By OGJ editors
HOUSTON, May 21 -- Energy futures prices declined slightly Thursday with profit taking, based on traders' speculation that pressure from US government officials might force the Organization of Petroleum Exporting Countries to increase actual production of crude, not just its quota cap to legitimize current overproduction, at its June 3 meeting.
However, Purnomo Yusgiantoro, Indonesia's oil minister who is also conference president of OPEC, said Thursday it is too late for the cartel to lift production in June. "I can't tell people to increase production now because the nominations (commitment to customers) are already out," he was quoted as saying by Dow Jones news service.
Purnomo also said that the top end of OPEC's target price ban should be raised to $32-34/bbl from the $22-28/bbl set in 2000.
The June contract for benchmark US light, sweet crudes pulled back by 58¢ to $40.92/bbl Thursday on the New York Mercantile Exchange, while the July contract fell by 72¢ to $40.80/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., lost 57¢ to $40.93/bbl.
Having closed at a new high Wednesday, gasoline for June delivery dipped by 0.01¢ to $1.4502/gal after trading as high as $1.47/gal Thursday on NYMEX. Heating oil for the same month retreated by 2.14¢ to $1.0271/gal. The June natural gas contract fell by 13.1¢ to close at $6.32/Mcf after first setting a new contract high of $6.57/Mcf in trading Thursday.
"Early buying was offset by weaker crude oil prices and profit taking after most months hit new contract highs," said analysts Friday at Enerfax Daily. "The market was overbought after Wednesday's 5% surge and [Thursday's] early bounce and was due for a technical correction," they said. However, warmer weather forecasts next week for Texas and the South should limit the downside, they said.
In London, the July contract for North Sea Brent crude lost 64¢ to $37.26/bbl on the International Petroleum Exchange. Gas oil for June delivery dipped by 75¢ to $325.75/tonne. However, the June natural gas contract gained 5.2¢ to the equivalent of $3.81/Mcf.
The average price for OPEC's basket of seven benchmark crudes increased by 32¢ to $37.44/bbl Thursday.