OIL AND NATURAL GAS PRICING SCENE - PART 2 THURSDAY AM 10/22/98
NYMEX natural gas mostly ends lower, ACCESS slips on AGAs
NEW YORK, Oct 21 - NYMEX Hub natural gas futures, hit by late technical selling after an early rally attempt stalled, mostly ended lower Wednesday in moderate trade, then lost more ground on ACCESS after a bearish weekly inventory report.
In the day session, November slipped 2.2 cents to close at $2.18 per million British thermal units after stalling early at $2.235. On ACCESS, the spot contract traded down to $2.14 shortly after the AGA storage report. December settled 2.8 cents lower at $2.455. Most other deferreds ended flat to down 1.8 cents.
''The (AGA) number was higher than expected, but the market is well bid between $2.14 and $2.16. The market has been reflecting uncertainty about weather, but the cash strength may be transitory,'' said one Midwest trader, noting recent weather-related gains in physical prices could erode once temperatures moderate.
AGA said Wednesday U.S. gas stocks rose last week by 58 bcf to 94 percent of capacity, above Reuter poll estimates in the 45-55 bcf range. Overall storage slipped to 227 bcf, or eight percent, above a year ago.
Eastern inventories gained 28 bcf and were two percent above last year. Consuming region west storage, which climbed six bcf for the week, was up 15 percent from 1997 levels. Stocks in the producing region were up 24 bcf and stood 18 percent over year-ago.
Traders said technical selling kicked in today when an early test of next November resistance in the $2.25 area stalled at $2.235.
While few expected the market to collapse with more cold forecast next week and winter just around the corner, most agreed it would take a decent jump in heating demand to sustain a rally.
WSC expects East Coast temperatures to drop to as much as 15 degrees F below normal Thursday and Friday before moderating to normal or slightly above normal by Sunday.
Below normal readings in the Midwest also are expected to warm to normal or slightly above by the weekend. Texas will see much below normal readings Wednesday and Thursday climb to several degrees above normal Saturday and Sunday. The Southwest will vary on either side of normal for the period.
While chart traders agreed the technical picture improved yesterday with November's close above the $2.16-2.18 gap, they said today's lack of follow through tainted sentiment. Most still needed a spot settle above the 18-day moving average in the $2.25 area to turn bullish. A break of that level could lead to a test of next resistance at $2.40. More selling should emerge ahead of last month's highs in the $2.53-2.57 area.
Interim support was now seen at $2.16, with major support still pegged at $2.03. More buying was expected at $2.015 and then in the mid-$1.90s.
In the cash Wednesday, Gulf Coast swing quotes firmed seven or eight cents to about $2.00. Midwest pipes were three cents higher in the mid-$1.90s. In the West, El Paso Permian gained more than a nickel to the high-$1.90s.
Gas at the Chicago city gate was flat to up slightly in the high-teens, while New York jumped more than a dime to the high-$2.20s.
The NYMEX 12-month Henry Hub strip slipped one cent to $2.279. NYMEX said an estimated 64,959 Hub contracts traded today, down from Tuesday's revised tally of 69,719.
NYMEX November natural gas futures expire Wednesday, Oct 28.
U.S. spot gas prices rebound ahead of cold weather
NEW YORK, Oct 19 - U.S. spot natural gas prices rebounded Monday as
forecasts called for temperatures to be a little colder than originally anticipated, industry sources said.
Cooler weather is expected to seep into the central and southwestern U.S. late Monday and into Tuesday and then in the Northeast by Wednesday, according to Weather Services Corp., with temperatures seen slipping to about 10 degrees below normal. Some lows in the northern plains are expected to dip into the 20s, with frost warnings also possible in the southern plains.
Swing gas prices at Henry Hub tacked on about 10 cents to about $1.74-1.75 per mmBtu, narrowing the discount to November futures to about 35-40 cents.
In the Midcontinent, prices similarly gained 13 cents to the low $1.70s, while Chicago city-gate prices were quoted equally higher at $1.95-2.00.
In west Texas, El Paso Permian gas traded at $1.68-1.81, with most business reported done in the low-$1.70s. Waha values were quoted at $1.70-1.83, and the San Juan market was seen at $1.62-1.76.
