DAILY REVIEW OF NATURAL GAS & CRUDE OIL PRICING - ALONG WITH RELATED NEWS / Part 3
CRUDE OIL
Index To Articles
11/11 14:30 Concern rises in Kuwait as Western diplomats leave
11/11 16:16 World Oil edges up as U.S. reinforces Gulf troops
11/11 17:09 NYMEX oil ends off highs, U.S. adds Gulf firepower
11/11 17:13 U.S. cash crude - Weak Texas grades baffle traders
11/11 17:22 U.S. foreign crude - Forcados heads for U.S. Gulf
11/11 17:26 North Sea Brent firms a cent in late U.S. trade
11/11 17:40 U.S. spot products-Mogas drops on pipeline freeze
11/11 21:34 U.S West Coast crude diffs flat, trade thin again
11/11 14:30 Concern rises in Kuwait as Western diplomats leave
KUWAIT, Nov 11 - Concern over a potential Iraqi threat grew in Kuwait on Wednesday after several Western embassies authorised the departure of non-essential staff and advised people staying behind to stock up on food and water.
But concern has not yet hit February's level when in a similar crisis residents bought gas masks, stockpiled basic goods and sealed rooms to serve as safe areas in case of Iraqi chemical weapons attacks.
Iraq's 1990 invasion of Kuwait led to the Gulf War in 1991.
Some 65 percent of Kuwait's population are foreigners, mainly from Asian and Arab countries.
Both the American and British embassies in Kuwait announced on Wednesday that some of their staff and all dependents were authorised to leave.
Canadian Ambassador Terence Colfer told Reuters that the some 2,000 Canadians in Kuwait were offered "friendly counsel and common sense tips".
"We have not yet reached the level of the British and the Americans but that could change very rapidly and we are very sensitive to what is going on and monitoring the situation," Colfer said.
The French community of some 600 people is due to hold a meeting on Friday with embassy officials to discuss the Iraq crisis and what precautionary measures might be needed.
The United States has a tested plan to evacuate its some 8,000 civilians in Kuwait. There is a similar plan to evacuate some European Union citizens.
Americans who are in charge of executing the U.S. plan are due to meet on Friday to discuss the situation.
The British embassy advisory to some 4,500 Britons in Kuwait said: "We advise against all non-essential travel to Kuwait. Non-essential British Embassy staff and their dependents have been authorised to leave, if they wish.
"In view of this, British nationals in Kuwait may wish to consider their own plans."
There are also some 550 British military personnel deployed at a Kuwaiti air base close to the border with Iraq, along with 12 Tornado warplanes which are on standby for possible action.
Britons who plan to stay on were told to "take sensible precautions and maintain a reasonable stock of food and water in the home".
The United States issued a similar statement earlier on Wednesday. "Private American citizens may want to consider departing the country," the statement said.
Similar messages in the previous standoff with Iraq in February caused alarm in Kuwait, which clearly backed military action against its former occupier.
The U.S. message said that although the possibility of Iraq launching chemical or biological weapons at its southern neighbour Kuwait was remote, "it cannot be excluded".
11/11 16:16 World Oil edges up as U.S. reinforces Gulf troops
LONDON, Nov 11 - Oil prices battered by steep losses under a torrent of excess supply recovered weakly on Wednesday after U.N. staff withdrew from Iraq in preparation for a possible U.S. military strike.
World marker Brent blend crude oil for December delivery settled seven cents higher at $12.11 a barrel, a tentative improvement following a loss of $1.23 late last week when prices fell precariously near to the 10-year lows seen in August.
The recovery was on the back of some short-covering following the withdrawal of U.N. weapons inspectors from Iraq in what a U.N. spokesman in Baghdad said was a precautionary safety measure.
But the market barely budged on news that the United States had ordered a second aircraft carrier to the Gulf and additional warplanes including F-117 stealth fighters as part of its troop buildup in the region.
"Much of the short-covering against the Iraq situation has been done. For now the market is looking for something more solid to go on -- like the first missile," a futures trader said.
And a later expression from Moscow of Russian opposition to any military attack on Iraq helped dampen bullish sentiment.
Iraqi oil exports of some 1.9 million barrels per day (bpd) under the current phase of the oil-for-food programme, which expires later this month would continue uninterrupted, U.N. special envoy to Iraq Prakash Shah said in Baghdad.
