Crude Oil Declines After Iraqi Election, OPEC Maintains Quot
Enviado: 31/1/2005 5:06Crude Oil Declines After Iraqi Election, OPEC Maintains Quotas
Jan. 31 (Bloomberg) -- Crude oil futures fell, poised for the biggest two-day drop in a month, after Iraq's first free election in 50 years passed without disruption to oil supplies.
``Current indications'' are that Iraq's election was a success and that ``augurs well for the transition process,'' United Nations Secretary-General Kofi Annan said, according to the UN Web site. In Vienna, oil-producer group OPEC decided to leave production targets unchanged at 27 million barrels a day, and it may raise output in the second quarter, the group's President Sheikh Ahmad Fahd al-Ahmad al-Sabah said yesterday.
``The Iraq elections went smoother than expected,'' said Anthony Nunan, manager of international petroleum business at Mitsubishi Corp. in Tokyo. ``OPEC didn't spring any surprise on the market by cutting output.''
Crude oil for March delivery fell as much as 77 cents, or 1.6 percent, to $46.41 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract traded at $46.62 at 11:20 a.m. Singapore time.
The March contract on Jan. 28 fell $1.66, or 3.4 percent, to $47.18 a barrel on the New York Mercantile Exchange, its biggest decline in a month.
Forecasts for warmer weather in the U.S. Northeast also pushed prices lower, Nunan said.
Northeast heating demand will be 7 percent below normal Jan. 29 to Feb. 4, according to Belton, Missouri-based Weather Derivatives. The National Weather Service forecast above-normal and normal temperatures for Feb. 4 to Feb. 10 in the region, where 80 percent of the nation's home heating oil is consumed.
OPEC
Crude oil has declined 6.4 percent since reaching an eight- week high of $49.75 on Jan. 25. Prices fell as Iraq shut its borders and stepped up security for the election, and as the prospect of another OPEC production cut diminished, Randy Simpson, vice-president of supply and trading at New West Petroleum Inc. in Sacramento, California, said today.
OPEC, which met in Vienna yesterday, left its daily output quota unchanged at 27 million barrels, citing anticipated strong demand and volatile markets for its decision.
The group agreed in December to cut output by 1 million barrels a day beginning Jan. 1 to prevent a glut in the second quarter when heating demand eases in the northern hemisphere.
The group trimmed output by 800,000 barrels a day to 29.6 million a day in January, according to Geneva-based consultant PetroLogistics Ltd., which tracks tanker movements. OPEC, including Iraq, which is outside the quota system, pumped 30.4 million barrels a day in December.
Oil Inventories
Oil inventories are now enough to meet 52 days of demand, and an increase to 56 days of demand would raise concern of a surplus, said the Kuwaiti minister and OPEC president, Sheikh Ahmad Fahd al-Sabah.
``There's room for oil to go down a bit further,'' Simpson said. ``The general consensus was that things were going to go to plan in Iraq, or at least with a bit less mayhem.''
``OPEC was never going to cut production, not with oil at fifty bucks,'' he said.
Not reducing production will be a ``temptation to the speculators to short the prices to see what OPEC's reaction will be,'' said Adam Sieminski, oil strategist at Deutsche Bank AG in London. ``At some point presumably they will have to cut'' unless demand jumps or supply is reduced in places such as Iraq.
Oil prices have risen 9.6 percent since the day before OPEC announced its production cut on Dec. 10. OPEC members will study a new price target because the current $22 to $28 a barrel goal is ``unrealistic,'' Iranian Oil Minister Bijan Namdar Zanganeh told reporters yesterday.
World oil supplies remain ``tight'' with non-OPEC producers also operating close to maximum capacity, Dariusz Kowalczyk, senior investment strategist at CFC Securities Ltd. in Hong Kong, told Bloomberg television.
Price Target
OPEC's spare capacity won't reach 2.5 million barrels until the end of the year, he said, adding that he thinks the group's new price target will be ``around $40'' a barrel.
``Current price levels, about $50 per WTI barrel, are at the top end of what they want to see,'' Kowalczyk said.
Twenty-six of 54 respondents in a Bloomberg survey, or 48 percent, said oil prices would fall this week. Eighteen said prices would rise and 10 forecast little change. Twelve of the past 17 surveys correctly predicted the market's direction.
Iraq held its first free election for more than 50 years yesterday with as many as 60 percent of eligible voters taking part in the poll for a National Assembly that will draft a constitution and prepare for general elections this year.
Iraq Vote
U.S. President George W. Bush said yesterday the election was a ``resounding success.'' The poll ``is a time for reconciliation on all sides,'' UN Secretary General Annan said in his statement.
The vote in Iraq will elect a 275-member assembly that will draft a permanent constitution and prepare for a general election at the end of the year.
Iraq, which produced almost 2 million barrels of oil a day last month, may be able to maintain security without foreign military forces within 18 months, Iraq's interim interior minister Falah al-Nakib told Britain's Channel 4 television.
Polling places in parts of the Sunni Muslim stronghold of west-central Iraq either didn't open or had few voters show up, according to residents cited by the Associated Press.
