Price of Crude Oil Continues to Climb
Prices of crude oil rose sharply on the open market Friday, extending to a third straight day a recovery from seven-year lows.
But prices remained about a third lower than at the start of the year and well below the closing prices at the end of the previous week.
While prices rose in commodities and the non-contract spot market, oil prices quoted by major oil companies continued to decline, catching up with the earlier open-market slide.
Mobil Corp. said that effective Saturday, it is reducing the price it will pay for West Texas Intermediate crude oil by $2 a barrel to $22.75. It was the fourth cut of the year by Mobil, which was paying $27.75 a barrel for the major grade of U.S. oil as 1986 began.
Sun Co. cut its contract price for West Texas Intermediate by $1 a barrel to $19.50 and Unocal Corp. said it reduced its price $2 on Thursday to $20.50.
On the New York Mercantile Exchange, where West Texas Intermediate for March delivery bottomed out at $15.44 a barrel on Tuesday, prices shot up $1.40 to $17.85 in the early going Friday before giving some ground to close the week at $17.68, up $1.23 from the previous day.
Just 2 1/2 months ago, West Texas Intermediate soared as high as $31.70 a barrel on the Mercantile Exchange, and prices were above $25 last month. West Texas Intermediate closed last week at $18.83 a barrel.
In the spot market, where oil not covered by long-term supply contracts is sold, West Texas Intermediate for March delivery was quoted Friday at $17.50 a barrel, up $1.05 for the day.
Peter Beutel, an oil trading analyst at the commodities firm Rudolf Wolff Futures Inc., said a reduction in oil production by Egypt and a move toward cooperation among some OPEC and non-OPEC countries contributed to the price rise in oil markets.
Oil ministers of Venezuela, a founding member of the Organization of Petroleum Exporting Countries, and non-OPEC Mexico and Egypt, met Friday in Cairo. The rapid fall in oil prices is especially painful to those debt-ridden countries.
The ministers of Mexico and Venezuela have launched a joint effort to convince other oil producers of the need to work together to restore order to markets glutted with oil.
Beutel also said technical factors were helping send oil prices higher.
Traders who earlier had bet on declining prices by selling borrowed oil were having to pay a premium to find oil available for prompt delivery to fulfill their contracts, he said.
