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NEW YORK -- Oil prices hit a 19-month low of $51.25 in intraday trading yesterday on the New York Mercantile Exchange on the news that Organization of Petroleum Exporting Countries (OPEC) members stated there was no need for further production cuts, reported The Associated Press.
Benchmark light sweet crude fell $1.43 to $51.56 in trading yesterday after the record low. The drop was measured using Friday's prices, as the exchange was closed due to the Martin Luther King Jr. holiday. In addition, gas futures fell 4.3 cents to $1.38.
Saudi oil minister Ali Naimi emphasized that there would not be a special meeting focusing on further production cuts in efforts to stop a 13 percent price drop this year, the report stated.
"There is no need now [for further cuts] on the basis of what market conditions are," he was quoted as stating during a conference organized by India's oil ministry.
To halt falling prices, Venezuela's oil minister, Rafael Ramirez, called for an unscheduled OPEC meeting to discuss further production cuts and noted that some OPEC countries agreed with the proposal, but declined to name them. He added that an excess of 700,000 to one million barrels of crude oil are produced daily in the world market.
At the OPEC headquarters in Vienna, Austria, an official who refused to be identified said that an extraordinary meeting was doubtful at this time.
OPEC member Edmund Daukoru, the Nigerian oil minister told Dow Jones Newswires that OPEC members should wait until February to decide if further cuts are necessary. "We cannot judge the market right now. We'll have to wait till Feb. 1," he said.
But if prices fall below the $50 a barrel level, expect OPEC to step in. "If prices threaten to break the $50-per-barrel level, more specific and immediate action can be expected from the group," stated Vienna's PVM Oil Associates.
An unseasonably warm winter in the Western hemisphere continues to have an effect on prices, the report stated. That may change this week, however, as the Northeast is predicted to have more seasonable temperatures in the 20s and 30s, according to the National Oceanic and Atmospheric Administration's National Weather Service.
"Right now, the overhanging picture for crude demand is the mild weather. Natural gas and heating oil prices have fallen a lot and that has an impact on crude oil price," ANZ Global Natural Resources analyst Andrew Harrington told the AP.
As crude oil prices fall, it is being translated to lower prices per gallon at the pump. The national average price of self-serve regular gas dropped five cents since last week, to $2.229 per gallon -- lower than a year-ago average of $2.32 per gallon, according to AAA's Fuel Gauge Report. Expect prices to continue to fall in the weeks ahead, AAA stated yesterday.
Lower gas prices are contingent on oil prices that stay near the current level or drop further. Oil and gas inventories grew over the past few months, and efforts to restrain production to bolster prices seem to be ineffective to date, the report stated.
Hawaii maintains the highest average price per gallon at $2.91 per gallon. Washington and Oregon place second and third for the highest average price per gallon, at $2.64 and $2.63, respectively. The lowest price can be found in Missouri, which has an average price of $2.01 per gallon.
The nationwide average for self-serve mid-grade gasoline is $2.36 per gallon, a drop from the $2.43 seen last month. Self-serve premium gas averages $2.45 per gallon across the nation, down from the previous month's $2.52 per gallon.