Oil analysts say the tensions over Iraq, which have simmered since Baghdad suspended cooperation with U.N. arms inspectors two weeks ago, have been factored into the price, which remains more than $6 below last year's average.
They point out that with oil stocks in industrialised nations at high levels, it would take a very big supply disruption to have any impact on prices given that producers have already taken out some 3.1 million bpd from the market so far this year without much improvement in price.
The International Energy Agency (IEA), the Western world's energy watchdog, said in its recent oil market report that commercial stocks in Organisation of Economic Cooperation and Development countries were 172 million barrels higher at end September than the same time last year.
The Organisation of the Petroleum Exporting Countries holds its biannual meeting in Vienna on November 25 amid signs its leading members are opposed to further production curbs. OPEC members have watched helplessly as the crude stockpile and falling demand has frustrated their efforts to raise prices by agreeing a 10 percent cut in production this year.
Venezuelan Energy Minsiter Erwin Arrieta reiterated on Wednesday that his country was not considering any new oil production cuts to shore up prices.
That view has been echoed by OPEC giant Saudi Arabia, whose minister Ali al-Naimi is likely to see Arrieta in Buenos Aires on Wednesday where both are attending climate talks. Arrieta said he may discuss market conditions with Naimi if the opportunity arose on the sidelines of the conference.
11/11 17:09 NYMEX oil ends off highs, U.S. adds Gulf firepower
NEW YORK, Nov 11 - NYMEX crude oil futures came off highs Wednesday and ended almost flat as the U.S. intensified a military buildup for a possible strike against Iraq and as U.N. personnel withdrew from Baghdad.
Traders said the market's retreat in afternoon trade signalled players were unwilling to bet that the U.S. would quickly launch a military strike against Iraq.
"Pressure seems to be building up toward an attack, but until it occurs, nobody is willing to buy heavily," said a Midwest trader for an oil company.
President Bill Clinton said in a Veterans Day speech that he was prepared to act with force, if needed, to end Iraq's defiance of U.N. arms inspectors.
But December crude, which had climbed 38 cents higher to $13.90 a barrel before he spoke at midday, retreated some after the speech.
"People were expecting some type of belligerent talk from Clinton," said the trader.
Other market players noted that, as the president's speech did not indicate any concrete military action, sellers reacted by selling off some positions.
After clinging to a gain of about 10 cents in the early afternoon, a wave of late selling hammered the December crude contract. It settled at $13.55, up three cents, after slipping as low as $13.53 near the close.
Heating oil futures pared down gains and ended at 37.92 cents a gallon, up 0.16 cent. The contract traded between 37.85/38.85 cents.
Gasoline futures weakened on news that Colonial Pipeline had frozen its November gasoline nominations as its line to northern markets was filled for the month.
The news helped push down cash gasoline prices for the Gulf Coast by a penny.
At the NYMEX, one trader said big trading houses led a sell-off on the news and the December contract ended at 40.54 cents a gallon, down 0.66 cent, just slightly above its day's low of 40.45 cents. In early trading, it hit a high of 41.80 cents.
Colonial Pipeline, the largest oil products pipeline in the country, extends from Houston to the northeast and includes a 1.2 million barrel-per-day gasoline line.
Earlier Wednesday, Clinton issued his warning to Iraqi President Saddam Hussein as 300 U.N. arms inspectors and relief workers began pulling out of Baghdad.
Clinton said he hoped the Iraqi leader would allow unfettered access to U.N. arms inspectors.
"We must be prepared to act if he does not," he said.
Later, the U.S. authorized the departure of non-essential embassy personnel in Israel and Kuwait.
The Pentagon, meanwhile, ordered 129 more warplanes, including B-52 bombers and stealth jet fighters, and 3,000 additional troops to the Gulf.
A U.S. battle group led by the carrier Eisenhower stationed in the Gulf is ready to attack without warning.
On Tuesday the carrier Enterprise was ordered to speed up its sailing so it can be in the Gulf by Nov. 23 instead of Nov. 26. The Enterprise is supposed to replace the Eisenhower.
Earlier, U.N. Secretary-General Kofi Annan decided to cut short his trip to North Africa because of the Iraq crisis, a U.N. spokesman said.
Through all the day's ramblings, Iraq remained defiant. Iraq sparked the latest crisis on Oct. 31, when it announced a decision to end cooperation with U.N. arms inspectors, who are charged with destroying Iraq's chemical and biological weapons.
