OIL AND NATURAL GAS PRICING SCENE - PART 2 FRIDAY 10/15/98
NYMEX Hub natural gas ends up on technical rebound
NYMEX Hub natural gas futures mostly ended higher Thursday in a moderate session, boosted by some technical buying and short covering despite reports of a softer physical market, industry sources said.
November climbed 5.4 cents to close at $2.095 per million British thermal units after trading today between $2.04 and $2.12. December settled 3.9 cents higher at $2.347. Most other deferreds ended flat to up 2.9 cents.
''I think we saw a lot of short covering when November couldn't break support. The shorts were disappointed by the AGAs, and there may be some (colder) weather showing up,'' said one Texas-based trader, noting some 10-day forecasts were expecting a cold front from Canada to push into the U.S.
With injections slowing as caverns fill, most agreed the key to market direction was weather.
''If we don't get some cold soon, then November could get beat up before it goes off the board (on Oct 28). If we do get some load, I think Nov will settle in the $2.10-2.20 area,'' the Texas trader said.
AGA data released Wednesday showed an unexpectedly-low weekly injection of 41 bcf. The number was well below Reuterpoll estimates in the 55-65 bcf range and trimmed the year-on-year surplus to 232 bcf, or 8.5 percent. To get stocks to 3.1 trillion cubic feet by October 31, weekly injections of about 49 bcf are needed.
WSC expects normal temperatures in the Northeast and Mid-Atlantic to warm to as much as 10 degrees F above normal Sunday and Monday, dimming hopes for some overnight load. The Southeast will climb to four to eight degrees above normal by early next week, while Florida will average one to four degrees above normal for the period.
Slightly above normal readings in the Midwest will dip to below normal Saturday, then climb to two to four degrees above by Monday. The mercury in Texas mostly will range from normal to slightly above, while the Southwest will average one to 10 degrees below normal into early next week.
Chart traders said shorts started to cover today when an early November move down stalled at $2.04, just above support in the $2.03 area. Further support was pegged at $2.015 and then in the mid $1.90s, a measurement from Monday's gap. Interim resistance was seen at the $2.16-2.18 gap, then at $2.25 and then in the $2.40 area.
In the cash Thursday, Gulf Coast quotes on average slipped four cents to the low-$1.70s. Midwest pipes were down a nickel or more to the low-$1.70s. In the West, El Paso Permian slipped several cents to the $1.75-1.80 level.
Gas at the Chicago city gate was more than five cents lower in the mid-to-high $1.80s, while quotes in New York were off seven cents to the low-$1.90s.
The NYMEX 12-month Henry Hub strip gained 1.7 cents to $2.234. NYMEX said an estimated 62,079 Hub contracts traded today, up from Wednesday's revised tally of 53,623.
U.S. spot natural gas prices soften on weak demand
U.S. spot natural gas prices fell Thursday as shoulder month weather stifled demand across most of the nation, industry sources said.
''I think they're looking toward the weekend. The weather is pretty moderate everywhere. There are not too many places to hide it (natural gas supply) anymore,'' one Midwest trader said.
Swing gas prices at Henry Hub were off an average of four cents to the mid-$1.70s, sources said, as temperature highs in Texas were expected to fall into the low-80s Friday and through the weekend.
In the Midcontinent, prices similarly slipped six cents to the low-$1.70s, while Chicago city-gate was pegged mostly at $1.87-1.89.
In west Texas, El Paso Permian gas traded at $1.73-1.83, while Waha values were also quoted about three cents lower at $1.75-1.83.
The San Juan and Southern California markets also softened slightly, with deals reported done at $1.72-1.78 and $2.24-2.27, respectively.
Supporting prices in the west, sources said, was the upcoming outage on the San Juan lateral, which is scheduled to begin Oct 26 and last five days, according to Transwestern.
The volume affected by the outage is expected to be about 625 million cubic feet per day (mmcfd) out of a total of 800 mmcfd. The San Juan lateral runs from Ignacio, Co., to Blanco, N.M.
Transwestern also reported it is allocating at three points on its system west of Thoreau because nominations exceed capacity, affecting about 60 mmcfd.
