000119 Cattle Prices at 2 1/2-Year High

New York - Crude oil futures staged their first big rally of the year on the New York Mercantile Exchange on the strongest sign yet that OPEC will extend production cutbacks that have tightened world supplies.

In other markets, orange juice prices slipped after the government issued a higher-than-expected estimate of Florida's crop, and cattle prices hit a 2 1/2- year high.

Oil prices surged after Iran's deputy oil minister, Kazempour Ardebili, said leading producers within the Organization of the Petroleum Exporting Countries want to keep the cuts going for at least another quarter beyond their scheduled March 31 expiration.

Iran heads OPEC's output monitoring committee, which meets Friday in Vienna.

His comments in London helped drive crude for February deliver $1.10 higher to $25.77 a barrel on the New York Merc, after North Sea Brent had risen 89 cents to $24.62 a barrel on the International Petroleum Exchange in London.

With prices going OPEC's way -- higher -- analysts suspect the cuts may be extended beyond the second quarter too. Thirty-dollar-a-barrel oil, once unthinkable, is possible within months if not weeks.

“I think it's going to be steady, and higher,” said Bill O'Grady, energy analyst for A.G. Edwards & Sons Inc. of St. Louis.

Today's high oil prices still can't be compared to the soaring level of the late 1970s and '80s, he said. A price of $30 now would be the equivalent of roughly $22 a decade ago after taking inflation into account.

Other energy commodities also jumped. February heating oil rose 2.03 cents to 66.75 cents a gallon, February gasoline rose 1.76 cents to 68.72 cents a gallon and February natural gas rose 4.4 cents to $2.26 per 1,000 cubic feet.

After the close of trading, the American Petroleum Institute released weekly supply figures that showed a rise in U.S. oil stockpiles.

API reported that U.S. crude oil stores rose by 1.711 million barrels to 294.809 million barrels in the week ended Jan. 7.

U.S. gasoline inventories rose by 4.082 million barrels to 194.595 million barrels. Refineries operated at 85.8% capacity, down from 89.7 a week ago.

The price of frozen concentrated orange juice rose to a five-month high and then fell to 82.20 cents a pound, down 1.95 cents for the day, on the New York Merc.

The reversal came after the U.S. Department of Agriculture estimated the Florida orange crop, the nation's biggest, at 219 million boxes -- up 5 million boxes from last month.

The overall U.S. orange forecast for 288.7 million boxes is up sharply from the 226.3 million count of the 1998-99 crop.

Cattle prices, 14% higher than a year ago, jumped to their highest price on the Chicago Mercantile Exchange since August 1997 before giving up most of the day's gains. The increase may reflect growth in consumer demand.

February live cattle rose 0.10 cent to 70.87 cents a pound.

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