Oil rises above $31/bbl, adds to rebound in Asia

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Oil rises above $31/bbl, adds to rebound in Asia

October 2, 2000 12:51am Source: Reuters

SINGAPORE, Oct 2 (Reuters) - Oil prices in Asia rose above $31 a barrel on Monday, clawing back some of the losses suffered since the United States announced plans to use oil from its strategic stockpile to allay fears of a winter supply crunch.

By 0415 GMT, benchmark New York Mercantile Exchange (NYMEX) November delivery light crude futures last stood at $31.34 a barrel, extending Friday's gains by 50 cents.

The fresh upward trend started in New York on Friday, when futures settled 50 cents higher at $30.84 a barrel, reversing six straight trading days of losses.

But there were no supply or demand factors seen supporting a new rally.

``It's just market trend now... no news,'' a New York-based broker said.

Monday volumes on the NYMEX electronic trading system were fairly thin, with only around a million barrels traded for November futures.

Oil has overall been subdued from last week after the United States said it would tap 30 million barrels from its Strategic Petroleum Reserve (SPR) to supply the market in October.

Prices have fell some 17 percent over the last two weeks, after then prompt month October struck a 10-year high at $37.80 a barrel on September 20, a day before the U.S. move was first mooted.

The world's major exporter and OPEC powerhouse Saudi Arabia also pressured the market last Thursday with a vow to pump as much oil as needed to stabilise the markets.

The kingdom's oil minister Ali al-Naimi said on Friday that the U.S. decision to release SPR oil would not alter OPEC's policy, which was to keep prices in the $22-$28 band for the cartel's basket of crudes.

``Even with these measures that have been taken, releasing some of these reserves -- if the price doesn't come within this band, should it stay above the band, I am sure we will consider additional supplies,'' al-Naimi told the industry newsletter Middle East Economic Survey in an interview.

The Organisation of Petroleum Exporting Countries (OPEC) had agreed to an output hike of 800,000 barrels-per-day (bpd) from October in Vienna last month.

The cartel, which controls the bulk of internationally traded oil, is set to meet again in November on its output plan.

HURRICANE KEITH

A hurricane in the Gulf of Mexico and Kuwait's request to the United Nations to take urgent steps to stop Iraqi threats were the only mildly bullish factors seen over the weekend.

The U.S. National Hurricane Centre in Miami said on Sunday Hurricane Keith, which packed winds of 125 miles per hour (200kph), did not pose any short-term threat to offshore oil and natural gas production in the U.S. Gulf of Mexico.

Keith later weakened marginally on Monday as it pounded Belize City and dumped heavy rain as far south as Nicaragua.

On Sunday, Kuwait asked the United Nations to take urgent steps to end the threatening behaviour of Iraq towards its Gulf neighbours.

The level of concern and tension has been steadily rising in Kuwait since August, when U.N. sanctions-bound Iraq celebrated the 10th anniversary of the invasion of Kuwait.

But Iraq assured the market last week that it would not disrupt its oil export sales under the U.N.'s oil-for-food deal, a threat feared as Kuwait's claims for Gulf War compensation went through. ^ REUTERS@

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-- Martin Thompson (mthom1927@aol.com), October 02, 2000


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