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Commodities-Oil prices sink as more output seen

NEW YORK: Crude oil futures prices closed lower at the New York Mercantile Exchange on Monday after Opec President Ali Rodriguez said the oil producers' group was likely to increase output again in the third quarter.

Wheat prices fell after a weather forecaster said a cold spell this week was unlikely to hurt the US crop. Coffee prices slipped ahead of a meeting of world coffee producers in London on Tuesday.

Spot crude oil futures dropped after Rodriguez, the Venezuelan energy and mines minister who was elected president of the Organisation of Petroleum Exporting Countries last week, said oil prices had dropped less than he had expected after Opec's recent decision to increase production.

"That makes me reaffirm my conviction that more production increases will have to be made when the second quarter ends and demand starts rising again from June," he said.

Opec ministers have agreed to meet again on June 21 to review the market's response to the latest production increase. Members of the group agreed in Vienna last week to increase output by 1.45 million barrels per day beginning April 1.

Opec production cuts implemented a year ago, along with reduced supplies from non-Opec members Mexico and Norway, resulted in a tripling of oil prices to more than $34 in early March, the highest in nine years.

Crude oil futures for delivery in May closed down 47 cents at $26.43 per barrel. Gasoline for April delivery slipped 1.43 cents to 84.16 cents per gallon. April heating oil closed down 1.39 cents at 67.26 cents per gallon.

The drop in wheat prices erased some of last week's gains, when prices rose after private forecasters said freezing weather this week could hurt the winter wheat.

But forecasters said on Monday the cold should not be severe enough to hurt hard red winter wheat, which is grown from Nebraska to Texas and is the largest class of wheat produced in the United States.

"The coldest night will be tonight, but it probably will not get cold enough to cause any damage," Joel Burgio, meteorologist with Weather Services Corp., said on Monday.

Burgio said temperatures would dip to the 30s Fahrenheit as far south as Oklahoma, with temperatures in the 20s F in north-central Kansas.

At the Kansas City Board of Trade, May hard red winter wheat futures closed down 2-1/2 cents at $2.84 per bushel and the July contract, which reflects the harvest-time price, was down 2-3/4 at $2.95.

At the Chicago Board of Trade, the May soft red winter wheat contract was down 4-1/2 cents at $2.57-3/4 per bushel, while the July contract slipped 5 cents to $2.69-1/4. Soft red winter wheat is grown in Missouri, Illinois, Indiana, and Ohio.

Coffee futures at New York's Coffee Sugar and Cocoa Exchange ended lower on speculative liquidation and modest trade selling ahead of a London meeting of the Association of Coffee Producing Countries this week.

Members of the group are expected to devise a plan to tighten global coffee supplies in order to shore up prices. However, many New York traders took the precaution of closing out accounts

"People just did not want to be holding these positions going into the meetings tomorrow," a Miami-based broker said, adding that players would be keeping an eye on a parallel meeting among Central American coffee producers that starts on April 5.

May coffee closed at 102.10 cents a pound, down 1.60 cents.-Reuters