Oil Is Steady Amid Signs 2-Day Plunge in Prices Was Unjustified
May 16 (Bloomberg) -- Crude oil was little changed amid speculation that a two-day, 5.3 percent plunge was larger than justified because of threats to supply.
The United Nations Security Council meets May 19 to discuss possible sanctions to end Iran's nuclear research. Iran is the fourth-biggest oil producer. Ecuador canceled a production agreement with a U.S. oil company yesterday. When oil couldn't get below last week's low of $68.25 a barrel traders began to buy futures.
``As bad as yesterday's selloff was, it could have been much worse,'' said Phil Flynn, vice president of risk management at Alaron Trading Corp. in Chicago. ``We couldn't even test last week's low so you started seeing the buyers come back in. We probably overdid it because there are still a lot of threats out there.''
Crude oil for June delivery rose 12 cents to close at $69.53 a barrel on the New York Mercantile Exchange. Futures reached $75.35 on April 21 and 24, the highest since trading began in 1983. Prices are 43 percent higher than a year ago.
Ecuador canceled the agreement with Occidental Petroleum Corp. following a six-year contract dispute. The country claims it has the right to seize Occidental's assets, the Los Angeles- based company said in a statement. Ecuador, holder of the third- largest reserves of oil in South America, joins Venezuela and Bolivia in tightening restrictions on foreign oil companies.
``The news that Ecuador has canceled its contract with Occidental has the market worried,'' said John Kilduff, vice president of risk management at Fimat USA in New York. ``This is part of a disturbing trend in South America, which may eventually lead to less production.''
$100 Oil
Oil prices would soar to $100 a barrel if Venezuela decided to cut sales to the U.S. amid worsening relations between the two countries, Venezuelan President Hugo Chavez said in an interview with a U.K. television station.
``If we decided now to stop selling oil to the U.S., among other things, the price of oil would shoot up to $100 a barrel,'' said Chavez.
The European Union may offer Iran a light-water nuclear reactor as part of an incentive package intended to convince the Islamic republic to cease uranium enrichment, officials close to the International Atomic Energy Agency said today.
Iran Offer
The offer hinges on Iran suspending its uranium research and development program and giving up ambitions for commercial production, they said. The officials requested anonymity because the deal hasn't officially been presented to Iran. Concern that the UN might impose sanctions on Iran, the world's fourth-biggest oil producer, has helped spur a 14 percent rally this year.
U.S. Secretary of State Condoleezza Rice said on May 10 that her country can wait ``a couple of weeks'' to seek a Security Council resolution on the Iranian nuclear program.
Libya may be able to raise oil production after the U.S. removed the holder of Africa's largest crude-oil reserves from its list of countries that sponsor terrorism. The agreement yesterday to upgrade diplomatic representation will facilitate the operations of U.S. oil companies, Shokri Ghanem, chairman of Libya's National Oil Corp., told reporters in Amman, Jordan.
``Yesterday's agreement with Libya is a not-so-subtle message to Iran,'' said Frank Verrastro, director of the Center for Strategic and International Studies energy program in Washington. ``If you play ball there are rewards. We are now providing the carrots to go with the sticks.''
The U.S. broke off diplomatic relations with Libya in 1980, accusing Muammar Qaddafi's regime of sponsoring terrorism. The U.S. opened a liaison office in Tripoli in 2004 after the North African nation gave up efforts to build weapons of mass destruction a year earlier, and paid compensation to the families of the people killed in the 1988 bombing of a U.S. commercial aircraft over Lockerbie, Scotland.
Brent crude oil for June settlement rose 67 cents, or 1 percent, to close at $70.34 a barrel on the London-based ICE Futures exchange. Futures touched $74.97 a barrel May 2 and 3, the highest since the contract began trading in 1988. The June contract expired today. The more-active July contract fell 10 cents to $70.08 a barrel.
May 16 (Bloomberg) -- Crude oil was little changed amid speculation that a two-day, 5.3 percent plunge was larger than justified because of threats to supply.
The United Nations Security Council meets May 19 to discuss possible sanctions to end Iran's nuclear research. Iran is the fourth-biggest oil producer. Ecuador canceled a production agreement with a U.S. oil company yesterday. When oil couldn't get below last week's low of $68.25 a barrel traders began to buy futures.
``As bad as yesterday's selloff was, it could have been much worse,'' said Phil Flynn, vice president of risk management at Alaron Trading Corp. in Chicago. ``We couldn't even test last week's low so you started seeing the buyers come back in. We probably overdid it because there are still a lot of threats out there.''
Crude oil for June delivery rose 12 cents to close at $69.53 a barrel on the New York Mercantile Exchange. Futures reached $75.35 on April 21 and 24, the highest since trading began in 1983. Prices are 43 percent higher than a year ago.
Ecuador canceled the agreement with Occidental Petroleum Corp. following a six-year contract dispute. The country claims it has the right to seize Occidental's assets, the Los Angeles- based company said in a statement. Ecuador, holder of the third- largest reserves of oil in South America, joins Venezuela and Bolivia in tightening restrictions on foreign oil companies.
``The news that Ecuador has canceled its contract with Occidental has the market worried,'' said John Kilduff, vice president of risk management at Fimat USA in New York. ``This is part of a disturbing trend in South America, which may eventually lead to less production.''
$100 Oil
Oil prices would soar to $100 a barrel if Venezuela decided to cut sales to the U.S. amid worsening relations between the two countries, Venezuelan President Hugo Chavez said in an interview with a U.K. television station.
``If we decided now to stop selling oil to the U.S., among other things, the price of oil would shoot up to $100 a barrel,'' said Chavez.
The European Union may offer Iran a light-water nuclear reactor as part of an incentive package intended to convince the Islamic republic to cease uranium enrichment, officials close to the International Atomic Energy Agency said today.
Iran Offer
The offer hinges on Iran suspending its uranium research and development program and giving up ambitions for commercial production, they said. The officials requested anonymity because the deal hasn't officially been presented to Iran. Concern that the UN might impose sanctions on Iran, the world's fourth-biggest oil producer, has helped spur a 14 percent rally this year.
U.S. Secretary of State Condoleezza Rice said on May 10 that her country can wait ``a couple of weeks'' to seek a Security Council resolution on the Iranian nuclear program.
Libya may be able to raise oil production after the U.S. removed the holder of Africa's largest crude-oil reserves from its list of countries that sponsor terrorism. The agreement yesterday to upgrade diplomatic representation will facilitate the operations of U.S. oil companies, Shokri Ghanem, chairman of Libya's National Oil Corp., told reporters in Amman, Jordan.
``Yesterday's agreement with Libya is a not-so-subtle message to Iran,'' said Frank Verrastro, director of the Center for Strategic and International Studies energy program in Washington. ``If you play ball there are rewards. We are now providing the carrots to go with the sticks.''
The U.S. broke off diplomatic relations with Libya in 1980, accusing Muammar Qaddafi's regime of sponsoring terrorism. The U.S. opened a liaison office in Tripoli in 2004 after the North African nation gave up efforts to build weapons of mass destruction a year earlier, and paid compensation to the families of the people killed in the 1988 bombing of a U.S. commercial aircraft over Lockerbie, Scotland.
Brent crude oil for June settlement rose 67 cents, or 1 percent, to close at $70.34 a barrel on the London-based ICE Futures exchange. Futures touched $74.97 a barrel May 2 and 3, the highest since the contract began trading in 1988. The June contract expired today. The more-active July contract fell 10 cents to $70.08 a barrel.
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