OIL AND NATURAL GAS PRICING SCENE - PART 1 FRIDAY AM 10/23/98
10/22 15:51 Oil prices dip slightly, oil firms hurt
LONDON, Oct 22 - Oil prices ended slightly lower on Thursday on technical selling, with little else to cheer a market bombarded with bad news from oil firms reporting poor third quarter earnings because of the long-term crude price slump.
World benchmark Brent blend crude for December last traded nine cents down at $12.76 a barrel in London at 1915 GMT, while in New York, the West Texas Intermediate (WTI) December contract shed 11 cents to $13.97 at its close at the same time.
Trading in the futures markets was rangebound for most of the day, with technicals taking precedence over fundamentals, traders said. A late bout of selling set in after WTI dropped below the psychological $14 a barrel level.
"People are still trying to get a handle on direction after two dynamic days this week," said Peter Gignoux at brokers Salomon Smith Barney.
Gignoux said neither the market's rise nor its fall this week could be explained by supply and demand fundamentals, which were still in favour of buyers.
Some oil producers still see scope for further production cuts to rescue prices which are now more than $6 a barrel below the 1997 average.
Libyan Oil Minister Abdullah al-Badri said on Thursday he would support a further round of cuts by members of the Organisation of Petroleum Exporting Countries (OPEC).
Badri told reporters in Rome that he would attend an energy conference in Cape Town at the end of October where he expected fellow OPEC ministers to discuss the issue.
OPEC producers have cut a total of 2.6 million barrels per day (bpd) from the glutted market this year in an attempt to rescue prices which fell to 10-year lows. Non-OPEC producers took a cut of 500,000 bpd for a total of some three million bpd.
But two of OPEC's biggest producers, Saudi Arabia and Venezuela, said earlier this month they did not favour a further output cut and recommended the present level of reductions be frozen into next year.
Badri's comments did little to buoy the oil complex.
"Every time someone comes out and says there should be cuts, they're just trying to support the price," one London trader said, adding the market will not take much note of such remarks until announcements of fresh cuts materialise.
This year's cuts came too late to help lift oil company earnings or the revenues of oil producing nations. Chevron Corp <CHV.N> became the latest oil major to report lower earnings as a result of the depressed price of crude oil.
Chevron said third quarter net income fell 37 percent to $461 million from $727 million a year ago because of a 32 percent fall in oil prices.
"Our results will continue to be affected negatively by low crude oil prices and low margins on refined products and chemicals, since we do not foresee any significant near-term improvement in these areas," said chief executive Ken Derr.
Shell Oil Co, the U.S. arm of the giant Royal/Dutch Shell Group <SHEL.L><RD.AS> also cited low oil and gas prices and poor margins in other sectors for the fall in its net third quarter income. This fell to $188 million from $271 million in the same quarter in 1997.
"Low prices for crude oil, natural gas and all major downstream oil and chemical products continued to depress earnings. Market conditions have deteriorated even further since the second quarter of this year, with average crude oil prices at their lowest level in 12 years," said Shell Oil President Jack Little.
On Wednesday Exxon Corp <XON.N>, the world's largest oil company, said the decline in oil prices had sliced its upstream earnings by 46 percent compared with the same period last year.
10/22 16:38 NYMEX oil pauses, ends below $14 in consolidation
NEW YORK, Oct 22 - Front-month crude futures firmed late Thursday on the New York Mercantile Exchange (NYMEX) and settled just below $14 a barrel Thursday as the market consolidated in sluggish trading, traders said.
"Crude was a little firmer...yesterday, it moved up on short covering, today was consolidating," said Michael Busby, a trader at Northville Industries.
The day's corrective pause ended with December crude settling at $13.97 a barrel, down 11 cents, after moving mostly sideways in a narrow range of $13.83/14.18.
The performance followed Wednesday's sharp rise in which December crude, which started on top of the board that day, hit a high of $14.40, erasing loses sustained in a heavy sell-off on Monday. Traders said the short-covering rally appeared to be overdone.