To contact the reporter on this story:
Gavin Evans in Wellington, New Zealand at gavinevans@bloomberg.net
To contact the editor responsible for this story:
Reinie Booysen at rbooysen@bloomberg.net
Last Updated: January 30, 2005 23:03 EST
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Jan. 31 (Bloomberg) -- Crude oil futures fell, poised for the biggest two-day drop in a month, after Iraq's first free election in 50 years passed without disruption to oil supplies.
``Current indications'' are that Iraq's election was a success and that ``augurs well for the transition process,'' United Nations Secretary-General Kofi Annan said, according to the UN Web site. In Vienna, oil-producer group OPEC decided to leave production targets unchanged at 27 million barrels a day, and it may raise output in the second quarter, the group's President Sheikh Ahmad Fahd al-Ahmad al-Sabah said yesterday.
``The Iraq elections went smoother than expected,'' said Anthony Nunan, manager of international petroleum business at Mitsubishi Corp. in Tokyo. ``OPEC didn't spring any surprise on the market by cutting output.''
Crude oil for March delivery fell as much as 77 cents, or 1.6 percent, to $46.41 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract traded at $46.62 at 11:20 a.m. Singapore time.
The March contract on Jan. 28 fell $1.66, or 3.4 percent, to $47.18 a barrel on the New York Mercantile Exchange, its biggest decline in a month.
Forecasts for warmer weather in the U.S. Northeast also pushed prices lower, Nunan said.
Northeast heating demand will be 7 percent below normal Jan. 29 to Feb. 4, according to Belton, Missouri-based Weather Derivatives. The National Weather Service forecast above-normal and normal temperatures for Feb. 4 to Feb. 10 in the region, where 80 percent of the nation's home heating oil is consumed.
OPEC
Crude oil has declined 6.4 percent since reaching an eight- week high of $49.75 on Jan. 25. Prices fell as Iraq shut its borders and stepped up security for the election, and as the prospect of another OPEC production cut diminished, Randy Simpson, vice-president of supply and trading at New West Petroleum Inc. in Sacramento, California, said today.
OPEC, which met in Vienna yesterday, left its daily output quota unchanged at 27 million barrels, citing anticipated strong demand and volatile markets for its decision.
The group agreed in December to cut output by 1 million barrels a day beginning Jan. 1 to prevent a glut in the second quarter when heating demand eases in the northern hemisphere.
The group trimmed output by 800,000 barrels a day to 29.6 million a day in January, according to Geneva-based consultant PetroLogistics Ltd., which tracks tanker movements. OPEC, including Iraq, which is outside the quota system, pumped 30.4 million barrels a day in December.
Oil Inventories
Oil inventories are now enough to meet 52 days of demand, and an increase to 56 days of demand would raise concern of a surplus, said the Kuwaiti minister and OPEC president, Sheikh Ahmad Fahd al-Sabah.
``There's room for oil to go down a bit further,'' Simpson said. ``The general consensus was that things were going to go to plan in Iraq, or at least with a bit less mayhem.''
``OPEC was never going to cut production, not with oil at fifty bucks,'' he said.
Not reducing production will be a ``temptation to the speculators to short the prices to see what OPEC's reaction will be,'' said Adam Sieminski, oil strategist at Deutsche Bank AG in London. ``At some point presumably they will have to cut'' unless demand jumps or supply is reduced in places such as Iraq.
Oil prices have risen 9.6 percent since the day before OPEC announced its production cut on Dec. 10. OPEC members will study a new price target because the current $22 to $28 a barrel goal is ``unrealistic,'' Iranian Oil Minister Bijan Namdar Zanganeh told reporters yesterday.
World oil supplies remain ``tight'' with non-OPEC producers also operating close to maximum capacity, Dariusz Kowalczyk, senior investment strategist at CFC Securities Ltd. in Hong Kong, told Bloomberg television.
Price Target
OPEC's spare capacity won't reach 2.5 million barrels until the end of the year, he said, adding that he thinks the group's new price target will be ``around $40'' a barrel.
``Current price levels, about $50 per WTI barrel, are at the top end of what they want to see,'' Kowalczyk said.
Twenty-six of 54 respondents in a Bloomberg survey, or 48 percent, said oil prices would fall this week. Eighteen said prices would rise and 10 forecast little change. Twelve of the past 17 surveys correctly predicted the market's direction.
Iraq held its first free election for more than 50 years yesterday with as many as 60 percent of eligible voters taking part in the poll for a National Assembly that will draft a constitution and prepare for general elections this year.
Iraq Vote
U.S. President George W. Bush said yesterday the election was a ``resounding success.'' The poll ``is a time for reconciliation on all sides,'' UN Secretary General Annan said in his statement.
The vote in Iraq will elect a 275-member assembly that will draft a permanent constitution and prepare for a general election at the end of the year.
Iraq, which produced almost 2 million barrels of oil a day last month, may be able to maintain security without foreign military forces within 18 months, Iraq's interim interior minister Falah al-Nakib told Britain's Channel 4 television.
Polling places in parts of the Sunni Muslim stronghold of west-central Iraq either didn't open or had few voters show up, according to residents cited by the Associated Press.
To contact the reporter on this story:
Gavin Evans in Wellington, New Zealand at gavinevans@bloomberg.net
To contact the editor responsible for this story:
Reinie Booysen at rbooysen@bloomberg.net
Last Updated: January 30, 2005 23:03 EST
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