Completion of the inspectors' job is crucial to the U.N. considering lifting sanctions imposed by the U.N. after it invaded Kuwait in 1990.
Despite the latest tension, however, the U.N.'s envoy to Iraq said that the oil-for-food program, under which Iraq is allowed to sell about 1.9 million barrels per day of oil, with proceeds used for humanitarian needs of Iraqi citizens, would continue.
A NYMEX trader said that was bearish for the oil markets.
"The current crisis has not changed anything," he said. "Market players are watching whether the supply of crude out of Iraq would go down. Until there is evidence that it will, there will be people willing to sell off crude."
11/11 17:13 U.S. cash crude - Weak Texas grades baffle traders
NEW YORK, Nov 11 - The domestic cash crude oil market was mostly steady, but traders said they were baffled by the weakness in Texas grades on Wednesday.
Crude oil futures, which began trading on a strong note, petered out by the afternoon, to settle a mere three cents stronger at $13.55 a barrel on the New York Mercantile Exchange.
With exchange for physicals unchanged at plus 3-4 cents, traders said December cash West Texas Intermediate/Cushing was valued around $13.55-13.60 a barrel.
The December-January WTI spread was mostly steady on Wednesday, ranging between minus 25-22 cents.
As a result, postings-related WTI/Cushing was also steady, around $2.32-2.34, traders said.
West Texas Sour/Midland, the main U.S. sour crude, traded down to $1.78 under benchmark WTI/Cushing, but also traded at minus $1.75, minus $1.74 and minus $1.73. WTS was talked about eight cents weaker than Tuesday's range at $1.80-1.75 under WTI/Cushing, traders said, without being able to explain the grade's weakness.
"There might have been some trader activity," said one cash trader, sounding perplexed as he noted having seen some buying interest in the grade on Wednesday.
WTI/Midland also lost some ground, with deals reported done at minus 42 cents and minus 40 cents. Midland was talked at 45-42 cents under benchmark WTI/Cushing, about seven cents weaker than
Tuesday.
Light Louisiana Sweet/St. James was heard done at minus 45 cents, minus 44 cents and minus 43 cents on Wednesday, but remained firmly in its range of 45-42 cents under WTI/Cushing.
Heavy Louisiana Sweet/Empire was not heard sold on Wednesday, and was notionally valued at 66-57 cents under WTI/Cushing, traders said.
Activity was slight in the offshore sour crudes as well. Eugene Island crude was talked in a wide range of $1.45-1.25 under WTI/Cushing, as was Bonito Sour, at minus $1.15-1.05.
11/11 17:22 U.S. foreign crude - Forcados heads for U.S. Gulf
NEW YORK, Nov 11- The U.S. remained awash in foreign crude on Wednesday, with a backlog of both sweet and sour grades keeping sentiment in the market decidedly bearish.
WEST AFRICAN, NORTH SEA
-- New York and London crude oil futures both crept higher on Wednesday, leaving the spread between the two markets at $1.48 a barrel, more than enough to make incremental crude sales from the North Sea to the U.S profitable.
-- Crude traders have taken the opportunity to offer a flood of North Sea Brent into the Gulf Coast, including a million barrels being shown by a player at January West Texas Intermediate (WTI) less $1.05 for mid-December arrival. On top of that, two other traders are also said to be offering December North Sea Brent around the same level.
-- West African crudes also remain well-supplied. A U.S. major oil company bought an LR2 of Nigerian Forcados on Tuesday at parity to Dated North Sea Brent, and plans to bring the barrels into the U.S. Gulf Coast.
Another trader is said to be offering a Forcados cargo loading around 20-21 November at 75 cents under WTI into the U.S. Gulf Coast. But traders are hesitant to chase Forcados cargoes because of recent interruptions to loadings at Shell's Nigerian terminal.
"It's going to take some kind of discount to force Forcados in here," one trader said Wednesday, adding that there were more than enough other West African crudes to choose from, including Qua Iboe and Bonny Light.
-- Indeed, one Bonny Light cargo loading 16-17 November and destined for the U.S. was said to have sold on Tuesday at the equivalent of about North Sea Dated Brent plus five cents a barrel.
-- Also, a cargo of Angolan Cabinda loading around 26-27 November is being shown in the Gulf Coast at January WTI less $1.35 a barrel, traders said Wednesday
LATAM - VENEZUELA, COLOMBIA, ECUADOR, CHILE, MEXICO
-- Latin American traders said Venezuela has nearly sold out of all its December program for light crudes, with just one or two cargoes of sour Mesa/Furrial and one sweet Santa Barbara cargo still available. On Tuesday, Mesa sold at about $2.73 under WTI, or about five cents weaker than last week.
