MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, MARCH 1, 1998 (3)
FEATURE STORY
Versatile Colt
Calgary Sun
For The Colt Companies, business isn't just about building hydrocarbon process facilities: It's about building relationships.
As Alberta's largest engineering, design and construction firm, Colt has had a hand in many of the province's most complex energy industry projects.
From the the massive Syncrude oilsands plant outside Fort McMurray to gas processing, heavy oil and pipeline facilities, Colt has grown up alongside Alberta's oilpatch institutions.
The firm, based in Calgary's southwest, was launched in 1973 in an office over a welding shop in Edmonton with two employees.
Since then, it has grown steadily to 2,000 employees, with offices in Edmonton, Sarnia and Toronto.
Company president John Read credits that growth to the caliber of Colt's staff and their ability to move with the changing fortunes of the hydrocarbon processing industry.
But changing gears so quickly demands not only a familiarity with all facets of the industry, but also the ability to meet a client's needs.
"It's a people-driven business, built on our people doing good work," Read says.
That philosophy is serving Colt well today, as the hydrocarbons industry tries to trim costs by outsourcing its engineering work.
"Outsourcing has meant more opportunities for companies like us," Read says. "We think we've done a good job in building long-term relationships with our clients and staff."
FEATURE STORY
U.S. Oil Group Wants Energy Laws,Regulations Eased
The United States should ease its current energy laws and regulations, particularly those protecting the environment, to attract foreign investment for oil and natural gas exploration, an energy trade group urged on Monday.
''Our policy makers must revisit outdated and misguided laws and regulations that make the (U.S. oil and gas) industry less attractive for global capital than other destinations,'' the Independent Petroleum Association of America (IPAA) said.
The group's comments were in response to the Department of Energy's proposed national energy strategy.
The IPAA pointed out that a recent study of 99 countries showed that the United States ranked 31st as having the least political and business risk in the petroleum industry.
''Our poor showing is primarily because of environmental activism, restrictions on drilling, and the fact that we apply new rules retroactively from time-to-time,'' the group said.
In order for the U.S. to move up in the ranks, the IPAA said there should more emphasis on improving environmental regulation to encourage energy exploration.
''Given the maturity of most U.S. producing basins and the perception that in the future we will be producing smaller fields, we must provide an environment that is at least as attractive to capital than our competitors offer in other countries,'' the group said.
Separately, the IPAA said it supports the Clinton administration's plan not to sell more crude from the Strategic Petroleum Reserve to raise money for budgetary purposes. The group is worried that selling SPR oil will further push down crude prices and hurt small producers.
The group also said the administration should consider expanding the current storage capacity of the reserve and stock enough oil equal to a 90-day supply.
''A period of low prices, like the one we are now experiencing, is the perfect time for the government to buy reserves rather than sell them,'' the IPAA said.
FEATURE STORY
OPEC Ministers Could MeetMarch 16-Kuwait
Kuwait called on Monday on OPEC member states to cut overproduction to help boost world oil prices and said OPEC ministers might hold an expanded meeting later in March.
Oil Minister Isa al-Mazidi told reporters OPEC's March 16 ministerial monitoring committee meeting in Vienna ''could coincide with an expanded meeting by all ministers member in the Organisation (of Petroleum Exporting Countries).
''Until now I have not received an invitation...but (such an expanded meeting) is not ruled out,'' added Mazidi before flying to Bahrain to attend the inauguration of a urea plant owned by the Gulf Petrochemicals Industries Co which is owned by Kuwait, Saudi Arabia and Bahrain.
Mazidi said contacts were underway to convene an expanded OPEC ministerial meeting ''and I have contacted and exchanged views with several OPEC ministers.
''We of course welcome any efforts by the Organisation and by members states to meet to put an end to falling world oil prices'' which are close to four-year lows.
The next formal full OPEC ministerial gathering is set for June.
Kuwait, which has an OPEC quota of 2.19 million barrels per day (bpd), is a member of the monitoring committee.
When asked about steps needed to boost oil prices, Mazidi said: ''The correct measure would be for OPEC members to abide by their quotas and not exceed them.''
Venezuela, the cartel's largest overproducer in volume terms, said on Friday it would not cut its output by even one barrel. It pumped a record 3.4 million bpd in February, over 700,000 barrels above its official quota.
Non-OPEC members should also ''cut their production to safeguard world oil prices at moderate levels,'' Mazidi added.
He said a date had not been set yet for a meeting by Gulf Cooperation Council (GCC) oil ministers to discuss market conditions and measures needed to boost prices.
Kuwait had earlier welcomed a call by non-OPEC Oman to hold such a meeting. OPEC members Saudi Arabia, Kuwait, United Arab Emirates and Qatar are members of the GCC alliance along with small, independent producers Oman and Bahrain.
Mazidi on January 25 said Kuwait had not sounded the alarm bell as the average price for Kuwaiti oil exports was only $1 below a budgeted $13 a barrel.
On Monday he refused to say if Kuwait had changed position now that the average price for Kuwaiti oil exports had dropped by more than $2 below budget projections.
''All countries see that weak prices affect them... Please let me be clear in my response,'' he said when pressed to comment on the drop in Kuwait's main source of income.
In line with a cabinet decision, Kuwait's Finance Ministry has asked state bodies to cut expenditure by 25 percent for the remainder of the 1997/98 (July-June) fiscal year in view of falling world oil prices.
OIL & GAS
WORLD
Oil Hovers Above $14, Waits For Saudi Word
Oil prices hovered just above $14 a barrel on Monday as traders waited to see if OPEC kingpin Saudi Arabia would heed calls for an emergency meeting of the cartel to discuss a glut in world oil supplies.
