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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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