NYMEX crude slips sharply lower on Mexico comments

NEW YORK, Jan 27 (Reuters) - Crude oil futures on the New York Mercantile Exchange (NYMEX) moved sharply lower midday Thursday after comments from Mexico that producers will make "proper efforts" to ensure that oil markets are not tight after March.

Mexico's oil minister, Luis Tellez, who is in Davos, Switzerland, to attend a global business forum, said his country wants to maintain stable markets and does not want sustained high prices to harm the world economy.

The comments sent NYMEX March crude tumbling to $27.40 a barrel, down 16 cents from before the comment hit the newswires at 12:20 p.m. (1720 GMT).

That deepened front month crude oil's losses to 44 cents on the day from Wednesday's close of $27.84.

Some traders said they interpreted the Mexican official's comments as a signal that oil producers may have to ease their production curbs to put a check on oil prices, which have recently risen to near $30 a barrel, the highest since the Gulf War. Mexico, a major non-OPEC oil producer, is part of a triumvirate with OPEC heavyweights Saudi Arabia and Venezuela that has engineered the curbs, which have worked to push oil prices to their current levels, from lows of just about $10 a barrel in December 1998.

Doesn't this say "we will change nothing until April"?

-- Possible Impact (posim@hotmail.com), January 27, 2000

Answers

Strange coming from Mexico. You can bank on it that Pemex cannot make up for the production shortfalls. What other producers are they talking about?

-- PA Engineer (PA Engineer@longtimelurker.com), January 27, 2000.

Don't know, is this a "Tale of nine Cats"?(chuckle)

If they wait till April to act, and the draw down keeps increasing, what are prudent traders going to do?

-- Possible Impact (posim@hotmail.com), January 27, 2000.

Blah, blah. blah....there is nothing Clinton wont do to preserve his "economic legacy". They've talked oil down a dollar from its highest close (March basis). Lets see what happens....

-- Ishkabibble (ishman@home.com), January 27, 2000.

Mr. Tellez said, "his country wants to maintain stable markets and does not want sustained high prices to harm the world economy". Nice to see somebody's looking at the bottom line. However, maybe they can't meet demand because of enviromental factors, and therefore are not acting rationally - i.e., increasing total revenue to the point where marginal revenue is zero.

-- Okie Dan (brendan@theshop.net), January 27, 2000.

Price Rise? What price rise?-Nassar Al Sabah, Kuwaiti Oil Minister

-- Gordon (g_gecko_69@hotmail.com), January 27, 2000.