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Oil Steady Near 2-Week High on Signs OPEC May Cut Production
Feb. 15 (Bloomberg)
Crude oil futures were little changed after rising to a two-week high yesterday after the acting secretary-general of OPEC said the group's members may have to reduce output in the second quarter.
Oil traded as high as $47.75 a barrel after Adnan Shihab- Eldin told reporters in London that the Organization of Petroleum Exporting Countries may cut daily output by as much as a million barrels. The group, which pumps more than a third of the world's oil, meets next on March 16 in Iran.
``OPEC has made it clear that they will do what is necessary to defend the price of oil,'' said Carl Larry, an associate director of energy futures at Barclays Capital Inc. in New York.
Crude oil for March delivery rose 3 cents, or 0.1 percent to $47.47 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 9:28 a.m. Sydney time.
Yesterday, the March contract rose 28 cents, or 0.6 percent, to $47.44, the highest close since Jan. 31. It traded as high as $47.75 early in the session before plunging as heating oil and gasoline prices each fell more than 1.5 percent.
Crude prices may have risen higher except for declines in heating oil and gasoline, said Chris Mennis, owner of New Wave Energy, an oil trader in Aptos, California. ``The products are kind of holding things back a little bit,'' he said.
OPEC deferred a production cut at its Jan. 30 meeting and said it may reduce output before its March 16 meeting if there's evidence global supplies are rising faster than demand.
Supplies
``We are forecasting 1.4 or 1.5 million barrels a day excess supply in the second quarter,'' Shihab-Eldin said in an interview. ``We may have to take half a million, 1 million if those figures are confirmed.''
U.S. crude-oil supplies probably rose 1 million barrels in the week ended Feb. 11 from 294.3 million barrels the prior week, according to the median forecasts from a Bloomberg survey of 11 analysts. Supplies in last week's report were 8.4 percent higher than a year earlier.
``Inventories of crude oil and gasoline are healthy now but OPEC remains the wild card,'' said Jason Schenker, an analyst with Wachovia Corp. in Charlotte. ``If they were to make further cuts inventories would fall, pushing prices higher.''
The department is scheduled to release its weekly report on petroleum inventories at 10:30 a.m. tomorrow in Washington. Yesterday's rise rounded five straight sessions of gains for oil and left prices 37 percent higher than a year earlier.
``There was a lot of buying below $47,'' said New Wave's Mennis. Crude may trade higher in today's floor session and slip back toward $46 before the inventory report tomorrow, he said.
Spring
The coming hemisphere spring is reducing concerns about winter heating fuel supplies. U.S. demand for distillates, which include heating oil and diesel, has peaked in January each of the past two years, according to U.S. Energy Department data on products supplied. Gasoline demand peaked in August last year and the year before.
Heating oil for March delivery fell 1.14 cents, or 0.9 percent, to $1.2944 a gallon in New York. It was at $1.2967 in after-hours trading. Gasoline for March delivery fell 0.57 cent, or 0.4 percent, to $1.278 a gallon. It was at $1.2822 in after- hours trading.
U.S. gasoline supplies probably rose 200,000 barrels last week from the 216.8 million barrels on hand during the previous week, based on the Bloomberg survey. Distillate supplies probably fell 1.05 million barrels.
http://www.bloomberg.com/apps/news?pid=10000085&sid=aFTAtnbGQQ_0&refer=europe
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