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Crude futures climb ahead of OPEC meeting

16th Mar 2010, 3:06 pm Crude futures climb ahead of OPEC meeting

Oil prices rose ahead of the Federal Reserve’s policy meeting, which is expected to give more clues on the Fed's near term interest rates policy and its assessment of the strength of the ongoing economic recovery. The currently ultra low rates are not expected to undergo any changes until late 2010, though the Fed’s tone could give a hint about the timing of possible changes, which would put oil and other commodities under pressure.

The US dollar declined ahead of the Fed’s decision, lending more support to the dollar-denominated gold, making it cheaper for holders of other currencies to drive up the demand.

Investors will also be looking to Wednesday’s meeting of the OPEC (Organisation of Petroleum Exporting Countries), which will make a decision on its production quotas. Saudi Arabia’s oil minister Ali Naimi has said that the organisation would not allow the oil market put too much pressure on the prices.

May Brent Crude improved to US$80.12/barrel, while US light, sweet crude reached US$81.12/barrel.

Blue chip oil and gas producers didn’t show much movement today. Shell (LSE: RDSB) was in the lead with a 1.3% gain, while fellow supermajor BP (LSE: BP) rose marginally, as did BG Group (LSE: BG). Cairn Energy (LSE: CNE) added nearly 1%.

Oil and gas engineering firms Amec (LSE: AMEC) and Petrofac (LSE: PFC) were flat.

Midcaps were mixed. Dana Petroleum (LSE: DNX) and Salamander Energy (LSE: SMDR) were in the lead with gains of 1.7%. Heritage Oil (LSE: HOIL), JKX Oil & Gas (LSE: JKX) and Soco International (LSE: SIA) made little headway. Dragon Oil (LSE: DGO) and Premier Oil (LSE: PMO) posted marginal losses, while Melrose Resources (LSE: MRS) slid to the bottom of the pile with a 2.7% decline.

Services companies headed in different directions as while Wood Group (LSE: WG) tacked on 1.8%, Wellstream Holdings (LSE: WSM) dropped 2.5%.

EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) was in decline, shedding 4%. North American based explorer Nighthawk Energy (AIM: HAWK) and Mongolia-focused Petro Matad Ltd (AIM: MATD) both lost 3%.

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