MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, FEBRUARY 6, 1998 (3)
NYMEX
CRUDE OIL
Crude oil and petroleum-products futures settled moderately higher on Friday on reports that Iraq had contested parts of a United Nations plan to increase its oil-for-food sale. (See updated report on Iraq in International section og column)
March light sweet crude oil settled up $0.12 to $16.70.
Reports stated that the United Nations received a letter Friday afternoon from Iraq rejecting the latest oil-for-food proposal. U.N. Security Council will meet on the matter Monday. Iraq's envoy to the U.N., Nizar Hamdoon, had signaled a willingness to discuss the issue
The disputed elements of the proposal included the use of additional funds to finance U.N. monitoring of the sale, and plans for the U.N. humanitarian agencies to target aid to specific "vulnerable groups."
Meanwhile, Defense Secretary William Cohen said he is ordering dozens more warplanes into the Persian Gulf region as he moves to convince allies that the U.S. is planning a "substantial" strike against Iraq. Mr. Cohen, speaking with reporters en route to a weekend defense conference in Germany, said he planned to formally approve the package of strike and support aircraft within the next day or so.
March gasoline closed 0.80 cent a gallon higher at 51.16 cents and March heating oil rose 0.12 cent at 46.33 cents.
NATURAL GAS
Natural gas futures ended mixed Friday in a moderate session, with front months hit by a late wave of profit taking despite firmer weekend cash prices, market sources said.
March slipped 2.4 cents to close at $2.359 per million British thermal units after climbing on ACCESS to $2.435. April settled 1.6 cents lower at $2.366. Other months ended mixed.
"We saw some profit taking ahead of the weekend. It brings the technicals into question," said one Midwest trader, adding chartists were looking for a higher March close today to confirm yesterday's break to the upside.
While the technicals have looked bullish this week, fundamental traders stayed skeptical, citing ample storage and more mild weather ahead.
Forecasts next week still call for mostly above-normal U.S. temperatures. After a brief cooldown in the Northeast and Mid-Atlantic this weekend, more moderate weather is expected early next week. In the Southeast and Texas, cool temperatures this week should moderate by the weekend or early next week.
Chart traders agreed March's failure to close higher today tainted the technical picture. Key support was pegged at $2.18, with minor support seen in the $2.22-2.25 area. Further buying was likely at $2.03.
Resistance was seen at the ACCESS high of $2.435 and then in the $2.50 area, with more selling likely at prominent highs in the low-$2.70s.
In the cash Friday, Gulf Coast weekend quotes firmed a few cents to about the $2.30 area. Midcon pipes were up a nickel to the low-to-mid $2.20s. New York city gate gas was two cents higher in the mid-$2.50s, while Chicago gained a similar amount to the mid-$2.30s.
The NYMEX 12-month Henry Hub strip fell one cent to $2.446. NYMEX said an estimated 66,956 Hub contracts traded, down from Thursday's revised tally of 72,330.
OIL & GAS PRICE REFERENCES
Charts:
oilworld.com
oilworld.com
NYMEX Reference quotewatch.com
NORTH AMERICAN RIG COUNT
As of February 6th, the number of rigs exploring for oil and natural gas in Canada fell by five to 504 versus 408 one year ago.
The number of rigs exploring for oil and natural gas in the United States stood at 974, down 13 from the previous week, and 141 above the year-ago total of 833, Baker Hughes Inc. reported.
The number of rigs drilling on land fell 10 to 818, while rigs working offshore remained at 134. The number of rigs active in inland waters fell three to 22.
Among the individual states, the biggest changes occurred in Oklahoma, up 17, in Louisiana, down nine and Texas, up seven.
The Gulf of Mexico rig count remained at 133.
The number of rigs searching for gas fell by nine to 584, the number of rigs searching for oil rose four to 385, while the number of miscellaneous drilling projects remained at five.
There were 244 rigs drilling directionally, 68 drilling horizontally and 662 drilling vertically.
The weekly rig count reflects the number of rigs exploring for oil and gas, not those producing oil and gas.
For additional data, go here; bakerhughes.com
GULF OF MEXICO & ELSEWHERE
There were 172 rigs under contract in the Gulf of Mexico as of Feb. 6, up one from the previous week, Offshore Data Services said.
The utilization rate for rigs working in the Gulf, based on a total fleet of 177, was 97.2 percent.
The number of working rigs in the European/Mediterranean area fell by one to 107 rigs under contract out of a total fleet of 112, a utilization rate of 96.4 percent.
The worldwide rig count went up one to 584 out of a total fleet of 606, with a utilization rate of 96.4 percent.
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