Oil Prices Rise As Upcoming OPEC Sessions Spark Technical Buying
NEW YORK (AP) _ Energy futures prices moved higher Thursday on technical buying in advance of OPEC meetings next week.
Traders were afraid of being caught short if the two committees of the Organization of Petroleum Exporting Countries make progress toward stabilizing the price of oil, said Madison Galbraith, senior energy specialist with Merrill Lynch Energy Futures.
The November contract for West Texas Intermediate, the benchmark grade of U.S. crude, rose 10 cents to settle at $14.21 a 42-gallon barrel on the New York Mercantile Exchange. The contract soared 56 cents on Wednesday.
OPEC’s price monitoring committee and its long-term strategy committee are scheduled to meet in Madrid Oct. 20, while the cartel is to hold a full meeting in Vienna in late November.
The price of oil skidded in recent weeks - trading below $12.30 a barrel last week - because of continued overproduction by several OPEC members, and the cartel hopes to work out an agreement that will lower output and push prices higher.
Galbraith called the recent improvement in prices a correction that typically precedes OPEC meetings. However, he said, the fundamentals underlying the market - such as the oversupply of crude on world markets - remain negative.
″The sentiment is buy, buy, buy, cover, cover, cover, but the fundamentals are sell, sell, sell,″ he said.
Galbraith predicted the upward momentum would slow if the price of oil hits $14.50 to $14.75 a barrel because profit-taking would set in.
In other trading on the exchange Thursday, the November contract for wholesale unleaded gasoline rose 1.49 cents to 44.15 cents a gallon. The November contract for home heating oil picked up 0.91 cent to settle at 41.75 cents a gallon.
OPEC Secretary-General Subroto said Thursday he was confident the cartel would be able to stabilize oil prices, although he said it might take more than one meeting.
Subroto said his optimism was based on recent consultations with various OPEC nations and on the end of hostilities between Iran and Iraq - both OPEC members.