AROUND THE KORNER WITH OIL & GAS PRICING
Venezuela's Arrieta Says Oil Cuts Not On Agenda
Venezuelan Oil Minister Erwin Arrieta said further oil cuts were not on the agenda for Friday's meeting here with his counterparts from Mexico and Saudi Arabia.
''We don't need to discuss more cuts here. We have an open agenda and we'll discuss a broad range of other issues,'' Arrieta said after arriving from Caracas.
Arrieta said he had not yet conferred with Saudi Arabia's Oil Minister Ali al-Naimi, who arrived in Cancun earlier in the day. Arrieta expected to discuss with Naimi recent talks the Saudi had held with other Gulf oil ministers in Kuwait.
According to a source close to the Cancun talks, ministers expect the Saudis to raise the possibility of making, together with other Gulf producers, further oil cuts, if necessary -- as long as the Mexicans and the Venezuelans agree to maintain production at current levels.
Arrieta said such a proposal had not been put to him directly.
The Cancun talks are due to begin at 10:00 a.m. local time (1100 EDT/1500 GMT) and are hosted by Mexico's Oil Minister Luis Tellez.
The talks are being held against a background of stronger oil prices since they hit 10-year lows in June. Prices of U.S. benchmark West Texas Intermediate are more than three dollars higher than in June, after two rounds of production cuts spearheaded by Mexico, Venezuela and Saudi Arabia. Nonetheless, prices of WTI are still more than five dollars lower than last year's levels, and analysts and market watchers remain concerned that the market's current firmness will not last.
The source said the producers' main worry is for the second and third quarters of 1999, when an expected winter rebound runs its course.
Saudi Aramco, OPEC's Lukman Join Oil Talks In Venice
Petroleum giant Saudi Aramco will join 14 other oil companies plus OPEC Secretary General Rilwanu Lukman at an industry conference in Venice this weekend, organisers said on Thursday.
Apart from Saudi Aramco, the world's biggest oil company by production and reserves, the line-up includes U.S. major Chevron Corp (NYSE:CHV) and state-owned National Iranian Oil Company, said a spokeswoman for organisers based Petroleum Finance Company.
Major invitees who will not attend include Exxon (NYSE:XON), Mobil (NYSE:MOB), Texaco (NYSE:TX), Amoco (NYSE:AN), Royal Dutch Shell (UK & Ireland: SHEL.L), British Petroleum (UK & Ireland: BP.L) and Russian natural gas giant Gazprom (UK & Ireland: GAZPq.L).
Company chief executives were expected to discuss industry restructuring, changing technology, petroleum geopolitics and environmental and social issues in a closed meeting on Saturday and Sunday at a convent on the Isola di S. Giorgio Maggiore.
Organisers have been at pains to play down fears that the gathering will turn into a crisis summit that could lead to anti-consumer cartels and price-gouging.
Accordingly there is to be no discussion of pricing arrangements, PFC has said. It has has invited a U.S. energy lawyer Lynn Coleman to attend in what experts said was a move to protect the gathering from accusations of market manipulation.
But the companies were expected to review their attempts to cut costs and integrate to try to prepare for what could be years of low prices battered by global economic malaise.
The executives are also expected to discuss how best to attack overcapacity and slack demand while retaining the muscle to compete for reserves in emerging areas.
The attendees are
Anadarko (NYSE:APC) (U.S.)
Chevron (NYSE:CHV) (U.S.)
Elf Acquitaine (France)
ENI (Italy)
Halliburton (NYSE:HAL)
National Iranian Oil Company (Iran)
Lasmo (UK & Ireland: LSMR.L) (Britain)
Organisation of the Petroleum Exporting Countries
PetroCanada (Toronto:PCA.TO) (Canada)
Repsol (Spain)
SASOL (South Africa)
Saudi Aramco (Saudi Arabia)
Sonangol (Angola)
Sonatrach (Algeria)
Statoil (Norway)
Weakened Global Demand Pushes Energy Prices Down, Fears Up
Energy futures prices slid Thursday on the New York Mercantile Exchange, reflecting concerns about weak demand from consuming nations.
Traders' fears about faltering global demand outweighed their worries about continued refinery outages in the U.S. Gulf Coast in the wake of Georges.
Adding to investors' gloom was inventory data showing storage remains nearly 7 percent higher than a year ago despite storms and efforts by world oil producers to slash daily production to drive crude prices higher.
Members of the Organization of Petroleum Exporting Countries have come close to full compliance with production cuts, according to reports. Even so, inventories remain high.
