COMMODITIES : Oil Futures Top $19 a Barrel; Refinery Problem Cited
Crude oil futures climbed Monday, including a late surge as the April contract for the benchmark West Texas intermediate grade smashed through two key resistance levels and closed above $19 a barrel.
On other markets, copper took a pounding on reports that stocks at the London Mercantile Exchange rose rather than declined from the previous week, grain and soybean futures posted modest gains on technical buying and spillover strength and frozen pork belly futures continued drifting lower as the underlying cash market hit nine-year lows.
The energy futures run-up began with reports that operations at Norway’s fire-damaged Ekofisk complex in the North Sea--which produces about 250,000 barrels of oil daily--would be down for at least another day.
Additional support came when non-OPEC oil-producing nations--whose share of the world market exceeds the Organization of Petroleum Exporting Countries'--announced plans to unilaterally cut an additional 290,000 barrels from their daily output.
“Admittedly, those were small bits of news, but there’s been strength underpinning for the market for a while,” said Jim Ritterbusch, vice president of trading and research for Chicago-based Carson Petroleum Co.
Expects Further Rise
When the April contract topped $18.92, last year’s high, it set off one wave of technical buying--a decision based on chart-price comparisons--and another wave followed when the market crashed a second important resistance level at $19.
Ritterbusch said he believes that energy futures will continue to rise.
“The last time we got to $19 was almost two months ago, and that was because there was a trading squeeze on when the time came for delivery of the February contract. This is a little different.
“Whenever you set new highs in an up trend,” he added, “the line of least resistance is to the upside.”
Crude oil settled 7 to 53 cents higher on better-than-average volume on the New York Mercantile Exchange, with the contract for delivery in April at $19.03 a barrel. Heating oil, which also managed contract highs in the nearby months, were 0.72 cent to 1.16 cents higher, with April at 52.35 cents a gallon, and unleaded gasoline was 0.90 cent to 1.77 cents higher, with April at 53.16 cents a gallon.
Copper was 3.9 to 5.1 cents lower on the Comex, with March at $1.427 a pound.
The pressure came with news from London Mercantile Exchange officials that copper stocks were up 1,775 tons from the previous week, putting total stocks at 87,525 tons.
“That’s still a relatively low level,” said analyst Bette Raptopoulos of Prudential-Bache Securities Inc. in New York, “but some of the trade were looking for a decline. And when no fresh news came along to buoy it up, it just kept easing.”
Technical Buying Cited
The precious metals, except for platinum, were a model of consistency. Platinum was $6.80 to $7.60 lower at the New York Merc, with March at $542.40 an ounce. At the Comex, gold was 10 cents lower to 10 cents higher, with March at $394.40 an ounce; silver was 1 cent to 1.8 cent higher, with March at $6.078 an ounce.
There was little fresh news in the grain or soybean markets, but technical buying led to an upswing in the soybean pits that spilled over into the grains.
Most of the technical buying took place in the May contract, which had traded between $7.60 and $7.80 a bushel in recent sessions. It settled 13 cents higher, closing at $7.82.
Wheat was 2.50 to 5.50 cents higher at the Chicago Board of Trade, with the contract for delivery in March at $4.385 a bushel; corn was 0.75 cent to 1.50 cents higher, with March at $2.77 a bushel; oats were 2.75 to 3.25 cents higher, with March at at $2.0975 a bushel, and soybeans were 7.25 to 13 cents higher, with March at $7.685 a bushel.
Livestock futures were mixed and pork futures mostly lower at the Chicago Mercantile Exchange.
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