The last Santa Barbara trade was reported at $1.65 under WTI.
-- U.S. traders said Wednesday there was no shortage of Colombia's Cusiana in the market, with the light sweet crude assessed around $1.65/1.50 under WTI.
-- Mexico's Pemex said on Wednesday it produced 3.03 million barrels per day (bpd) of crude in the third quarter, slightly lower than the 3.07 million bpd it produced during the same period a year ago. The state-owned oil company also said third quarter crude exports averaged 1.64 million bpd, compared to 1.79 million bpd during last year's third quarter.
-- There was no news of repairs to Colombia's second largest pipeline, the Cano Limon-Covenas line, which was bombed on Tuesday for the 70th time this year, forcing all crude pumping to be halted.
IRAQ
-- Iraq's sour Basrah Light is making its way into the Gulf Coast as well, with offers for early January barrels said to be at WTI less $2.10 a barrel.
-- Meanwhile, tensions between the U.S. and Iraq continue to escalate, with President Clinton warning Baghdad that the U.S. was prepared to act with force if Iraq doesn't comply with U.N. arms inspectors. Backing his statements, the U.S. ordered 129 warplanes and over 3,000 troops to the Gulf.
In anticipation of possible U.S. strikes, the U.N. has withdrawn all its arms inspectors, though some staff remained to monitor the "oil-for-food" program.
11/11 17:26 North Sea Brent firms a cent in late U.S. trade
NEW YORK, Nov 11 - December North Sea Brent crept a cent higher in late U.S. trade on Wednesday.
December Brent was valued at $12.12 a barrel in the aftermarket, or a cent higher than its close on the International Petroleum Exchange earlier in the day. January North Sea Brent was placed at $12.49 a barrel, after a 200 lot partial cargo traded at $12.49 and a 100 lot partial cargo traded at $12.50 a barrel.
January North Sea Brent closed at $12.48 a barrel on the International Petroleum Exchange.
Meanwhile, one full cargo of December cash Brent changed hands on Wednesday at $12.12 a barrel. Also, traders said a 100 lot December partial cargo was done at $12.14 a barrel.
They added that the December-January spread traded twice at minus 34 cents a barrel.
11/11 17:40 U.S. spot products-Mogas drops on pipeline freeze
NEW YORK, Nov 11 - A freeze on gasoline nominations on prompt November gasoline on the Colonial Pipeline dragged down both U.S. Gulf Coast gasoline differentials and the NYMEX late Wednesday, traders said.
Gulf Coast gasoline differentials shed a penny which lead to New York Harbor levels slipping 0.20 cent on prompt supplies and a penny on December barrels.
Chicago gasoline however ended with the greatest losses, of around two cents, partly on the back of the losses in the Gulf, but also as it extended a price correction, traders said.
The Colonial Pipeline told shippers that nominations for remaining November cycles (32 and 33) showed rapid recent growth due to market conditions, and it had frozen Line 1 gasoline nominations for the 32 cycle and was monitoring the 33 cycle.
One analyst said "I think there's a better than 50/50 chance that they will soon allocate, or prorate, the distillate line, as they did in 1997 and other prior years". "The freeze shouldn't be a huge surprise, as refineries are finally back up to near capacity and, up to now, the market has been paying them to maximize gasoline instead of some distillates. The latter may change now to a maximum distillate mode, which will likely precipitate that proration," he added.
Gasoline futures also took a cue from the bearish cash market although one NYMEX trader said the fall was directly due to big trading house selling.
"The (futures) market is tired of waiting for something to happen with Iraq," said a source.
December gasoline on the NYMEX settled down 0.66 cent per gallon at 40.54 cents, defying the upward trend crude and heating were taking on the Iraq tensions.
December crude settled three cents per barrel higher at $13.55 while heating oil closed 0.16 cent per gallon firmer at 37.92.
But part of the fall on gasoline futures was also due to bearish stock data, some sources said.
The American Petroleum Institute (API) report late Tuesday said there was an unexpected gasoline build of 1.6 million barrels to 202 million barrels.
The API also said crude stocks rose 1.9 million to 314.8 million barrels, while distillates drew 332,000 barrels to 147 million barrels.
