US equities rose for a third day. Stocks were buoyed as General Electric Co said that the loss of its top credit rating at Standard & Poor's won't hurt business.
OPEC has cut daily output targets by 4.2 million barrels since September. It will meet in Vienna tomorrow to discuss whether to make more cuts.
The global oil market is oversupplied and OPEC will lower production if needed, Shokri Ghanem, who chairs Libya's state-run National Oil Corp, said on Thursday. Other ministers have called for the group to halt reductions. United States crude stockpiles rose last week amid a 3.5-percent drop in demand, the Energy Department reported on Wednesday.
"The dynamic is a real supply and demand struggle at the moment," said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd in Melbourne. "The market sees the downside risks still apply to demand, but there is upside risk to supply if OPEC comes through with a cut."
Oil drops
Crude oil for April delivery was at US$46.73 a barrel, down 30 US cents on the New York Mercantile Exchange yesterday. On Thursday, futures rose US$4.70, or 11 percent, to US$47.03 a barrel, the most since February 19. Prices have advanced 4.7 percent this year and gained 2.6 percent this week.
Futures dropped 7.4 percent on Wednesday after the US government report showed a bigger-than-expected inventory gain. Daily crude-oil price swings are widening. Futures fell or rose by 4 percent or more on 24 trading days since the beginning of the year, compared with three days in the same period last year, according to data complied by Bloomberg News.
"There's no surprise the volatility is coming because you have large outstanding long and short positions," ANZ's Pervan said. "The net positions can swing from long to short in a very quick period of time so that creates additional volatility."
Oil also gained on Thursday as US equities rose for a third day. Stocks were buoyed as General Electric Co said that the loss of its top credit rating at Standard & Poor's won't hurt business.
OPEC has cut daily output targets by 4.2 million barrels since September. It will meet in Vienna tomorrow to discuss whether to make more cuts.
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