Finance Markets

October 16, 2006

Crude oil prices mixed ahead of OPEC meeting

Permalink: Crude oil prices mixed ahead of OPEC meeting

Filed under: Commodities, Oil, Metals, Economy

Crude oil prices were mixed on Monday ahead of an emergency OPEC meeting scheduled for later in the week in Qatar. It is expected that an announcement of a production cut of 1 million barrels per day will come out of the meeting, and that the cut will be made from actual production rather than from the official quota of 28 million barrels per day.

Several OPEC member nations, including Iran, Indonesia, and Venezuela are said not to be happy with the decision and instead want the cuts to come from the quota instead. This is apparently because those nations are already pumping below quota and do not wish to lose market share by having to cut their actual output.

Brent crude for November delivery was 14 cents lower to $59.38 per barrel, while West Texas Intermediate crude November contracts were up, but just by 3 cents to $58.61 per barrel on the New York Mercantile Exchange.

In the metals markets, supply concerns and low inventories meant a 17-year record high for the price of tin and new all-time high prices for nickel and lead on Monday. Tin added 12.8 percent to $11,000 per tonne late in the day in London on worries about disruptions in supplies from Indonesia.

Nickel was 3.4 percent higher to $31,800 per tonne, down slightly from a record high of $31.900 per tonne reached earlier in the day, with only 2,514 tonnes of the metal in London Metal Exchange warehouses. Lead, meanwhile, reached a new record of $1,545 per tonne during the day’s session before easing back slightly to a gain of 2.9 percent to $1,535 per tonne.

Copper and zinc were also higher on the day, by 4 percent to $7,760 per tonne and by 4.6 percent to $3,965 per tonne respectively. Zinc that was actually available was in short supply and could continue to be so in the next few months despite a forecast by the Lead and Zinc Study Group of a 7.3 percent hike in mine production next year.



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