Heating oil and gasoline, also range-bound, sustained moderate losses on Thursday.
November heating oil ended 0.62 cent lower at 38.54 cents a gallon, after moving within the 38.30/39.30-cent range.
November gasoline finished at 43.40 cents a gallon, down 0.58 cent, above its session low of 43.00 cents and off its intraday high of 44.10 cents.
In London, December crude on the International Petroleum Exchange ended nine cents down at $12.76, on a wave of technical selling, brokers said.
New York traders said the NYMEX crude trading pattern in the past two days may have set the December contract's short-term trading range at around $14 to $15 a barrel.
"Until we get more market-moving information, we will trade in range," Busby said.
The market's current concerns include OPEC's year-end meeting and the pace of Asia's economic recovery, he said.
The market is watching for what members of the Organization of Petroleum Exporting Countries (OPEC) will do at their meeting on Nov. 25.
Before that meeting, however, major producers, including members of OPEC, are attending an energy conference in Cape Town, Africa, at the end of October.
Among those attending is Sheik Saud Nasser al-Sabah, the oil minister of Kuwait, who has been pressing OPEC to consider another round of output cuts -- if Brent crude does not rise to $17 a barrel by the Nov. 25 meeting in Vienna. Among other OPEC ministers supporting the Kuwaiti minister is Libyan Oil Minister Abdullah al-Badri, who said on Thursday from Rome that he would attend the Cape Town conference, at which he expected his fellow OPEC ministers to discuss the issue.
But persuading Saudi Arabia and Venezuela may be difficult as the two OPEC heavyweights have recently reiterated that they no longer favored additional production cuts.
Another item of concern to traders is when Asia, a big consumer with economies currently facing restructuring, will recover, Busby noted.
"Is the (Asian) economic slowdown over? Is a recovery possible after the second half of 1999?" Busby asked, framing the questions in market participants' minds. Asia's economic downturn last year cut its huge appetite for oil and was among the reasons oil prices have stayed low this year.
But a more immediate indicator will be the completion of autumn refinery turnarounds, which could help lift crude oil prices in the next 60 days, he said.
In related news, North Atlantic Refining Ltd.'s 150,000- barrel-per-day Come by Chance refinery, a large supplier to the New York Harbor trading hub, will complete its maintenance that began on Oct. 19 near the end of November. And Exxon Corp. said it restarted its crude unit and flexicoker at its 427,000-bpd refinery in Baytown, Texas, on Oct. 20.
10/22 16:52 U.S. Cash Crude- LLS advances, jumps over HLS
NEW YORK, Oct 22 - U.S. cash crude traders spent Thursday balancing books before the close of November cash crude trade, providing a last-minute boost to differentials for most grades.
Light Louisiana Sweet/St. James on Thursday regained its typical place as the most expensive of the so-called swamp grades, at one point jumping 25 cents to trade at 15 cents below West Texas Intermediate/Cushing. Heavy Louisiana Sweet/Empire changed hands at 25 cents below WTI/Cushing, slightly stronger than where it finished Wednesday when a sharp run-up left it at an unusual premium to LLS/St. James.
No influence other than refiners' needs to straighten their books was cited as the cause for the lift of LLS.
"It looks like clean up," said on Texas-based trader. "The deals look to be pretty small" in volume.
Outright prices for most crudes were down on Thursday as crude oil futures on the New York Mercantile Exchange settled 11 cents lower at $13.97 for the front-month December contract. And November WTI/Cushing prices were valued around 20 cents less than that, between $13.77/$13.81 per barrel.
While the November futures contract expired at the market's close on Tuesday, cash crude barrels will continue to trade over the remainder of the week, with prices set by the so-called roll between the November and December markets.
That roll was done late Wednesday at minus 21 cents and was talked around minus 20/19 cents on Thursday.
