WSJ:OIL FUTURES: Crude Likely To Remain Above $100/Bbl On Tight Supply
SINGAPORE (Dow Jones)--Crude-oil futures were mixed in choppy Asian trading Friday, but prices will likely be supported above $100 a barrel in the near term by the fallout from this week's Organization of Petroleum Exporting Countries meeting, which left production quotas unchanged.
"Supply-side worries are supportive of prices," said Victor Shum, an analyst at Purvin & Gertz in Singapore.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at $101.62 a barrel at 0725 GMT, down 33 cents in the Globex electronic session. July Brent crude on London's ICE Futures exchange rose 14 cents to $119.71 a barrel.
Continued unrest in the Middle East and North Africa, a weaker U.S. dollar and a shrinking U.S. trade deficit would likely support Nymex crude prices above a floor around $100 a barrel in the near term, Shum said.
The conflict in the Middle East continues to prop up prices mainly because the supply of sweet grades of oil from Libya has been disrupted by the civil war in the country. Similar problems in other Middle East countries are also tightening or have the potential to tighten supplies from the region.
Global crude demand is fundamentally bullish, and this should continue to support prices even though "there is enough spare capacity from Saudi Arabia to support demand for the remainder of this year," Shum said.
Saudi Oil Minister Ali Naimi pledged earlier this week to meet the market's supply needs regardless of OPEC's decision to leave production quotas for member countries unchanged.
Meanwhile, the dollar could return to center stage for the crude market following the OPEC meeting, Peter Beutel, president of Cameron Hanover, said in a note to subscribers.
"It has been a number of weeks since the oil complex has gone this long without taking its cue from the greenback," he said, adding that "at some point, that will change, and the dollar will return to the forefront of activity."
Nymex reformulated gasoline blendstock for July--the benchmark gasoline contract--fell 38 points to $3.0360 a gallon, while July heating oil traded at $3.1397, 19 points higher.
ICE gasoil for June changed hands at $985.75 a metric ton, up $8.75 from Thursday's settlement.
