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14 April 2024

Oil up on Mexico port closures

By Agencies

Oil rose on Monday, nearing $91 a barrel, with prices supported by the closure of Mexico's oil export terminals due to bad weather, as well as OPEC's dismissal of calls to raise output.

US light crude for February delivery rose 36 cents to $90.93 a barrel in Globex electronic trading by 12.43pm GMT. Oil snapped a three-day losing streak and closed 44 cents higher at $90.57 a barrel on Friday, thanks to short-covering ahead of the Martin Luther King holiday in the United States.

Mexico closed all its main oil exporting ports on Sunday due to bad weather, the transport ministry said on its Web site. The Gulf of Mexico ports ship around 80 per cent of Mexico's daily oil exports.

Mexico, the world's number nine exporter of crude oil and a top-three supplier to the US, has seen its exports repeatedly disrupted in recent months by rough weather that has halted shipments for days at a time.

OPEC's cool reaction to US calls for it to raise output also helped keep prices firm above the $90 mark.

"The shutdown of Mexico's oil ports is pushing up prices a little... I think there is also growing sentiment that OPEC will leave its production unchanged at its next meeting," said Rowan Menzies, head of research at Commodity Warrants Australia.

The Organisation of Petroleum Exporting Countries (OPEC) on Sunday said the global market was well supplied and the cartel has little control over oil prices near $90 a barrel.

"I don't think there is a need to increase because the market is well supplied," Oil Minister Abdullah Al Attiyah told reporters on the sidelines of a conference in Abu Dhabi on Sunday.

US President George W Bush and Energy Secretary Sam Bodman have urged top exporter Saudi Arabia and OPEC to raise supply on two separate visits to the Kingdom last week.

The production group will meet on February 1 to discuss output. Several OPEC members have said there was no reason to raise output if oil inventories recover in the second quarter as winter ends and if the US slips into a recession.

Ongoing geopolitical tensions between Iran and the US over Tehran's nuclear programme also supported oil prices. Iran received a fourth delivery of nuclear fuel from Russia on Sunday to power Tehran's first atomic power plant and it expects four more before the consignment is complete.

NYMEX floor trading and other US financial markets are closed on Monday to mark the Martin Luther King holiday. But energy futures will continue to trade on the Globex electronic and NYMEX ClearPort platforms on normal schedule.

Mounting US economic problems, including high energy costs, have prompted analysts to cut forecasts for oil demand growth and helped cut crude prices by 10 per cent from the record $100.09 on January 3.

Amid recession fears, analysts said investors will look out for corporate earnings and prospects for help from central banks as guidance this week. (Reuters)