Both HLS and LLS have benefited over the past couple of days from short-covering ahead of the expiration of front-month trade, and both continue to feel the effects hurricane-related production cuts last month.
"The combination of the cuts carry over from last month and people coming in to cover shorts...pushed it higher," one cash crude trader said.
Other cash crude grades also recorded modest gains. West Texas Intermediate/Midland changed hands at 40 cents below the cash crude benchmark, then narrowed to a 37 cents discount. West Texas Sour Midland was assessed around -$1.55 a barrel.
U.S. cash crude traders also said that WTI/Cushing postings-plus was done at $2.30, $2.33, and $2.35 a barrel.
10/22 16:54 North Sea December Brent gains two cents in U.S.
NEW YORK, Oct 22 - North Sea Brent gained two cents in late U.S. trading on Thursday.
December Brent was valued at $12.78 a barrel, up from its close at $12.76 earlier Thursday on the International Petroleum Exchange.
Only one deal for December cash Brent partial cargoes was reported, with a 200 lots parcel trading at $12.78.
Traders said the Brent November-December spread also traded at minus 50 cents in the aftermarket. The Brent December-January spread remained valued at -18/16 cents, they said.
10/22 17:04 U.S. spot products-Gulf mogas weaker on scheduling
NEW YORK, Oct 22 - Gulf gasoline continued to get pummelled as players dumped barrels ahead of a scheduling deadline later in the day, while New York Habor gasoline held firm in thin trade, players said.
On refinery news, North Atlantic Refining Ltd's 150,000 barrel per day Come By Chance refinery, a large supplier to the New York Harbor trading hub, will complete maintenance near the end of November that began on October 19, according to a spokeswoman at the refinery. "There's one part that's very significant to this turnaround, it's a reaction furnace which we're adding to our sulphur unit," said spokeswoman Gloria Slade, who added that the maintenance wouldhelp reduce sulphur dioxide emissions.
Also, Exxon Corp <XON.N> restarted its crude unit and flexicoker at its 427,000 barrel per day refinery in Baytown, Texas on October 20, according to a company statement released Wednesday.
Meanwhile New York Harbor gasoline differentials held Wednesday's gains of nearly a penny Thursday as the few players who were not attending an industry outing there, continued to scramble to find prompt barrels.
Gasoline November futures, perhaps finally reacting to bearish stock data this week, settled down 0.58 cent weaker at 43.40 cents a gallon.
November heating oil settled 0.63 cent lower at 38.54 cents a gallon, while crude oil futures settled down 11 cents at $13.97 per barrel for December's contract. The November crude contract expired on the NYMEX on Tuesday.
GULF COAST
Gasoline continued to weaken on a scheduling deadline later in the day and Wednesday's news of Exxon Baytown's refinery coming back earlier in the week, traders said.
Prompt back 30 cycle weakened about 0.25 cent to 4.75/4.50 cents under the November screen, with trades reported at 4.50 cents under. Any month was pegged at 4.40/4.25 cents under
Meanwhile, low sulphur diesel shed its 0.25 cent from the morning and was pegged at 1.25/1.50 cents above the screen, amid thin talk, players said. "Low sulph has just been too overpriced in the last few weeks," said one Gulf trader.
Prompt heating oil was steady, pegged at a 1.50/1.35 cent discount.
Front 31 cycle of jet fuel held its near-penny losses from Wednesday that occurred as the material was slammed on scheduling of the previous cycle. Jet 54-grade was pegged at 2.40/2.60 over the screen, and traded at 2.50 cents premium.
Talk on the reformulated and premium grades was thin with the RFG A-grade pegged steady at 2.00/1.85 cent regrade to the M-grade, D-grade premium RFGs around 2.25 cents over the print and premium conventional V-grades at 1.50 over the print.
NEW YORK HARBOR
Conventional gasoline differentials kept their penny gains from Wednesday, in thin trade amid an industry event in the hub, traders said.