International benchmark Brent blend was trading three cents down at $14.14 a barrel at 1748 GMT -- more than $5 below the average price for last year and some $11 below a post-Gulf War peak hit about 16-months ago.
Indonesian Mines and Energy Minister and OPEC President Ida Bagus Sudjana last week called for an emergency meeting to discuss falling prices.
All members of the Organisation of the Petroleum Exporting Countries have been approached to see if they would support emergency talks following a scheduled ministerial monitoring committee scheduled for March 16 in Vienna.
But a Gulf source said Saudi Arabia was still waiting to see what OPEC would propose for any such meeting before it announced its response.
Gulf heavyweights Saudi Arabia, Iran and Kuwait in recent days have called on OPEC members to cut overproduction.
But Venezuela, considered the group's leading violator of quotas, on Friday refused to cut oil output by even one barrel.
Some dealers doubted Saudi Arabia would agree to take action to support prices without cast-iron commitments by quota-busters to stick to their allocations.
''I see nothing to suggest the Saudis will cut their output...nor anything to suggest the Venezuelans will either,'' said Christopher Bellew, an energy futures trader and director of brokerage of Prudential-Bache in London.
The current oil price weakness is partly due to OPEC's decision in November to raise its overall output ceiling by 10 percent to 27.5 million bpd. But early estimates for February show quota-cheating has already taken output to more than one million barrels per day higher.
Iraqi exports under the third round of the oil-for-food agreement with the United Nations resumed in January and the U.N. Security Council has approved an increase in sales to $5.2 billion every six months from $2 billion.
Meanwhile global demand has been crimped by the Asian economic crisis and a mild northern hemisphere winter.
Unable to soak up extra barrels, the international oil market has crumpled under the strain.
Without a rescue attempt by OPEC, all the fundamentals in the market point to further price falls, traders said.
"Fundamentally the market is still pointing down," said Bellew.
NYMEX
Crude Oil
Crude Dips As OPEC Debates Special Meeting
Crude oil futures closed lower in thin trade Monday with no clear sign on whether OPEC producers would meet to discuss a possible cut in oil exports.
The market also saw some bearish pressure on expectations that the United Nations Security Council will adopt a resolution warning Iraq of ''severest consequences'' if it again bars weapons inspectors from suspect sites. An official vote on that resolution is expected Monday evening.
April light, sweet crude oil futures settled at $15.34 a barrel, down 10 cents from Friday. April gasoline futures fell 0.44 cent to end at 50.83 cents a gallon and April heating oil shed 0.54 cent to finish at 42.92 cents a gallon.
Market players remained reluctant to take fresh positions because of fears that OPEC producers may hold an emergency meeting to discuss a cut in exports to boost sagging crude oil prices. ''We are going to continue to trade in a range until we know whether OPEC will meet or not,'' said Nauman Barakat, a trader at Prudential Bache. ''If they don't meet, we will resume our path'' to lower prices, Barakat said. ''But if they do, this market will run.''
April crude reached a low of $15.32 a barrel Monday, just above the four-year low of $15.31 reached last week. The contract had moved higher on the opening, helped by a joint statement from Saudi Arabia and Iran that they may act to support oil prices.
However, opposition from other producers, notably Venezuela, has cast doubts that cuts could be undertaken.
Refined product futures remained weak because of soft current demand and the relatively ample supplies, according to traders. Trading in the April product futures appeared choppy Monday following the expiration of the March contracts on Friday.
Few players appeared hopeful that heating oil prices would rebound in the near term as the winter heating season in the key-demand U.S. Northeast waned.
But traders continued to eye the gasoline market, which traditionally peaks in the spring months as players move to secure supplies ahead of the heavy demand summer driving months.
Natural Gas
Natural Gas Ends Flat To Down, Still In Range
Natural gas futures ended flat to down slightly Monday in a sluggish session, with front months lightly pressured by technical selling after an early rally attempt stalled, industry sources said.
April slipped 2.9 cents to close at $2.292 after stalling early at $2.355. May ended 2.2 cents lower at $2.317. Other months finished flat to down 1.9 cents.
''The market was hyped early on the (cold) weather, but it couldn't hold. Once the ($2.35-2.355 April) gap was filled, it died,'' said one East Coast trader, adding cash was strong early but tailed off by late morning.
Traders said more supportive forecasts this week were countered by a significant storage surplus and the upcoming end of winter later this month.
Forecasts this week call for normal to below-normal temperatures in the Midwest, Texas and the Southeast. The Mid-Atlantic and Northeast mostly should remain slightly above seasonal for the period though brief dips below normal are possible.
Chart traders agreed April was stuck in a range, with a close above key resistance at $2.355 needed to turn sentiment bullish. Next resistance was seen at the February high of $2.43 and then at the contract high of $2.46.
Minor April support was seen in the $2.25-2.26 area, with major buying expected at $2.19. A break of that level could drive prices to the $2.06 area. Further buying should emerge at the January 13 prominent low of $2.00.
In the cash Monday, Gulf Coast quotes on average were up three cents to the low-to-mid $2.20s. Midcon pipes firmed almost a nickel to about the $2.20 area. Gas at the New York city gate gained more than five cents to the low-$2.50s, while Chicago city gate was up the same to the mid-$2.30s.
The NYMEX 12-month Henry Hub strip fell 1.1 cents to $2.429. NYMEX said an estimated 37,306 Hub contracts traded, up slightly from Friday's revised tally of 35,689. |