Those points affected are Southern California Gas at Needles, Mojave Pipeline at Topock (Southern California border) and Pacific Gas & Electric at Topock.
Also, El Paso said its Eunice turbine will still be unavailable through Oct 15, which is reducing capacity into the South Mainline by 50 mmcfd.
On the East Coast, New York city gate prices were quoted at $1.91-1.95, while Appalachian quotes were heard mostly at $1.86-1.87.
U.S. spot natural gas prices - October 15th
OCTOBER ($/mmBtu).....................10/15..........10/14
U.S. GULF OFFSHORE...............1.65/1.70....1.69/1.74
TEXAS COAST............................1.70/1.75....1.73/1.78
WESTERN TEXAS.......................1.76/1.81....1.79/1.84
LOUISIANA COAST...................1.69/1.74....1.74/1.79
NORTHERN LOUISIANA...........1.71/1.76....1.76/1.81
OKLAHOMA...............................1.69/1.74....1.75/1.80
APPALACHIAN...........................1.83/1.88....1.97/2.02
SO. CALIFORNIA BORDER.......2.22/2.27....2.23/2.28
HENRY HUB................................1.74/1.76....1.78/1.81
WAHA HUB.................................1.77/1.82....1.81/1.86
Canadian spot natural gas prices firm on sparse supply
Canadian spot natural gas prices edged higher Thursday due to absence of some supply in the Alberta market as a result of ongoing plant outages, industry sources said.
Day prices at Alberta's AECO storage hub were quoted early at C$2.69 per gigajoule (GJ), but a tolerance level change to 0/+20 on NOVA spurred heavy packing on the system and thereby put downward pressure on prices. Late morning deals at AECO were reported done in the mid-C$2.60s.
Business through the end of the month at AECO was reported done at C$2.55 per GJ.
Linepack on NOVA's system stood at 12.25 billion cubic feet per day (bcfd) as of Wednesday evening, below the pipeline's target of 12.75 bcfd.
Prices at Westcoast Energy's Station 2 compressor also treaded higher, with deals reported done at C$2.68-2.74.
At the Sumas/Huntingdon export point, prices climbed about one cent to US$1.89-1.93 per million British thermal units (mmBtu).
Export prices at Niagara were talked at US$1.95-1.97 per mmBtu, down about three cents on the day.
NYMEX Hub natural gas called steady to lower, cash softens
NYMEX Hub natural gas futures were expected to open steady to lower Friday amid talk of softer cash prices ahead of the weekend, industry sources said.
November over-the-counter trade ranged from $2.085 to $2.09 per mmBtu this morning after settling Thursday at $2.095 and easing to a low of $2.085 on ACCESS.
''We expect another test toward the lows. It's another weak day for cash, but futures may ignore that,'' one Midwest trader said.
Early Henry Hub cash prices were quoted at $1.65-1.67, compared with about $1.74-1.76 on Thursday.
Technically, support in November was seen at $2.03, and then at $2.015 and the mid-$1.90s. Interim resistance was seen at the $2.16-2.18 gap, and then at $2.25 and the $2.40 area.
Forecasts for next week called for mostly above-normal temperatures across the U.S., though seasonal weather is forecast for south Texas and temperatures are expected to drop to below-normal levels in the Chicago area by Tuesday.
London Brent futures called to pen
-- Fri, 16 Oct 1998 04:58 EST
London-Oct. 16-FWN--Energy traders here look for November Brent crude oil futures to open unchanged from Thursday's close.
In London Thursday, November Brent closed down 11 cents at $13.00, after trading between $13.20 and $12.94.
Pre-Opening NYMEX energy futures called higher as short covering expected
-- Fri, 16 Oct 1998 10:01 EST
--Crude oil is called to open 15 to 20 cents higher
--Heating oil futures are called up 20 to 45 points
--Unleaded gas futures are called steady to 25 points higher
Crude oil and product futures are called to open with a firmer tone this morning following the solid bounce off some key support levels in New York Thursday and further gains posted overseas today.
The markets continue to be dominated by the technical trade. Market news remains relatively sparse or at least not changing overall supply and demand fundamental outlooks, traders agreed. But the big picture may have improved some by the surprise move by the U.S. Federal Reserve to cut short-term interest rates on Thursday.
