MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING WED., APRIL 22, 1998 (2)
OIL & GAS, Con't
Oil Prices Slip on U.S. Stock Rise
LONDON, April 22 - Oil prices retreated on Wednesday on the back of hefty increases in U.S. crude and product stocks, dealers said.
North Sea benchmark Brent crude for June delivery traded 41 cents down at $14.10 a barrel at the close on the London energy futures market.
American Petroleum Industry stock figures showed a rise of 3.29 million barrels in crude inventories and an increase of 1.35 million barrels of gasoline.
U.S. traders had earlier predicted crude stocks would rise by 2.2 barrels and gasoline would fall by one million barrels. Energy Information Agency data issued later confirmed the broad trend.
'The market is down on the U.S stocks figures. Volumes are thin with the lack of fresh news,'' said one broker.
Further downward price pressure came with word from Norway that it was
awaiting signs of reductions in output by OPEC and non-OPEC oil producers before deciding when it would go ahead with its own planned cuts.
Norway, the world's second largest crude exporter after Saudi Arabia, announced in early April that it would reduce its output by around three percent or 100,000 barrels per day (bpd), to try and help prop up sagging prices.
Oil producers last month announced output cuts effective until the end of the year in the international deal to cut global production by two percent and reduce oversupply on world markets.
Prices have risen about $2 per barrel, or 15 percent, since touching a nine-year low last month, but analysts say the cuts are insufficient to wipe out the current supply glut.
Producers have seen Brent average a disastrous $4.75 a barrel less so far this year than in 1997, cutting export earnings for Organisation of the Petroleum Exporting Countries members by some $8 billion in the first quarter of 1998.
Recent support for the market has come from verbal sparring between Iraq and the United States in a long-running dispute over U.N. weapons inspections.
In the latest exchange, Iraq swiftly rejected the results of a London conference aimed at speeding up the implementation of an expanded deal with the United Nations allowing Baghdad more oil sales to buy humanitarian supplies.
The official Iraqi news agency INA quoted an information ministry spokesman as saying that the two-day meeting which ended on Tuesday was aimed at keeping harsh U.N. sanctions against his country dragging on.
''The Iraq situation is helping keep the market in a tight range,'' said Christopher Bellew, energy futures broker and director of brokerage at Prudential Bache in London.
He added that without the Iraqi tension Brent could sink towards $13.90.
NYMEX Crude, Products End Lower On Stocks Build
NEW YORK, April 22 - NYMEX crude oil and refined product futures dropped Wednesday amid builds in stock inventories in the past week, spurring sell-offs following expiration of the May contract on Tuesday, traders said.
''It was a corrective day,'' said Andrew Lebow of E.D. & F. Man International Inc., adding that gasoline was ''shaken up'' by the big build in stock inventory, defying traders and analysts' expectations.
June crude settled at $15.54 a barrel, off 44 cents. Crude reached a high of $15.98, but failed to gather support, quickly pulling back.
May gasoline lost 2.07 cent at 50.61 cents a gallon on the inventory data. The drop came amid reports of record demand for the product in the coming driving season. But gasoline stocks are brimming in storage tanks, analysts say.
May heating oil dropped 0.98 cent at 43.06 cents a gallon.
The American Petroleum Institute, the industry group, reported late Tuesday an increase in gasoline stocks for the week ending April 17 of 1.351 million barrels due to rising imports, against forecasts of a 1.0 million barrel draw.
API also reported a build in crude stocks to 3.3 million barrels against lower forecasts of around 2.2 million barrels and an increase of 111,000 barrels in distillates, reversing expectations of a 500,000 barrel increase.
The Department of Energy released Wednesday morning its own stock inventory statistics showing a bigger build in crude at 5.0 million barrels, a smaller build in gasoline at 800,000 barrels. It put distillates stocks unchanged from the previous week.
A big contango -- a situation in which prices are higher in the succeeding delivery months than in the nearest delivery month -- also contributed to early weakness of the June contract, Lebow said.
The July and August crude contracts both closed up 42 cents at $15.91 and $16.18, respectively.
''There was also a strong correction on gas cracks and that contributed to the market sell-off'' Lebow said.
At the close on Tuesday, the June gasoline-to-crude crack spread was $6.15 a barrel. As of 1334 EDT/1734 GMT Wednesday, the gas crack had fallen to $5.74 and then further weakened to $5.72 at the close.
In London, IPE Brent futures plunged through support in late trade Wednesday to fell through fresh lows for the day, with the June contract finishing 41 cents down at $14.10 a barrel.
On other developments, Sun Co Inc. said Wednesday it has delayed the restart of its Girard Point 68,000 barrel-per-day cat cracker at its Philadelphia refinery due to problems.
Sun spokesman Bud Davies said Sun was still encountering difficulties bringing the unit back on line.
''We have identified the problems but are not willing to disclose them,'' he said.
Sun did not have a firm date when the unit would be restarted. The unit was shut late Tuesday due to a regional power failure and was previously scheduled to come back on last Wednesday.
Earlier Wednesday, Norway said it was awaiting signs of reductions in oil output by OPEC and non-OPEC oil producers involved in the Riyadh pact before deciding when it would go ahead with its own planned cuts.
Norway, the second largest crude exporter after Saudi Arabia, said in early April that it would reduce its output by around 3.0 percent or 100,000 barrels per day (bpd) to help prop up sagging oil prices.
The director-general of Norway's Oil and Energy Ministry, Tore Sandvold, told Reuters he hoped for for a decision ''within a few days'' and that the earliest Norway could implement the planned reduction would be May 1.
