Thursday, November 19, 1998

Crude closes in on 12-year lows on inventory data

By CLIFF EDWARDS Associated Press

Crude oil prices plunged Wednesday for the fourth consecutive session on the New York Mercantile Exchange, flirting with 12-year lows as inventory statistics reinforced concerns about a glut in supplies.

On other markets, precious metals rose sharply, as did grain and soybeans.

Crude futures and other energy products tumbled as gasoline and heating oil inventories continued to grow sharply in the United States, with no end to the supply glut in sight.

While the American Petroleum Institute reported late Tuesday that crude inventories had fallen, supplies remain 8 percent higher than at this time a year ago. And gasoline inventories rose a sharp 3.53 million barrels to 205.64 million barrels.

The increasing supplies come even after world oil producers agreed this year to reduce daily output by some 3 million barrels a day. The Organization of Petroleum Exporting Countries, representing 11 producing countries, also appears to be unwilling to cut output further.

Iran's deputy oil minister said OPEC is unlikely to propose further reductions at a meeting Nov. 25 in Austria. And there is some doubt whether the group will even agree - and stick to - a six-month extension of the current quotas, analysts said.

Crude for December delivery fell 31 cents to $12.14 a barrel, after earlier reaching a low of $11.65 a barrel. Crude on June 15 reached a 12-year low of $11.42 a barrel.

December heating oil fell .39 cent to 34.71 cents a gallon; December unleaded gasoline fell .86 cent to 37.20 cents a gallon, a five-year low. December natural gas fell 7.5 cents to $2.204 for each 1,000 cubic feet.

Palladium futures rose sharply on the New York Mercantile Exchange, pulling platinum higher, on continued concerns Russia will sharply reduce exports next years even as demand for the metal grows.

Gold futures rose to their highest price in a month as a reduction of U.S. interest rates made the precious metal cheaper for investors and manufacturers during the holiday jewelry-making period.

December palladium rose $11.65 to $292.50 an ounce, while January platinum rose $3.50 to $352.40 an ounce. December gold rose $3.30 to $298.20 an ounce; December silver rose 4.5 cents to $4.972 an ounce.

Grain and soybean futures rose sharply on the Chicago Board of Trade amid indications the U.S. Agriculture Department is preparing to purchase more grains for donation to needy countries.

The USDA this summer committed to buying 2.5 million metric tons of grains, and an agency official indicated on Tuesday that the figure is likely to go higher as the Clinton administration looks for ways to help farmers get rid of bumper crops.

Corn and wheat also were supported by bad weather in Australia and Argentina, which raised the potential for sharply reduced production there.

Soybean futures rose on the strength in the soybean oil market. Investors expected soybean oil exports to rise in coming weeks as the price of a competing vegetable oil, palm oil, moves higher. Increased exports would come at a time when soybean oil processing has fallen.

Soybeans also were supported by potential weather problems with South America's crop that also could boost U.S. export prospects.

December wheat rose 5 cents to $2.93 a bushel; December corn rose 2-1/4 cents to $2.21-1/4 a bushel; January soybeans rose 2-1/2 cents to $5.84 a bushel; while the expiring November contract rose 6-1/4 cents to $5.79 a bushel.