Nymex Crude Higher After OPEC Confusion

NEW YORK Sep 29, 2006 (Dow Jones Newswires)

New York crude oil futures ended higher Friday after regaining early losses amid conflicting reports about OPEC's intentions to cut output to drive prices higher.

Prices ended the week higher for the first week in five, rebounding on technical buying after crude failed to fall below $60 a barrel early in the week.

The front-month November light, sweet crude contract on the New York Mercantile Exchange rose 15 cents to $62.91 a barrel. Crude was up 4.4% for the week. November Brent crude on the ICE futures exchange was up 1 cent at $62.55 a barrel. Settlement prices weren't yet available.

October heating oil fell 2.92 cents to $1.6846 a gallon. Front-month unleaded gasoline rose 4.81 cents to $1.5492 a gallon and reformulated gasoline blendstock, or RBOB, gained 98 points to $1.57 a gallon.

Final settlement prices weren't yet available.

Confusion over the Organization of Petroleum Exporting Countries' intentions began Thursday after media reports Nigeria would cut production as part of an OPEC deal. After initial gains, prices finished lower when OPEC officials and other member countries said they had no knowledge of deal.

Adding to the conflicting statements, Venezuela on Friday told OPEC it plans to cut crude output by 50,000 barrels a day from Oct. 1, according to a Vienna-based spokesman for the group. The official wouldn't give a reason for the cuts. Adding to the confusion, Venezuelan President Hugo Chavez later said oil prices between $50 and $60 a barrel were "adequate" for OPEC members.

"Despite the talk out of Venezuela and Nigeria, it's ultimately going to come down to what Saudi Arabia is going to do," said Andy Lebow, senior vice president with brokerage Man Financial in New York. "The market will stand up and take great notice if the Saudis start talking about cuts."

Crude is also trading on technical factors with this week's rally following a slump in crude prices from near $80 a barrel in August to a six-month low of $59.52 a barrel Monday.

"This market still wants to rally," after the steep declines of the past month , said Peter Beutel, president of advisory firm Cameron Hanover. The market "doesn't like a dramatic reassessment without another reassessment," he said.

Talks over Iran's refusal to stop uranium enrichment are still a focus of potential supply risks that could drive prices higher.

Iran has previously threatened to cut oil exports if the U.N. imposes tough sanctions for its refusal to halt its nuclear program. But with the U.S. unable to get support from other permanent U.N. Security Council members, notably China and Russia, sanctions have become less and less likely.

President George W. Bush told the Wall Street Journal he is willing to let talks with Iran over its nuclear ambitions run on.

"We ought to give the Europeans time to see whether or not the Iranians will make the proper choice by verifiably" suspending enrichment," the Journal Friday reported Bush as saying.

Analysts said the comments suggest the standoff is unlikely to help drive prices higher in the near term.

"The relatively calm tone suggests a lack of urgency for U.N. sanctions and we wonder if a push for Security Council action might now wait until after the November elections," said Citigroup analyst Tim Evans.

In supply news, BP PLC (BP) said a natural gas leak forced it to shut in 25,000 to 30,000 barrels a day of crude production at its Lisburne field, which feeds into Prudhoe Bay's production stream, the Anchorage Daily News said Friday.

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