Crude Petroleum Futures Fall on OPEC Meeting Rumors

Strategic Insights -

Crude petroleum futures took a significant hit on January 10, 1994, as the market turned bearish on rumors that the Organization of Petroleum Exporting Countries (OPEC) would not move up its March 25th ministerial meeting. This development was a stark contrast to the market's optimism earlier in the week, when news of a possible meeting move had sent prices rallying. The collapse in prices was led by a 65-cent drop in February delivery of West Texas Intermediate crude oil futures, which closed at $14.67 per barrel on the New York Mercantile Exchange. Unleaded gasoline futures also took a significant hit, falling by 2.12 cents per gallon to 41.70 cents per gallon on February delivery to New York Harbor.

Key Takeaways:

  • Crude petroleum futures fell by 65 cents to $14.67/bbl on the New York Mercantile Exchange, with February delivery of West Texas Intermediate crude oil futures experiencing the largest decline.
  • Unleaded gasoline futures fell by 89 cents/bbl, or 2.12 cents/gallon, to 41.70 cents/gallon, with traders citing speculation that European gasoline imports were headed to the US.
  • The spread between US and European gasoline prices increased to almost 18 cents/gallon, making it profitable to ship supplies across the Atlantic.
  • US gasoline stocks are over 9 million bbl higher than year-ago levels, according to the American Petroleum Institute's weekly report.
  • North Sea Brent prices fell in thin trading, with the differential between Brent and WTI becoming too small to cover freight costs.
  • February No. 2 heating oil futures took a significant dive, falling by 1.41 cents/gallon to 46.76 cents/gallon.

Statistics:

  • February delivery of West Texas Intermediate crude oil futures fell to $14.67/bbl.
  • Unleaded gasoline futures for February delivery to New York Harbor fell to 41.70 cents/gallon.
  • The differential between northwest Europe prices and New York Harbor prices was almost 18 cents/gallon.
  • US gasoline stocks are over 9 million bbl higher than year-ago levels.
  • North Sea Brent prices fell to $13.74 on London's International Petroleum Exchange.
  • February No. 2 heating oil futures fell to 46.76 cents/gallon.

Sources:

  • Wall Street Journal, January 10, 1994
  • The Oil Daily in cooperation with Computer Petroleum Corp., nationwide rack price survey.