May 18, 2000 - 05:30 PM

Oil Market's Bullish Attitude Boost Crude Prices By Herbert G. McCann The Associated Press

Despite a lack of fundamental news to influence the energy market, crude oil prices surged above $30 a barrel on the New York Mercantile Exchange as the market's bullish mood gave direction to Thursday's trading. "There is a bullish cycle (in the market)," said analyst Tim Evans of Pegasus Econometric Group, who said there is a belief oil prices will go higher because traders are buying it at current levels.

On other markets, corn and soybean futures prices were higher on fears of dry weather in coming months, while wheat tumbled on the approach of the winter crop harvest.

Evans said a pipeline fire interrupted the flow of oil at one terminal in Nigeria, and two U.S. refineries reported delays in planned production increase.

"But they were not worth a dollar increase," he said.

Evans said the oil market has been bullish in recent trading, but he does not believe it to be a bull market. He pointed to increases in OPEC output, currently at 26.6 million barrels of crude daily. That's about 1 million barrels above its 25.6 million barrel target set in March when Organization of the Petroleum Exporting Countries members voted for an output hike of about 1.7 million barrels a day to bring down international oil prices that had reached 10-year-highs.

The cartel plans to review market conditions next month, a move that could open the door to further production increases.

"Yesterday, the Department of Energy showed an increase in inventory for everybody," Evans said. "The market doesn't care. But eventually, somebody is going to ask is where is the shortage. Inventory is higher than a month ago. It is higher than it was two months ago."

Light sweet crude for June delivery was $1.01 higher at $30.33 a barrel; June heating oil was up 2.51 cents at 79.87 cents a gallon; June unleaded gasoline was 1.05 cents higher at 99.03 cents a gallon; June natural gas settled 2.1 cents higher at $3.710 per 1,000 cubic feet.

In London, June Brent crude from the North Sea rose $1.08 to $28.92 a barrel on the International Petroleum Exchange.

Less-than-expected rainfall this week in the Midwest gave a lift to grain and soybean futures prices on the Chicago Board of Trade.

National Weather Service forecasts called for rains for much of the corn and soybean crop region from Wednesday through early Friday. Although the Midwest's northern regions received substantial rainfall, southern sections, particularly southern Iowa and Nebraska, received little precipitation, according to analyst Don Roose of U.S. Commodities Inc.

While the market opened strongly on news of the paltry rainfall, prices began to retreat from the day's highs on reports of midday precipitation in the region.

Weather concerns are strong in the market as forecasts call for normal temperatures but below-normal rainfall over the next six- to 10-days. In addition, the weather service's latest 30- to 60-day forecast, released after the close of trading Thursday, calls for below-average precipitation across the Midwest and Plains states from June through August. In addition, temperatures will be warmer than usual across most of the nation.

Wheat futures prices tumbled on the approach of the harvest of the winter wheat crop, which will begin in Texas next month.

AP-ES-05-18-00 1729EDT

http://ap.tbo.com/ap/breaking/MGI2UIJWE8C.html

-- Martin Thompson (mthom1927@aol.com), May 18, 2000