U.S. Cash Crudes Steady, LLS Stays Strong
NEW YORK, April 22 - U.S. cash crude differentials were steady to slightly stronger on Wednesday morning as cash crude oil traders began squaring books before the end of trade off May.
The NYMEX May contract expired on Tuesday.
Light Louisiana Sweet/St. James gained strength again on Wednesday, showing offers as strong as 60 cents below West Texas Intermediate / Cushing. This is about 20 cents stronger than Monday's differentials.
Outright prices for cash crudes, except for LLS, were down on Wednesday because of the 13-cent drop in the June NYMEX futures contract. The June contract at 1119 EDT/1519 GMT was down to $15.85 per barrel.
With the May/June spread talked both sides of minus 55 cents and the exchange for premium talked around five cents, WTI/Cushing was talked in a range of $15.35/$15.40 per barrel.
One trader said that two cargoes of LLS were not delivered into the Capline Pipeline, but this could not be confirmed. He gave it as a reason to explain the strengtening of LLS. Other traders said the rise of LLS differentials was caused by short-covering and by profit-taking once the buying interest began to show late Monday and early Tuesday.
Postings-related WTI/Cushing values were steady on Wednesday, talked either side of $1.80 over WTI/Cushing.
West Texas Intermediate/Midland was done at 36 cents under WTI/Cushing as well as 37 cents under.
West Texas Sour/Midland was done Wednesday at $2.22 under and $2.20 under WTI/Cushing, a few cents weaker than on Tuesday.
NYMEX Hub Natural Gas Bounces Off Highs Early With Cash
NEW YORK, April 22 - NYMEX Hub natural gas futures mildly retreated from earlier highs on Wednesday morning as traders snatched up some profits but remained fairly cautious ahead of this afternoon's storage data, industry sources said.
''It's kind of meandering around. Funds are just taking some profits,'' one trader said.
At 1124 EDT, May was off 1.6 cents at $2.545 per mmBtu after retesting the $2.585 high. June slipped 0.8 cent to $2.605, while other deferred months were on either side of unchanged.
Similarly in the cash market, prices at Henry Hub were recently quoted at $2.51, off slightly from earlier trades at $2.54 but still up about five cents from Tuesday's levels. New York city-gate prices were talked in the mid-$2.70s.
Technically, minor resistance was now seen at the top of the trendline at $2.585. Next resistance was pegged around $2.60, but most traders were seeing major resistance at $2.63 and then at the $2.725 contract high. Support was now seen around $2.53, and then at $2.465, $2.435 and the $2.33 double bottom.
Injection estimates for today's American Gas Association storage report range from 14 bcf to 50 bcf, with most around 32 bcf. These estimates are compared with a draw of seven bcf a year ago and an injection of 22 bcf a week ago.
Forecasts for late this week are calling for slightly above-normal temperatures across the Northeast and upper Midwest, with much warmer weather expected to follow in the Chicago area on Sunday and Monday. Southwestern temperatures are expected to cool to a few degrees below normal by week's end.
On KCBT, May futures slipped 0.8 cent to $2.45.
U.S. Spot Natural Gas Prices Soften From Earlier Highs
NEW YORK, April 22 - U.S. spot natural gas prices tacked on significant gains early but prices quickly retreated by late morning in tandem with the abating futures market, industry sources said Wednesday.
Cash prices at Henry Hub surged to a high of $2.57 per mmBtu, but by late morning prices were down in the high-$2.40s, still up a few cents from yesterday.
In the Midcontinent, gas traded up to about $2.42 but then followed Gulf values lower to the high-$2.30s. Chicago city-gate was pegged mostly in the high-$2.50s, though late deals were reported done as low as $2.51.
In the West, where cooler weather was approaching, southern California border prices rose an average of five cents to about $2.65-2.66.
Permian prices also turned higher early to about $2.37 before spiraling back into the low-$2.30s by late morning. San Juan values similarly firmed to the high-$2.20s and then reversed to about $2.23-2.24.
El Paso said it has scheduled to shut down one of three compressors at its Bondad station on Thursday morning for four hours, starting at 0900 MDT.
In the Northeast, New York city-gate prices jumped early into the low-$2.80s, but prices were then pressured into the low-$2.70s. Appalachian values on Columbia were up on average of four cents to about $2.65.
Injection estimates for today's American Gas Association storage report ranged from 14 bcf to 50 bcf, versus a draw of seven bcf a year ago and an injection of 22 bcf a week ago. The bulk of the estimates hovered around 32 bcf.
Canada Spot NatGas Prices Ease On Strong Supply
CALGARY, April 22 - Canadian spot natural gas prices traded mostly lower on Wednesday as ample field supply pushed line pack on Alberta's main pipeline system above its target volume, traders said.
The NOVA intra-Alberta pipeline system was about 300 million cubic feet a day above its target line pack as field receipts remained healthy in the province and producers cut back storage withdrawals, a Calgary based marketing source said.
''There was only a net injection of 86 million (cubic feet) a day yesterday. It's telling us that producers don't want to inject at these prices -- they'd rather sell into the market,'' the source said, adding he expected spot prices to stay in the C$2.20-2.30 range over the next week.
Spot gas at the AECO storage hub in Alberta was quoted at C$2.22/2.23 per gigajoule on Wednesday, down from C$2.28 on Tuesday. Gas for May delivery sank by about five cents on the day to C$2.23/2.24 per GJ.
British Columbia gas was also softer, with Huntingdon-Sumas supply in the high US$1.80s per million British thermal units, down from about US$1.95 a day earlier.
Prices rose in the east, however, despite a sharp drop in the NYMEX May futures contract, the region's key price indicator. Gas at Niagara was discussed in the high US$2.60s per mmBtu, up from about US$2.60 on Tuesday.
Con't next page (message) |