GULF COAST
The gasoline freeze on the Colonial Pipeline dominated the market in the afternoon, with few sellers with November supplies turning aggressive and bringing down regular gradedifferentials by a penny.
Prompt regular conventional M4 gasoline on the back 32 cycle traded at a 7.00 cents discount from the morning quotes at 5.75 to 5.95 cents discount, and the anys at 6.40 cents from 5.85/5.65 cents under.
But the freeze stymied talk and trade on the rest of the grades and the market, traders said.
"It dried up the market..nobody is doing anything else," a trader said.
One analyst said, "The 32 cycle gasoline nomination freeze will not affect a lot of barrels, as most everything that wants to move has already been nominated - but a few sellers are left looking for buyers who not only want extra product, but also have the space to move it".
Premium conventional V4 grades were pegged notionally at a 3.10 cent regrade to the M4, the reformulated regular A4 at a 2.75 cents discount to the print.
On the distillates, prompt low sulphur diesel was pegged steady at 1.50/1.40 cent under and heating oil at a 2.75/2.65 cents discount.
Jet fuel which schedules on the back 32 cycle, traded steady on the 54-grade at a 1.00 cent over the screen and the 55-grade pegged at a 1.00 cent regrade.
MIDCONTINENT
Chicago gasoline and diesel differentials extended their weaker tone from the morning, aided by drop in the Gulf gasoline.
"But both were overpriced and had room to come off," a trader said.
Gasoline took the brunt of the fall, crashing by around 2.0 cents to a 4.75/4.50 cents discount, the anys at 5.00/4.75 cent and ratable December traded at 5.50 cents down.
Low sulphur diesel in Chicago fell 1.50 cent to a 2.50 cents premium on the prompt second cycle, 1.50 premium on the third and 1.00 cent down on the December ratable.
Group Three's early week fall found a momentary floor with more buyers emerging although some traders were still bearish amid hefty pipeline supplies.
Low sulphur diesel in the Group was pegged steady at flat to 0.25 cent premium while regular gasoline traded at 4.75 and 4.95 cents below the print compared to previous day's quotes at 5.00/4.90 cents below the print.
NEW YORK HARBOR
Harbor differentials slipped on weaker Gulf differentials that cratered on news of the Colonial Pipeline freezing prompt gasoline allocations, traders said.
Prompt gasoline differentials slipped about 0.20 cent to 2.25/2.00 cents under for material by November 15, and slipped about a penny to over 4.00 cents under the screen for December supplies.
Heating oil differentials, strong all week, slipped slightly on market talk of a possible looming chance of a freeze on the distillates section of the pipeline.
But heat was still comparitively strong, about 0.60 cent higher than last week, at 0.60/0.40 under the screen, with trades at 0.50 cent under. Sellers were still holding supplies to store to take advantage of the strong futures contango, traders said.
Low sulphur diesel was unchanged in thin trade at 0.15/0.25 cent over the December screen, with only Laurel pipeline trade heard at 0.30 cent over the print.
Jet fuel 54-grade firmed on pipeline restrictions in the Northeast to 5.60/5.80 while 55-grade was pegged at 6.50/6.75 cents over the screen.
Prompt conventional M5-gasoline differentials strengthened slightly with supplies by Nov. 15 pegged at 1.75/1.50 cents under the screen, and the anys at 2.25/2.40 cents under.
Regular RFG A5 grade was steady at a 0.35/0.50 cent premium, A9 at a 1.50 cents premium, and premium grade D5 at a 2.25/2.50 cents premium.
11/11 21:34 U.S West Coast crude diffs flat, trade thin again
LOS ANGELES, Nov 11 - U.S. West Coast crude oil differentials were flat again Wednesday with no fresh deals reported.
Business remained slow because traders were returning from the American Petroleum Institute's (API) annual meeting which many players attended in San Francisco.
West Coast refinery buyers were said to be busy with calculations aimed at avoiding large year-end inventories which could result in large tax liabilities.
Dealers said it might take some time for refineries to assess their remaining supply needs for the year and that could further dampen trading until the end of the week.
The benchmark West Texas Intermediate (WTI) crude rose slightly for a second straight on further Middle East tensions.
The discount of Alaska North Slope (ANS) crude for delivery on the West Coast remains at $1.37 a barrel, so the notional spot price for ANS edged up to $12.18/12.34 a barrel, a rise of some nine cents.
|
