Tuesday, December 1, 1998

Crude, heating oil futures drop; soybean, corn futures up

By MARTHA IRVINE

AP Business Writer

Crude and heating oil futures continued their downward plunge Monday on the New York Mercantile Exchange, setting new 12-year lows as both continued to be hurt by warm weather and the worldwide oil glut.

On other markets, soybean and corn futures continued their upward trend on the Chicago Board of Trade with January soybeans up more than 11 cents a bushel -- their highest gains in four months. Gold and other precious metals also dropped on the New York Mercantile Exchange.

January crude finished at $11.22 a barrel Monday, down 64 cents after dropping as low as $10.82 a barrel earlier in the day.

Analysts attribute the drop to a continued supply glut with no signs that OPEC will be able to reach an agreement to cut production.

Last week’s meeting among OPEC producers failed to resolve a dispute with Venezuela and Iran over their producing above agreed-upon limits, said Bill O’Grady, an analyst with AG Edwards & Sons in St. Louis.

Warm weather, particularly east of the Rockies, has also done nothing to help heating oil prices. Heating oil for delivery in December plunged as low as 30.80 cents a gallon, before recovering to 31.32 cents a gallon, down 1.78 cents.

"It’s been really balmy ... and we have huge heating oil inventories," O’Grady said. "We’re just not able to burn any of it up because the weather’s not cold enough."

Other products fell as well. December unleaded gasoline fell 2.40 cents to 32.58 cents a gallon as the contract expired, while January natural gas fell 2.2 cents to $1.976 for each 1,000 cubic feet.

In London, North Sea Brent Blend crude oil for delivery in January fell 68 cents to $10.46.

Analysts say the soybean surge was fueled, in part, by heavy fund-buying. The increases also were a carry-over from last week’s U.S. Agriculture Department report that showed unexpectedly strong export sales for both soybeans and corn, which prompted modest gains for the latter.

It was also a good weekend in the weather department. Dry weather Saturday and Sunday in the South American growing regions -- particularly Brazil for corn and soybeans -- also contributed to the upward trend.

"The dry weather’s definitely giving us a push," said Don Roose, an analyst for Iowa-based U.S. Commodities Inc.

Rain is not predicted in the South American regions until Wednesday, he said.

"But, as we all know, that can change unexpectedly," Roose said.

Dry weather in Argentina’s wheat region was not, however, enough to sustain gains early in the day for December wheat. Analysts say wheat futures were experiencing continued pressure due to anticipated large deliveries of wheat against the December contract.

Wheat for December delivery was unchanged at $2.77 a bushel; December corn was up 1-1/4 cents to $2.18-3/4 a bushel; December oats were unchanged at $1.07-1/4 a bushel; and January soybeans surged 11-1/4 cents to $5.93-1/2.

Gold and silver futures fell on the New York Mercantile Exchange with December gold down $4 to $292.50 a troy ounce and December silver down 7.6 cents to $4.825 an ounce. Analysts attributed the drop to fund liquidation

On the Chicago Mercantile Exchange, meat and livestock futures were mixed Monday.

December live cattle fell .30 cent to 63.05 cents a pound; January feeder cattle dropped .57 cent to 70.50 cent a pound; December lean hogs were up .60 cent to 28.55 cents a pound; and February pork bellies were up 1.75 cents to 45.57 a pound.