Crude, Products Plunge
Crude oil futures prices tumbled Monday on the New York Mercantile Exchange after Venezuela’s oil minister said his country, the largest importer to the United States, plans to return to maximum daily output in mid-1999, a move likely to exacerbate a world supply glut.
Oil products also fell, while natural gas gained. On other markets, precious metals and pork futures also tumbled.
Prices for crude and its products took a beating after Venezuelan Oil Minister Erwin Arrieta surprised market participants with comments that his country will boost its exports in about eight months. Venezuela says it is currently adhering to a quota of 2.85 million barrels a day _ nearly all of which makes its way to the United States.
But Arrieta, speaking at a banking seminar in Caracas, said the decision about extending cuts beyond June 30, 1999, was ``only a proposal″ that is entirely dependent on whether prices increase. Some 525,000 more barrels a day would come to market if Venezuela returns to pre-quota output.
The oil minister’s comments threw confusion into a market that recently had been showing some signs of strength.
Venezuela, Mexico and Saudi Arabia, the world’s largest producer, had proposed only a few weeks ago to extend daily output quotas through the end of 1999 in a bid to shore up stagnant global prices.
That proposal had been expected to be presented to the Organization of Petroleum Exporting Countries at its meeting Nov. 25 in Vienna, but now is likely to become a hot topic next week at an oil producer-consumer conference in Cape Town, South Africa.
Market participants have been worried for months that world oil producers cannot hold a shaky alliance together in the face of falling prices since many of the individual countries depend on oil revenues for meet budget obligations. Oil prices are 30 percent below year-ago levels because of a global economic crisis and continuing production glut.
Light, sweet crude for November delivery fell 80 cents to $13.35 a barrel; November heating oil fell 1.4 cents to 37.72 cents a gallon; November unleaded gasoline fell 2.1 cents to 42.08 cents a gallon; November natural gas rose 3.4 cents to $2.143 for each 1,000 cubic feet amid forecasts for cold weather later this week in the Midwest that could boost heating demand.
Gold, silver, platinum and palladium futures fell sharply on the New York Mercantile Exchange as investors opted to put their money into the stock market, which saw gains a third consecutive session.
December gold fell $3.90 to $297.80 an ounce; December silver fell 6.5 cents to $4.88 1/2 an ounce; January platinum fell $8.70 to $338 an ounce; December palladium fell $4.95 to $276 an ounce.
Pork futures fell sharply on the Chicago Mercantile Exchange amid disappointment the U.S. farm aid package adopted by Congress last week does not include money to buy pork for donation to cash-strapped Russia.
Pork futures had risen sharply last week amid speculation the Clinton administration would buy as much as 100,000 metric tons of pork to aid Russia and help U.S. producers who are suffering from overproduction and weak world demand.
December lean hogs fell 1.48 cents to 40.37 cents a pound; February pork bellies fell 2.37 cents to 46.45 cents a pound.