While the cynics remain convinced that the Federal Reserve move suggests there are more problems going on in the hedge fund community and the economies here and abroad than have been reported, others see the move as nothing more than a clear signal from the Fed to restore confidence and head off a more protracted credit crunch.
"It can't hurt," commented one broker on the Federal Reserve move Thursday.
He said the resulting weakness in the dollar should be a plus for helping to revive some emerging markets from their severe tailspin of the past year. The key still remains improving money flow into some of these once high- flying economies to improve consumption and capital spending trends. He noted that while financial asset prices have declined sharply in most nations, the real impact of those declines has only just begun to be felt in the rest of the economy in the last several months.
The broker said the impact on energy prices is more psychological than immediately an economic boost. But he said the weakness in the dollar could help to stimulate demand for energy products and more importantly stave off any further devaluation of key overseas currencies.
Traders were encouraged by the bounce away from key underlying support at $13.87 to $13.95 in November crude oil futures on Thursday and follow-through strength overnight on ACCESS trading. One broker noted that November futures closed above a short-term downtrend line on the hourly charts at $14.03 Thursday, settling at $14.05.
He noted that the open interest in crude oil futures has been on a recent upswing during this week's decline in prices, setting up a potential for a short-covering rally. The high volume trade Thursday in crude oil on a day when prices tested support and rallied was another signal of underlying strength.
Technically, November crude oil will find support today at $13.88, $13.78 and $13.28 with resistance seen at $14.34, $14.58, $14.95 and $15.11.
November heating oil support is seen at 37.80, 37.40 and 36 cents with resistance at 38.75, 39.37 and 41 cents.
November unleaded gasoline support is at 43.15, 42.60 and 41.65 cents with resistance seen at 44.40, 45.30, 47.40, 47.80 and 49 cents.
In NYMEX ACCESS trading, November crude oil futures traded in a range of $14.20 to $13.99 and was last up 14 cents at $14.19. November heating oil was last up 39 points at 38.55 cents in a range of 38.55 to 38.20 cents.
November unleaded gasoline was up 14 points at 44.05 cents on ACCESS
after trading in a 44.05 to 43.80-cent range.
Overseas this morning, December Brent crude oil futures are up 24 cents at $13.24, and December gas oil futures are up $2 at $121.
North America Texas (ERCOT) energy summary & 1-10 day trend
-- Fri, 16 Oct 1998 10:06 EST
Omaha, Neb.-Oct. 16-FWN--Strategic Weather Services
SUMMARY: Seasonal to above seasonal temperatures covered the state as dry conditions persisted for all but TX Panhandle. Highs were in the low-to-mid 80s, with mid and upper 80s in west and northwest TX. Lows were in the upper 50s to mid 60s.
FORECAST: Leading trough and then frontal boundary will spark showers and thunderstorms across TX today and tomorrow. Temperatures above seasonal will persist in TX today before cooling to near seasonal tomorrow, with frontal passage. Highs today will range from low to upper 80s and tomorrow cool to upper 70s and low 80s. Overnight lows in the upper 50s to mid 60s.
1 TO 5 DAY TREND: Temperatures near normal; precipitation near normal.
6 TO 10 DAY TREND: Temperatures near normal; precipitation below
normal.
Today in the energy markets - Friday Oct 16
BAGHDAD - Turkish State Minister Mehmet Batalli, officials from the energy, transport and housing ministries and businessmen arrive to discuss oil and gas joint projects with their Iraqi counterparts. Batalli is to meet Iraq's Oil Minister Amir Muhammed Rasheed and several other ministers and discuss projects, one including possible future Iraqi pipeline gas sales to Turkey (To October 18).
HOUSTON - Oilfield breakfast forum with speeches by executives from Mobil Oil, Schlumberger Oilfield Services and ENSCO International. Doubletree Post Oak Hotel.
BUDVA, Montenegro - International seminar on natural gas and production technology (Fourth day).
CAPE TOWN - Fifth annual indaba (summit) Africa Upstream, international exploration and production business strategy and oil and gas opportunities (Final day).
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