Oil Prices Seesaw After OPEC Issues Statement
Oil prices seesawed on world markets Thursday after the OPEC secretariat took the unusual step of issuing a statement that the cartel’s oil production was “well below” its official 15.8 million barrel-a-day ceiling in February.
Oil traded on U.S. markets moved higher for the third consecutive day, but prices on the international spot market zigzagged in erratic trading.
Marathon Oil Co. and Diamond Shamrock Corp. raised their buying prices for West Texas Intermediate, the benchmark U.S. crude, by $1 to $17 in a move that is expected to be followed by the rest of the domestic oil industry.
A spokeswoman for Dallas-based Diamond Shamrock said the company is “responding to the surge in crude oil prices in the marketplace.”
Oil prices have shot up by more than $1 a barrel this week on claims by several OPEC oil ministers and industry reports that the 13-nation cartel cut production by nearly 1 million barrels a day last month, which put it within its 15.8 million barrel-a-day ceiling.
The rebound ended a six-week oil market slide unleashed by reports that the Organization of Petroleum Exporting Countries was overproducing and imperiling its Dec. 20 agreement to raise oil prices to an official average of $18 a barrel.
The OPEC secretariat said member nations are adhering to official prices “without exception,” the OPEC news agency reported.
The secretariat issued the statement from its Vienna headquarters but did not give specific figures on OPEC output. The statement was attributed to an unidentified official at the secretariat.
“Total OPEC production for the month of February, 1987, is well below the 15.8 million barrel-a-day ceiling decided upon in the last meeting of the OPEC conference held in December, 1986,” the secretariat’s statement said.
“The reduction in total supplies, namely actual exports of crude oil and products plus local deliveries to member countries, is even more pronounced, as those supplies fell very noticeably during that month.”
The OPEC spokesman said cartel members are determined to defend the official $18-a-barrel level and “to refrain from selling any quantity below that price.”
“It looks as though OPEC is standing pretty firm on its December agreement,” said Andrew LeBow, analyst at Shearson Lehman Bros. Inc. in New York.
“In this case, spot market prices are cheap relative to official OPEC prices,” LeBow said. “Some refineries are saying they ought to buy now at a discount on the spot and futures markets, since they may have to pay official prices two months from now.”
On the New York Mercantile Exchange, West Texas Intermediate for immediate delivery gained 24 cents to $17.74 a barrel.
Home-heating oil for April delivery jumped 1.47 cents to 47.91 cents a gallon, and unleaded gasoline added 0.55 cent to 51.24 cents.
West Texas Intermediate rose by a dime to $17.65 a barrel on the U.S. Gulf Coast spot market, where gasoline and heating oil lost a fraction of a cent.
