Posted on 05/23/2005 2:11:18 AM PDT by RWR8189
SINGAPORE (Reuters) - Oil maintained its steady decline on Monday after OPEC's president said he saw no need to rein in output and oil major Total said it would restart its French refineries after a strike shut five of them.
U.S. light sweet crude for July delivery eased 17 cents to $48.48 a barrel in light Asian trade. The June contract expired on Friday after ending down 12 cents at $46.80 a barrel, the lowest front-month closing price in three and a half months.
London Brent crude was down 3 cents at $48 a barrel.
"OPEC has not shown signs of trimming production," said Tony Nunan, a manager at Mitsubishi Corp.'s international petroleum business. "The dollar's strength is also a bearish sign."
A two-week slide has wiped 7 percent off prices and taken oil nearly $10 below its early April record high, with the dollar's rally to a seven-month peak versus the euro convincing some hedge funds to move money back into foreign exchange markets.
Speculative traders on the New York Mercantile Exchange (NYMEX) have switched to a net short crude oil position for the first time in four months, U.S. data showed on Friday.
The president of the Organization of the Petroleum Exporting Countries said on Friday that the cartel was content to allow prices to ease into the $40 to $45 range and saw no need to cut production when it next meets on June 15.
"There is no need to trim, we will continue at this level," Sheikh Ahmad al-Fahd al-Sabah, also Kuwait's oil minister, told Reuters in an interview last Friday.
But the oil minister of Venezuela, typically a price hawk, said at the weekend OPEC would have to consider cutting output.
Since early February, U.S. crude oil inventories have climbed more than 13 percent to their highest level in six years, pumped up by near-record OPEC production meant to create a bigger cushion for an expected jump in winter demand.
Prices also eased after European oil major Total said at the weekend that its five refineries halted by a strike would be back in operation by early on Monday.
Over the course of last week, Total had been forced to shut down plants that refine more than 900,000 barrels per day (bpd) of crude due to a strike over a public holiday, sparking worries of a squeeze on motor fuels ahead of the summer.
Total is the largest European exporter of gasoline to the United States, where demand spikes during the summer as drivers take to the roads for vacations. The driving season typically begins over the Memorial Day holiday, this weekend.
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Ahh, you know summer is just around the corner when June futures contracts expire!
A Castro ally with oil cash vexes the US
Iran, terrorist ally of Hugo Chavez & OPEC's second biggest exporter will also present other oil exportation/shortfall issues when the fanatical Islamic mullahs are finally & forcefully confronted over the ongoing Iranian nuclear weapons threats to the West & Israel.
Chavez considers breaking US ties
If prior to any further international petroleum problems arise, crude oil prices can head toward $40 a barrel, or below, in light of future potential bullishness, buying some long crude calls is advised, for those trading in oil options.
Just think when crude was priced around $30 a barrel in the Fall of 2003 and by the following Fall months she had rocketed well over $50 a barrel. An shocking $20 a barrel increase in less than 12 months!Light Crude Oil (CL, NYMEX)1997-2005
Picking up some call contracts for the 2005-2006 winter months in heating oil & natural gas may also be wise considering the volatility of the energy market & a potential harsh, upcoming winter, if prices can fall another 10% to 20%.
Venezuela supports OPEC production cut to boost international crude prices.
Early to mid-summer is traditionally when seasonal heating prices trend their lowest. As everyone knows there has been nothing 'traditional' relating to the energy complex in the last couple of years. Heating oil chart.
U.S. Denies Trying to Lower Venezuelan Oil Production (Update1)
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