An outage on the San Juan lateral 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.
On the East Coast, New York city gate prices followed Gulf values higher to the low-$1.90s as colder air approached the region.
Canadian gas steady on less supply, firm futures
CALGARY, Oct 21 - Canadian spot natural gas prices were steady on
Wednesday, as continued supply constraints and a bullish futures market compensated for some stranded supply in Alberta, industry sources said.
Inventory drawdowns on Tuesday resulted in some gas being stranded in Alberta, driving prices down slightly in the province, while British Columbia prices rose as supply there remained tight, marketers said.
Prices at the AECO storage hub in Alberta were talked at C$2.53/2.58 per gigajoule, off about six cents from Tuesday trade.
The November contract, unchanged from yesterday, was discussed at C$2.77 per GJ.
Day prices at Westcoast Energy's Station 2 compressor jumped about seven cents, to C$2.68/2.70 per GJ.
Export prices also increased. At Sumas/Huntingdon, business was talked at US$1.95/2.00 per million British thermal units, up six cents on the day. Trade at Kingsgate was flat at US$1.85/1.90.
To the east, trade at the Niagara export point increased about seven cents over Tuesday, to US$2.15/2.18 per mmBtu.
MORNING UPDATE
10/22 00:26 US Crude Outlook - Oversupply turns market bearish
NEW YORK, - The U.S. crude oil market will feel the pressure of several ships of foreign oil heading to the U.S., particularly since U.S. demand for crude is not very strong, traders and analysts said on Wednesday, after the release of the latest U.S. inventory data.
"I think we are heading down. There is a significant upswing in (crude) imports," Ritterbusch said, pointing to a fleet of ships carrying Brent towards the U.S. market.
One U.S. trader is said to be bringing four Ultra Large Crude Carriers (ULCCs) of the light sweet European crude towards the Gulf Coast, while other traders are also said to be showing November Brent in the U.S. Gulf at discounts around 75 cents under December West Texas Intermediate. Each ULCC carries more than 300,000 tons, or more than two million barrels of crude.
While imports are said to be streaming in, few companies are keen to build stocks any higher given the relatively narrow "roll" between November and December prices of U.S. benchmark WTI.
"The roll is coming off at the moment, but you're not going to see anyone rushing to build stocks with this contango," said one Gulf Coast crude trader. November crude is now trading between 20-18 cents a barrel lower than December crude, not enough incentive to store barrels.
News of production disruptions in Nigeria is not proving especially supportive of crude markets, traders said, noting that there were still ample early November barrels and still some October barrels of West African crudes as yet unsold. A series of community disturbances in Nigeria have stopped one fifth of the country's production, but traders said they were still monitoring the situation.
The latest U.S. inventory figures released earlier this week are not much help either, and traders dismissed the odd figures, saying they reflected short-term disruptions caused by hurricane Georges. While the American Petroleum Institute (API) figures showed a sharp drawdown of 3.8 million barrels, the U.S. Department of Energy report showed a build of 2.7 million barrels in U.S. stocks of crude oil.
"The statistics were neutral to bearish," said Nizam Sharief of Hornsby & Co., adding that the the disparity in the weekly reports reflected the disruptions caused by hurricane Georges, the fourth storm to pound the Gulf of Mexico in as many weeks.
"In the very near term, we are going to drop below $15," Sharief predicted. The front-month November contract on the New York Mercantile Exchange settled 44 cents lower at $15.06 on Wednesday, and touched a low of $15.02 in intraday trading.
Analysts pointed bearishly to the relatively high product inventories, especially in distillate stocks, which include stocks of heating oil. While U.S. stocks of gasoline are 9.75 million barrels higher than last year's levels, those of distillates are 16.86 million barrels higher than last year.
On the demand side, the picture is also bearish in the short-term, since Sun's cuts of 177,000 barrel per day (bpd) at its two-refinery complex in Philadelphia, Pennsylvania are expected to continue until the end of the month. Similarly, Tosco's 110,000 bpd refinery in Bayway, New Jersey is not expected back up until the second half of October.
