Oil falls on eased supply concerns
By LILY NGUYEN
Thursday, September 13, 2001
Calgary - Oil prices retreated further from the highs they reached in the wake of terror attacks on the United States, as fears about supply disruptions were eased by official reassurances.
London Brent blend crude future prices eased $1.04 (U.S.) to $28.02 a barrel Wednesday on the London International Petroleum Exchange, the only venue for futures traders as the North American exchanges remained closed for the second day. The futures jumped as high as $31.05 on Tuesday, before closing at $29.06.
Brian Prokop, a Calgary analyst from Peters & Co., said reassurances from officials with the Organization of Petroleum Exporting Countries were "huge" factors in calming the market.
OPEC secretary-general Ali Rodriguez said Tuesday the group would continue to guarantee the stability of the oil market. He rejected any notion that member countries - which include Saudi Arabia, Iraq, Iran, the United Arab Emirates and Libya - would use oil as a political weapon. Wednesday, Saudi Arabia's oil minister Ali al-Naimi said the kingdom would help fellow oil producers cover any oil shortages that might arise.
"The government of the kingdom of Saudi Arabia gives special importance to the stability of the oil market and to provide constant supplies under all circumstances in co-operation with OPEC to cover any shortage that might occur in the market for any reason," he told the official Saudi Press Agency.
Mr. Prokop stressed that there has been no significant change in the demand or supply of fuel sources following the attack, as oil and gas continued to flow as normal.
"Fundamentally, nothing's changed vis-à-vis oil or natural gas."
Many have taken the opposite view, arguing the attacks could plunge an already teetering world economy into recession, causing a drop in demand and possibly lower oil prices.
"Longer term, demand concerns hinge on an exacerbation of the current global economic slowdown driven by a loss of consumer confidence," said Adam Sieminski of Deutsche Bank.
Natural gas trading in Alberta resumed as normal Wednesday, with prices stable in the high $2 (Canadian) per gigajoule range, said Peter Gottfried of Natural Gas Exchange Inc.
Jason Toews, co-founder of Gasbuddy.com, a Web site that tracks gasoline prices across North America, said there are no reports of price spikes at the pumps in Canada. Some U.S. gas stations raised prices as high as $5 (U.S.) a gallon, but they are now lowering them to where they were before the suicide attacks, he said.
With files from Reuters