MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, FEBRUARY 27, 1998 (05)
NYMEX
Crude Oil
Oil Shrugs Off Venezuela News
Reuters
A refusal by Venezuela to cut oil production to come into line with other members of the Organization of Petroleum Exporting Countries pressured oil prices in early dealings on Friday, but the market bounced back to close higher as traders shrugged off the news.
NYMEX crude futures Friday gained nine cents at $15.44 a barrel, climbing from a low of $15.21 as a flurry of technical buying and short-covering came in late in the session.
Before the closing kick, trading was just off Thursday's close of $15.35, down from the day's energetic opening that pushed April futures to $15.58 a barrel, the day's high.
OPEC news thrust the market upward at opening, but it fell on other developments such as Venezuela's reiteration it would not cut oil output by even a barrel.
The headline-driven market waited and reacted to OPEC news as they came. Traders were disappointed nothing was strong enough to counter the fundamental fact that there is an global oversupply of oil.
''This is the underlying thought that traders have to come back to after each potentially bulish headline gets past the initial emotional impact - and this thought, unlike the headlines, doesn't go away afer a few minutes or hours or days,'' said market watcher Tom Mooney of Southeast Energy Inc.
NYMEX crude futures opened on a positive tone as traders welcomed a statement from Indonesian Mines and Energy Minsiter Ida Bagus Sudjana, that the cartel's production quota could be lowered to stabilize the price of oil if all of its members agreed to it.
On Thursday, Indonesian Mines and Energy Minister Ida Bagus Sudjana, who is also OPEC's president, called for an emergency meeting of the cartel in an effort to boost oil prices, which have been hovering around 46-month lows.
Shortly before midday, the market pulled back on a statement by Venuezuela's Energy and Mines Minister Erwin Arrieta. He welcomed moves for an emergency meeting of OPEC to discuss falling oil prices, but stood by an earlier stand that Venezuela would not reduce its output. He would like the emergency meeting broadened to include non-OPEC producers as well.
"We won't reduce oil production by even one barrel," he said. Venezuela, known as OPEC's largest quota buster, pumped a record 3.35 million barrels per day in February, more than 700,000 barrels above its official quota.
That was a repeat of Venezuela's stand last week in response to a Saudi Arabian overture that an emergency meeting may be held provided quota busters adhered to their official ceilings.
OPEC raised its overall production ceiling in November by 10 percent to 27.5 million barrels per day, but current production exceeds 28 million BPD.
Saudi Arabia, the largest oil exporter, wants ''meaningful efforts'' of members to stick to their quotas and would see the cartel's March production figures first before making a decision on steps to address the oil situation.
On Friday, a Reuter source in the Gulf, reacting to Sudjana's call for an emergency meeting, said, ''There's nothing to it.''
Another report said that leading Saudi econonist Ihsan Bu-Hulaiga believed Saudi Arabia was not considering cutting its oil production to shore up low crude prices.
''For Saudi Arabia to cut production is unthinkable. It is very obvious from earlier official statements that Saudi Arabia is not even entertaining the idea,'' the source told Reuters.
A crude futures analyst said talk about the possibility of an OPEC meeting was boosting hopes in the market, but ''the stark fundamentals have to be dealt with, though,'' referring to the current oversupply.
Meanwhile, at the United Nations, a British-U.S. draft resolution that warns Iraq of ''the severest consequences'' if it breaks its promise to give U.N. arms inspectors unrestricted access may not be put to a vote until Tuesday.
Secretary-General Kofi Annan said he was delaying a trip to Washington next week to be in New York so he could join the consultations on the recent accord he signed in Baghdad, which the new resolution will endorse.
Among the council's permanent five members, France appears to support the document but Russia and China are still hesitating. All three apparently want to make sure the document does not automatically authorize force.
March heating oil closed .35 cent lower at 42.80 a gallon. March gasoline closed down .20 cent at 47.39 a gallon. Heating oil reached a high of 43.70 cents a gallon and gasoline 48.25 cents on short covering ahead of contract expiry on the day.
April heating oil was off .13 cent at 43.46 a gallon, gasoline was up .22 cent at $51.27.
IPE Brent crude closed firmer at $14.17 a barrel, up 14 cents, following NYMEX's late rally.
Natural Gas
U.S. SPOT GAS
U.S. March Spot Natural Gas Eases Ahead Of Weekend
Reuters
U.S. spot natural gas prices for the first two days of March turned a little softer Friday as bidweek nomination deadlines arrived and interest waned ahead of the weekend, industry sources said.
Cooler weather is forecast for most of the U.S. next week, with below-normal temperatures expected to reach the Southwest, Texas and southern plains by this weekend.
Prices at Henry Hub for March 1-2 were pegged mostly at $2.20-2.25, indicating a loss of about five cents from Thursday. For Saturday, prices were quoted around $2.20, while the baseload market hovered in the mid-$2.20s.
In the western Texas market, Permian prices for swing March gas were talked little changed at $2.08-2.10, while San Juan quotes for early March were also at $2.08-2.09.
On the West Coast, southern California border prices eased two cents to the mid-to-high $2.30s as demand weakened slightly from earlier in the week.
In the Midcontinent, March prices were firm in the mid-to-high teens, while Chicago city-gate tailed off to about $2.29-2.30.
In the East, where temperatures were still above-normal, New York city gate prices were talked at $2.43-2.46, off slightly from Thursday.
CANADA SPOT GAS
Unavailable
OIL & GAS REFERENCES
Charts
oilworld.com
oilworld.com
NYMEX
quotewatch.com
|
