Crude Oil Futures Soar
By Cliff Edwards
AP Business Writer
Wednesday, March 10, 1999
Crude oil futures soared on the New York Mercantile Exchange Wednesday,
a day before key oil producers planned to meet in Amsterdam to consider
output cuts.
Unleaded gasoline and heating oil also moved sharply higher. On other
markets, wheat futures jumped, boosting corn and soybeans.
It was the third straight day of gains in the crude oil contract and
the best showing since November. Traders are getting optimistic that world
oil producers are becoming more serious about slashing supplies in an effort
to lift prices.
Saudi Arabia, the world's largest producer, and Iran are the catalysts
for the latest rally. With prices continuing to hover at their lowest in
a decade and their budgets tumbling into the red, countries that rely on
crude exports for cash are trying to build momentum for greater output
reductions.
The Organization of Petroleum Exporting Countries in the past year
has moved to cut 2.6 million barrels daily from output, while other producers
have chipped in to bring that figure to slightly more than 3 million barrels
daily.
But those moves have had little effect on prices amid cheating and
slack world demand. Further, analysts have said producers needed to cut
at least 1 million barrels above the 3 million to boost prices.
Saudi Oil Minister Ali Naimi said Wednesday that OPEC and independent
producers will agree on cuts ahead of the cartel's meeting next Tuesday
in Vienna. Futures market participants later went on a buying spree on
word some of those involved would meet in Amsterdam.
Crude for April delivery rose 84 cents, or 6 percent, to $14.69 a barrel;
April heating oil rose 2.65 cents to 39.66 cents a gallon; April unleaded
gasoline rose 1.90 cents to 44.80 cents a gallon; April natural gas rose
1.3 cents to $1.941 for each 1,000 cubic feet.
Wheat futures rose sharply on the Chicago Board of Trade, boosting
corn and soybeans, on talk the U.S. government is considering allowing
the sale of agricultural commodities to Iran.
Wheat rocketed higher amid unconfirmed market talk that U.S. National
Security Adviser Sandy Berger favors the removal of trade barriers on farm
products to Iran.
The United States in 1979 embargoed most trade with Iran and has repeatedly
worked to tighten that noose amid allegations the Middle Eastern country
sponsors terrorism.
The State Department on Tuesday expressed hope Italian officials would
raise U.S. concerns about terrorism during a visit this week of Iran's
president. But there have been signs of a thaw during the tenure of Iranian
President Mohammad Khatami, a moderate Shiite Muslim cleric who is promoting
greater social, political and cultural freedom among his people.
Members of Congress and agricultural groups have pressured the Clinton
administration to lift restrictions, but the government remains concerned
about several key issues, Secretary of State Madeleine Albright told a
congressional panel on Wednesday.
Wheat also was supported after the U.S. Agriculture Department sought
to buy 711,000 metric tons of wheat for donation to economically troubled
countries.
Soybeans shrugged off early weakness tied to expectations the government
would again lower its export estimates for the marketing year and raise
projections for the size of crops in Brazil and Argentina. Corn also moved
higher in step with wheat and soybeans.
Wheat for July delivery, representing prices after harvesting is completed,
rose 9 1/4 cents to $2.85 a bushel; May corn rose 2 1/4 cents to $2.23
1/2 a bushel; May soybeans rose 4 1/4 cents to $4.76 3/4 a bushel.
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