Nymex Close: Late Sell Off Sends Crude To 11 Month Low

AAP General News (Australia)
04-03-2001
Nymex Close: Late Sell Off Sends Crude To 11 Month Low
NEW YORK (Dow Jones)--Crude futures skidded to 11-month lows at the New
York
Mercantile Exchange Monday, as concerns of short-term oversupply and easing
demand in the longer term due to a slowing economy triggered a flurry of
late
selling, analysts said.

Front-month May crude oil futures broke the low of $25.58/bbl last seen in
December to hit their lowest level since May 2000.

A 3-cent plunge in heating oil futures to 67.50 cents a gallon, and a
2-cent
drop to 89.90 cents a gallon in gasoline futures also pressured the
petroleum
complex.

"There's a general oversupply of crude right now," said Ed Silliere, vice
president of risk management at Energy Merchant. "It's just the posture of
the
cash market," where sellers outnumber buyers 2 to 1.

Large builds in crude oil stocks over the last three weeks also weighed on
the
petroleum complex.

Data released by the U.S. Department of Energy last week showed an
increase of
more than 11 million barrels in crude oil inventories.

And, lingering worries over a slowing economy, combined with Monday's
stock
market session in negative territory, added to "worries that demand will
fall
off the table if the economy gets bad," said Chris Schachte, analyst at GSC
Energy. "We're waiting to see if the economy will hang on."

Analysts are also waiting to see if the Organization of Petroleum
Exporting
Countries will live up to its pledge to cut production.

OPEC has cut output quotas twice this year - by 1.5 million barrels a day
in
January and 1 million barrels last month - in an effort to keep the group's
basket of crudes near its target of $25.00 a barrel.

The latest output cut went into effect Sunday. But OPEC was overproducing
500,000 b/d in February, and the Wall Street Journal reported Monday that
analysts say it won't be long before OPEC members are cheating in earnest.

The OPEC basket price slipped to $22.79 a barrel Friday.

To avert a price plunge in the seasonally weak second quarter, OPEC
members
have informally agreed to reduce production quotas by another 500,000
barrels a
day if the price of the basket stays below $22.00 a barrel for 10
consecutive
trading days.

(MORE) Dow Jones Newswires 02-04-01

1947GMT(AP-DJ-04-02-01 1947GMT)

KEYWORD: NYMEX CLOSE

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