Regular conventional M4 grades were traded up to a 0.50 cent discount on Buckeye Pipeline supplies, while regular reformulated A4 was at 1.00/1.25 cent premium.
Premium reformulated, the D4 grade, was pegged at a 3.60 cents over and premium unleaded, the V4 grade, at 2.25 cents.
On the distillates, heating oil held its firm tone amid storage demand with prompt supplies at a 0.75/0.85 cent discount while low sulphur diesel was pegged at a 2.40 cents over the screen.
Jet fuel was steady at a 5.00 cents premium to NYMEX on the 54-grade, and a 5.50/5.75 premium on Grade 55 Jet (kerosene).
MIDCONTINENT
Group Three low sulphur diesel rose a penny on good demand as rains finally ceased and agricultural workers are back harvesting, traders said.
Group low sulph was pegged at 4.50/4.75 cents over the screen. Chicago held onto its previous 0.75 cent gain and was steady at 3.50/3.75 cent over the screen.
Gasoline differentials in both hubs continued to be weak on the back of Gulf differentials, traders said.
Chicago regular gasoline was pegged steady at 4.00.3.75 cent under the screen, while Group was steady and changed hands at 2.75 cent under the screen.
Premium grades in the Group were pegged at 5.35/5.50 cents over while Chicago were pegged at a 3.25/3.50 cent regrade.
10/22 18:22 US foreign crude - Slight gains for Angolan grades
NEW YORK, Oct 22 - The U.S. market for imported crudes remained steady on Thursday, although traders said Angolan grades were slightly stronger in the U.S.
LATAM - COLOMBIA, VENEZUELA, ECUADOR
-- Traders said they had still not heard any news about Ecopetrol's two tenders of December-loading cargoes of Cusiana. Bids for the two 1.1 million barrels of the sweet Colombian crude were due on Wednesday. The state-owned oil company has not specified loading dates for the cargoes, but has said that it would not allow the cargoes to be separated into smaller pieces.
November-loading cargoes of Colombian sweet crude, Cusiana, are also said to be on offer at $1.39 under December West Texas Intermediate. Last week, state-owned Ecopetrol awarded a November 25-29 loading cargo of Cusiana, reportedly at a discount between $1.40-1.37 to WTI, a good 10 cents weaker than the previous week. Sweet grades have been under pressure in U.S. markets, where traders anticipate huge imports of North Sea Brent through October.
-- With the 400,000 barrel per day (bpd) Ocensa pipeline repaired after Sunday's bombing,
Colombian rebels attacked the country's second-largest pipeline, the line connecting the Cano Limon field to the Caribbean port of Covenas. The bombing was the 63rd this year, and forced a halt to pumping along the line only two days after Ocensa, Colombia's largest pipeline was repaired. Sunday's bombing of the line connecting the Cusiana/Cupiagua field to Covenas killed at least 56 people.
-- A cargo of Venezuela's sour crude Mesa/Furrial was sold last week at $2.32 under WTI. But with sour crudes under pressure in the Gulf after a refiner has been forced to sell crude it cannot run at a damaged refinery, there is some talk in the market that private and confidential deals for Mesa were done at significantly weaker levels this week.
-- Traders said that November arrival barrels of Ecuador's sour crude, Oriente were being offered into the U.S. Gulf at $2.60 under WTI.
WEST AFRICAN, NORTH SEA
-- Clashes in the Nigerian Delta resulted in six deaths on Thursday, and a third of the country's average production of two million barrels per day remains shut in after community protests.
While Nigerian grades are mixed after the disruptions, traders said U.S. refiners are buying up Angolan grades from the problems in Nigeria. A U.S. refiner bought up a third decade November cargo of Cabinda for 89 cents under Dated North Sea Brent. Angolan sweet Palanca was on offer at Dated plus $1.40 on a delivered basis, traders said.
Traders said the availability of Nigerian Brass River crude has lessened. Italian company Agip resumed exports from its Brass River terminal on Monday, but the 130,000 bpd had been shut in for two weeks before that. Loadings of medium-heavy Forcados are also delayed by 10-20 days, making buyers wary of the grade.