November crude fell 71 cents to $15.43 a barrel; November unleaded gasoline fell 1.24 cents to 45.94 cents a gallon; November heating oil fell 1.84 cents to 41.56 cents a gallon; November natural gas fell 1.9 cents to $2.414 per thousand cubic feet.
In London, North Sea Brent crude oil for November fell 57 cents to $14.11 a barrel on the International Petroleum Exchange.
NYMEX Hub Natural Gas Ends Down After Early Rally Stalls
NYMEX Hub natural gas futures ended lower across the board Thursday in a moderate session, pressured by profit taking and technical selling when an early rally attempt stalled at resistance, industry sources said.
November slipped 1.9 cents to close at $2.414 per million British thermal units after stalling early at $2.53. December, which rallied early to $2.715, settled 2.5 cents lower at $2.60. Other deferreds ended down by 1.4 to three cents.
''We opened up at $2.50 (basis November), then ran into good selling in the $2.50s. We saw more Gulf of Mexico gas come on line today, and there's not much demand out there,'' said one Midwest trader.
Traders said Wednesday's bullish AGA inventory report showing a 41 bcf weekly build helped spark the early rally, but many stayed skeptical, noting most Gulf production shut early this week by Hurricane Georges was back.
In addition, Dynegy said today that two of its natural gas processing plants in southeast Louisiana, shut Saturday by Georges, should be back in service by midweek next week. The two plants have a combined processing capacity of 2.2 bcfd, but traders said most of the gas can be rerouted and only 500-600 mmcfd would likely be shut in.
WSC expects above-normal eastern temperatures Thursday to cool to three to 10 degrees F below normal Friday through Sunday, then warm to normal levels by Monday. Midwest readings will slide to four to 12 degrees below normal Thursday and Friday, then warm to three to eight degrees above normal by Monday. Texas will range from normal to slightly below from Thursday to Saturday, then climb to three to six degrees above normal on Sunday and Monday. The Southwest will see mostly below normal readings for the period.
Chartists said November broke trendline and range support early this week, then held the 18-day moving average and Monday's low and rebounded, making shorts nervous, but longer-term bearish fundamentals continued to weigh on sentiment.
November resistance was seen at the $2.57 and $2.605 recent highs. Interim support was pegged at the gap at $2.35-2.36, and then at the double bottom at $2.27, with further buying expected in the $2.22-2.23 area, and then around $2.10.
In the cash Thursday, Gulf Coast swing quotes on average firmed 10 cents to the high-$2.20s though early deals were reported higher. Midwest pipes gained a similar amount to the $2.20 area. Gas at the Chicago city gate was up almost 10 cents to about $2.40, while New York was quoted five to 10 cents higher at $2.50-2.55. In the West, El Paso Permian was talked more than 15 cents higher at near $2.20.
The NYMEX 12-month Henry Hub strip gained two cents to $2.329. NYMEX said an estimated 71,194 Hub contracts traded today, up from Wednesday's revised tally of 54,508.
US Spot Gas Prices Jump With NYMEX, Plant Outages
U.S. spot natural gas prices for early October firmed sharply again Thursday, in line with morning gains on NYMEX and news late Wednesday two Louisiana gas plants were shut due to flooding from Hurricane Georges.
But traders said prices retreated from the highs as NYMEX sold off and reports continued of more gas production flowing from the Gulf following cuts early this week from the storm.
''The market was very nervous about the gas plants and production, but the problem is that there's not a lot of load right now and gas is coming back,'' said one Texas-based trader, adding much of the gas shut in by Georges had been restored and current price levels may be difficult to sustain unless more damage is reported.
Swing gas at Henry Hub jumped early to a high of $2.39 per mmBtu, then slipped later into the $2.20s, but on average was done in the low-$2.30s, up about 10 cents on the day and already more than 25 cents over the current month index.
Traders said news today that Dynegy said it expected two of its natural gas processing plants in southeast Louisiana, shut Saturday by Hurricane Georges, to be back in service by midweek next week helped calm the market. The two plants have a combined processing capacity of 2.2 bcfd, but traders said most of the gas can be rerouted and only 500-600 mmcfd would likely be shut in.
Wednesday's AGA report showing an unexpectedly-low 41 bcf weekly stock build also lent some support to the market. The number was well below Reuter poll estimates in the 50-60 bcf range, and many expected the 40-50 bcf shut in this week from Hurricane Georges to lead to another light build next week.