Also, the crude unit at British Petroleum's 250,000 bpd Belle Chase refinery in Louisiana still hasn't been brought back on stream after a fire broke out in the unit last week. The crude unit is expected to remain shut for another week or so, according to a company statement.
Expectations are that Chevron's Pascagoula refinery in Mississippi will be shut even longer after it suffered flooding when Hurricane Georges pounded the area late last month.
10/22 00:27 U.S. Product Outlook-firm on extended outages
NEW YORK, - Extensive unplanned refinery shutdowns due to Hurricane Georges last week boosted U.S. Gulf Coast gasoline prices, and the rally is expected to continue as two major plants were affected, traders said on Monday. "Looking at the fundamentals as far as refining is concerned, the shutdowns will put more buyers in the market than anticipated,"a Gulf Coast trader said.
The hurricane which hit the Gulf Coast a week ago took down at least seven refineries in Louisiana and Mississippi. Five of them escaped any damage but the precautionary shutdowns took out around a week's worth of 928,000 barrel-per-day of production, traders said.
But what sent buyers into the market and prices soaring in "refining row", was the longer lasting mayhem the hurricane brought at Chevron Corp's <CHV.N> and BP's <BP.L> plant.
Hit by floods, Chevron's 295,000 bpd refinery at Pascagoula, Miss. had some five feet of silt and would take at least a month to begin its start up process, traders said.
More pessimistic sources said the plant will be shut until the end of the year but the company declined to comment on the duration of the shutdown.
Although largely unscathed by the hurricane, a fire broke out at BP's 250,000 bpd Alliance refinery at Belle Chasse, LA. during its start up process on Wednesday. It restarted its 100,000 bpd catalytic cracker and 37,800 bpd reformer and other secondary units on Sunday but its crude unit will remain shut for another seven to ten days.
"Chevron is quite a large producer on the Gulf Coast and I think it will keep the market supported," a trader said. "Gasoline will and can climb even higher...I wouldn't be surprised if the conventional gasoline will go into a premium...it is near enough."
Gasoline outright prices on the Gulf Coast rose nearly 3.00 cents per gallon last week to around 45.00 cents. Its differential to the NYMEX rose from a 3.75 cent discount to the NYMEX before the hurricane hit, to 0.25 cent premium on Monday.
With the cut in output, traders expected another drawdown in gasoline stocks which fell 1.8 million barrels to 21 million in the week ending Sept. 25 according to the American Petroleum Institute (API).
Both BP and Chevron were amongst the aggressive buyers seeking mainly the gasoline, jet fuel and low sulphur diesel.
But high stocks of heating oil capped any rallies in both the Gulf and the northeast, and prices in both hubs slipped by around 1.5 cents per gallon to around 40 cents per gallon.
The API reported weekly stocks grew 2.5 million barrels to 15.3 million, around 16.7 million higher than last year's build.
While an influx of Russian gas oil was also putting a lid on New York Harbor heating oil prices, gasoline arbitrage cargoes were also going to depress Harbor prices.
"Give it five to six days...then prices will be slaughtered," a trader said on the expected arrival of cargoes.
But other traders were more skeptical.
"There is a lot of talk of incoming cargoes but until I see them will I believe it. You won't be seeing these sort of premiums if the market wasn't tight," a trader said.
Harbor outright gasoline prices have actually fallen a quarter cent to around 45.60 cents per gallon, but reformulated grades differentials have risen by nearly 1.75 cents, climbing into a premium of around 1.25 cent to the NYMEX on Monday.
Conventional differentials on Monday also flipped to 0.25 cent over the NYMEX from a discount as low as 0.50 cent.
10/22 09:32 NYMEX crude called to open flat-5 cts higher
NEW YORK, Oct 22 - December crude futures were called to open unchanged to about five cents higher Thursday as traders said they expected the market to keep its upward momentum, sparked Wednesday by short-covering and a small draw in U.S. crude stocks last week.
"The market may hold on to gains made on Wednesday's sharp bounce, but there could also be some profit-taking along the way," said a NYMEX floor trader.
Refined products were called unchanged to 0.25 cent lower as traders said they see possible selling following Wednesday's big gains by heating oil and unleaded gas.
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