-- The prompt cargo of Gabonese Rabi, scheduled to load in the next 10 days was sold this week, but details as to the price were still unavailable.
-- End November/early December cargoes of Nigerian Bonny Light are valued around 10-15 cents over Dated Brent at a fob price, and Nigerian Qua Iboe is said to around similar premiums to Dated.
-- Brent arriving in the second-half of November remained on offer at 70-75 cents under December WTI, traders said. Three Ultra Large Crude Carriers (ULCCs) scheduled to carry Brent to the U.S, and traders said there is no dearth of sweet crude. The trader bringing the Brent will also bring a couple of smaller vessels of Brent to U.S. markets in October and November. Each ULCC carries over two million barrels of crude, and the talk has been pressuring sweet crudes in the U.S.
-- Other North Sea grades, such as Troll and Oseberg are also on said to be on offer out of storage. Troll was said to be talked around December WTI minus 50 cents.
ASIAN - BRUNEI LIGHT, CHAMPION, MINAS
-- A U.S. refiner is offering early December barrels of Brunei Light at a delivered price of Dated Brent plus $1.70 and another light sweet Brunei grade, Champion at $1.50 over Dated.
Traders also said that a Swiss trader is offering Indonesian Minas arriving in early November into the Gulf.
10/22 19:07 Crude oil futures unchanged in U.S ACCESS trade
LOS ANGELES, Oct 22 - U.S. December crude oil futures prices were unchanged from daytime levels in quiet after-hours ACCESS trade on Thursday.
By 1545 PDT, December crude traded at $13.97 a barrel, flat from its NYMEX close where it finished 11 cents a barrel lower on speculative selling.
Dealers said the unchanged crude price reflected a lack of news and light interest on the last day of ACCESS trade this week.
"It's been real quiet," one dealer said. "There's no news to speak of."
Prices were stable after inventory figures sparked a rally Wednesday, which was driven higher by speculators buying up futures to lock in profits.
December crude volume was low at 690 lots for all futures months and 677 lots for December on ACCESS.
November unleaded gasoline traded 43.35 cent a gallon on ACCESS, down 0.05 cent with 53 lots exchanged for all months and 48 in November.
November heating oil traded 28 lots total, with 22 changing hands in November. The contract price rose 0.06 cent a gallon to 38.60 cents on ACCESS.
10/22 19:20 U.S. West Coast crude discounts steady
LOS ANGELES, Oct 22 - U.S. West Coast crude oil differentials were flat on Thursday while absolute prices were driven lower by slight losses in NYMEX futures.
With differentials unchanged, pure Alaska North Slope (ANS) crude prices fell with an 11 cent loss in NYMEX December crude oil futures.
West Coast spot crude markets remained quiet, with refiners trying to push discounts higher for November ANS.
The last ANS deal was struck Oct. 9 at a discount of $1.025 a barrel off benchmark U.S. crude, November West Texas Intermediate (WTI).
Buyers claimed that normal production levels and weak margins were discouraging them from buying ANS this week. One refiner which buys and sells the grade said the ANS discount would widen.
"It's just a matter of how much," the dealer said.
Some buyers saw the differential widening to $1.25 below WTI.
The notional price for West Coast ANS fell to $12.89/13.05 a barrel from $13.03/19.
The biggest ANS producer said his company had November cargoes available but declined to make a specific offer to refiners.
Buyers said beteen three and five cargoes were available for November delivery.
In foreign crudes, three cargoes of Oriente, an ANS substitute, were reportedly offered by two Gulf Coast trading houses and a West Coast refinery.
A cargo of Kuwaiti was sold between two West Coast refineries, but neither was available to confirm the deal.
Several major oil firms cut their posted prices for West Coast crudes by 50 cents to 75 cents a barrel Monday, bringing their prices in line with a 80-cent slide in oil futures that day. |
