Crude oil jumps 5 percent to 3 month highgreenspun.com : LUSENET : TB2K spinoff uncensored : One Thread
Jun 12, 2000 - 05:38 PM
Crude Oil Jumps 5 Percent to 3-Month High By Dave Carpenter The Associated Press
Crude oil prices raced to a three-month high Monday on the New York Mercantile Exchange on news that OPEC's expected production increase won't happen for at least another week.
In other markets, corn prices plummeted on the latest Midwest rains and lean hogs also slid.
Just ten weeks after OPEC raised oil production to tamp down fast-rising prices, the cost of crude is soaring well above $30 a barrel again.
With a new delay in the cartel's much-anticipated decision on whether to open the taps wider, crude for July delivery rose $1.54 to $31.74 a barrel Monday.
The Organization of the Petroleum Exporting Countries had been expected to increase supply by 500,000 barrels a day last week - a move ministers authorized at their last meeting if the average 20-day price of OPEC oil topped $28 a barrel, which occurred nearly a week ago.
While the increase is still expected to happen, a top cartel official said Sunday it won't be formally considered until the oil ministers meet June 21 in Vienna.
"We are going to look at that situation, vis a vis our decision in March, and see whether something needs to be done," OPEC secretary general Rilwanu Lukman was quoted as saying.
The extra week-plus is a lifetime for traders in a bull market, especially with no relief in sight for a supply crunch, and their uneasiness translated into a buying surge Monday.
"People are very sensitive about the inventory levels, and any kind of delay makes them more sensitive about prices this summer," said William Byers, an analyst for Bear, Stearns & Co. in New York.
"From the time they pump it out of the ground in the Middle East and ship it, to the time it gets where it's going - we're talking sometime seriously distant. Any kind of delay slows down the process. And who knows, maybe they won't do it even in a week," he said.
The analyst suggested some OPEC members could resist another production increase.
Market-watchers also are concerned that a 500,000-barrel increase would be quite small - less than a third of the 1.7 million barrels approved in March. With U.S. gasoline stockpiles squeezed by extra demand for reformulated gasoline, a cleaner-burning fuel needed to meet stricter environmental standards this summer, the likelihood of OPEC meeting the needs of American motorists for the vacation driving season remains slim.
In other energy products, July heating oil rose 3.64 cents to 77.87 cents a gallon, July unleaded gasoline rose 2.58 cents to $1.0440 a gallon and July natural gas rose 5.2 cents to $4.212 per 1,000 cubic feet.
In London, July Brent crude rose $1.63 to $31.21 a barrel on the International Petroleum Exchange.
Corn plunged 5 percent on the Chicago Board of Trade as a combination of greater-than-expected weekend showers in the Midwest and forecasts for more rain this week touched off heavy selling.
Despite government warnings, long-range forecasts suggested there is no chance for a drought in the nation's midsection until at least mid-July.
Corn finished down nearly the maximum amount allowed by the Board of Trade, in its biggest one-day decline in 12 years. July corn fell 11 cents to $2.08 1/4 a bushel.
Lean hogs declined sharply on the Chicago Mercantile Exchange on a technical slide that was accelerated by talk of declining demand for pork products.
July lean hogs fell 1.32 cent to 69.05 cents a pound.
-- Cave Man (email@example.com), June 12, 2000
prices in chicago are up more this week $2.26(reg) $2.46(prem)
-- boo (firstname.lastname@example.org), June 13, 2000.
Isn't a "lean hog" an oxymoron? Maybe, with the price of gas, they're making them walk to market?
-- I'm Here, I'm There (I'm Everywhere@so.beware), June 13, 2000.