Midcontinent pipes also saw gains of about a dime on average, with swing quotes on Panhandle now at about the $2.10 level, up more than 25 cents from the October index. Gas at the Chicago city gate was talked almost 10 cents higher at about $2.40.
In west Texas, Permian prices jumped more than 15 cents to near the $2.20 level, while San Juan gas gained a similar amount to about $2.00.
On the East Coast, New York city gate quotes firmed five to 10 cents to the $2.50-2.55 level despite mild weather and almost no load in the region.
WSC expects above-normal eastern temperatures Thursday to cool to three to 10 degrees F below normal Friday through Sunday, then warm to normal levels by Monday. Midwest readings will slide to four to 12 degrees below normal Thursday and Friday, then warm to three to eight degrees above normal by Monday. Texas will range from normal to slightly below from Thursday to Saturday, then climb to three to six degrees above normal on Sunday and Monday. The Southwest will see mostly below normal readings for the period.
Canadian Spot Natural Gas Flat Despite Transport Restrictions
Canadian spot natural gas prices were flat on Thursday despite restrictions on interruptible transport that held Alberta gas up at the Canada/U.S. border and a slight decrease in NYMEX pricing, industry sources said.
Marketers were at a loss to explain the relative strength of Alberta's day market, noting some gas had been backhauled into the province due to the strong prices there.
Day prices at Alberta's AECO storage were quoted at C$2.49/2.54 per gigajoule, virtually unchanged from Wednesday trade. The November contract was discussed at C$2.62 per GJ.
At Westcoast Energy's Station 2 compressor, prices tracked up slightly, closing just one cent lower than AECO, at C$2.48/2.53 per GJ.
Gas traded as low as US$1.74 per million British thermal units at the Sumas/Huntingdon export point, but settled in about US$1.80 per mmBtu as the day wore on.
Huntingdon prices were discussed at US$1.83/1.85 per mmBtu.
To the east, prices were up 11 cents per mmBtu at the Monchy export point, to US$1.87/1.89 per mmBtu, and Niagara was pegged at US$2.35 per mmBtu.
U.S. ACCESS Energy Futures Retain Day's Losses
U.S. crude oil and refined products futures inched ahead in after-hours trading but lacked the impetus to pull ahead from sharply lower closing levels on NYMEX.
Earlier the November crude contract closed 0.71 lower at $15.43 a barrel on the New York Mercantile Exchange, with a wave of selling emerging as players focused more on weak global demand than on recent weather-related disruptions in U.S. oil output.
Several hours into the evening session on ACCESS, the November crude contract was trading just three cents above the NYMEX close at $15.46.
The unleaded gasoline and heating oil contracts showed a similar picture, with prices just above their NYMEX close.
Dealers said volume was thin but some said prices could firm again on Friday, with Thursday's tumble seen as a sufficient correction to recent market strength.
''As long as we hold $15.10 now (on the crude contract), we should stay in a range of $15.50 to $16.00,'' said one dealer.
''The products also took a pretty hard beating today, so I think you'll see them come back too,'' he added.
NYMEX Natural Gas, Power Contracts Set Volume Records
The New York Mercantile Exchange (NYMEX) said on Thursday its Henry Hub natural gas and electricity futures and options reached new annual and monthly volume records through the end of September.
''Overall volume on our energy markets is up 22 percent over last year with our two most active contracts leading the pack. The global benchmark light, sweet crude oil futures contract is up 23 percent over last year and Henry Hub natural gas futures continue as the fastest-growing contract in exchange history with volume up a remarkable 43 percent over last year,'' NYMEX President Patrick Thompson said in a statement.
The annual volume record for Hub natgas futures was set with 11,931,677 contracts through Sept. 30, surpassing the 11,923,628 contracts traded in all of 1997. Natural gas options also set an annual volume record by September's end with 2,210,239 contracts from 2,079,607 traded all of last year, the NYMEX said.
Through the end of September, Palo Verde (PV) power options reached 27,625 contracts, exceeding the 19,328 traded in 1997 and California Oregon Border (COB) electricity options totaled 19,444 contracts versus 13,495 traded last year.
Monthly volume records were set for Hub gas futures and options, with 1,656,265 futures contracts traded in September surpassing the 1,625,910 record established in April and 353,214 options contracts traded versus the 322,503 in June, NYMEX said.
NYMEX's newly introduced Midwest power options set monthly volume records, with Entergy trading 570 contracts in September, up from the 415 contracts traded in August, and Cinergy trading 273 contracts in September, far surpassing the 61 traded in August.
|
