CRUDE OIL PRICING & RELATED / PART 2 - International In Scope
11/10 16:09 FOCUS-OPEC helpless to resist new oil price slump
LONDON, Nov 10 - OPEC oil producers on Tuesday were back to square one in their bid to revive export revenues after another slump on international markets took oil prices dangerously close to this summer's 10-year lows.
The Organisation of the Petroleum Exporting Countries have watched their efforts to rescue the market rebuffed by a stockpile of oil and failing world demand.
London's bellwether Brent blend futures closed on Tuesday at $12.01 a barrel -- not far beyond the $11.55 low touched in August.
OPEC, having already cut supply by 10 percent this year, appears in poor shape to take further action.
Industry monitors say the group is close to its stated aim of removing 2.6 million barrels a day in an attempt to rebalance an oil market glut.
But familiar cracks have appeared in the cartel in recent weeks as member countries point the finger of blame at those alleged not to be fully meeting their pledged supply cuts.
Saudi Arabia, in control of nearly a third of OPEC supply, has repeatedly called for full compliance amid signs that it remains unhappy with the performance of rival producers like Iran and Venezuela.
Some OPEC countries like Kuwait want immediate further output cuts but a meeting of ministers on the fringes of a conference in Cape Town last week appeared to signal only the likely extension of reductions already agreed. December presidential elections in Venezuela mean Caracas is unable to consider any further action.
"OPEC is in a jam at the moment but our soundings suggest some members are considering whether $12 barrel of oil could be their best bet in the longer term," said Leo Drollas of London's Centre for Global Energy Studies.
Meanwhile oil prices show scarce sign of responding to the output cuts, dealers preferring to concentrate on an increasingly bearish picture for the market next year.
"The outlook for crude oil prices still appears gloomy," said Jeremy Hudson of Salomon Smith Barney in a report. "Temporary interruptions to oil production in several countries ... have been largely offset by recent weakness in OECD oil demand as well as the ongoing decline in the non-OECD."
Energy thinktank the International Energy Agency (IEA) on Monday underlined producers' difficulties when it warned that oil consumption this year was proving even weaker than expected and cautioned that the chances of any significant recovery next year had receded.
The Paris-based IEA sliced its forecasts for world oil demand in the remainder of this year and for 1999 and said it had received lowly demand returns from the United States, Mexico, South Korea and China.
Even key producer Iraq's recent tensions over weapons inspections with the United Nations have failed to bolster prices ravaged by a year-long supply glut.
A brief spurt in Brent values that took it to $12.20 at one point came after U.S. Defense Secretary William Cohen said on Tuesday that "time is running out" for Iraq to comply with U.N. arms inspections, but added that no decision had been made on whether to launch a military strike against Baghdad. "This can't go on forever," Cohen told reporters at the Pentagon. "Diplomacy always should have every opportunity to dance. But at some point, a dance has a beginning and an end."
Cohen also said he had ordered the U.S. aircraft carrier Enterprise -- now en route to the Gulf from Norfolk, Virginia, to replace the carrier Eisenhower -- to speed up its transit and arrive on November 23 instead of 26. But he said there was no plan at this time to station both carriers in the region.
"We have all indicated that time is running out," he said when asked if the U.S was getting closer to bombing Iraq, which declared on October 31 that it would halt all cooperation with U.N. arms inspectors unless sanctions against it are reviewed.
Iraqi Trade Minister Mohammad Mehdi Saleh told reporters on Tuesday that Baghdad was discussing with the United Nations a fifth phase of its oil-for-food exchange, an exception to sanctions in place since the 1990 Gulf crisis.
Analysts said that even if the United States uses military action in a bid to force Iraqi compliance with UN resolutions, the exchange looked set to continue.
"The U.N. has made a clear separation of the oil-for-food programme from the lifting of sanctions and is not seeking to block Iraqi oil exports," said Salomon Smith Barney.
However, Iraqi exports might be interrupted if UN supervisors were required to leave the country, it added.
Oil traders said there was little impact on Brent prices after news of the bombing of Colombia's Cano Limon pipeline by rebels which has halted pumping at the 230,000 barrel per day pipeline.
"That's just happening too often to have any effect here but it did help the U.S. market a little bit but people are mainly buying on the back of the defense secretary's comments and it seems they are getting itchy on Iraq again," a trader said.
11/10 16:46 NYMEX crude end higher, API stockbuild forecast
NEW YORK, Nov 10 - Crude oil and refined products on the New York Mercantile Exchange emerged from contract lows and ended higher Tuesday on late short covering ahead of the weekly inventory data from the American Petroleum Institute, traders said.
Traders and analysts were predicting a moderate build in crude stocks for the week ending Nov. 6, but the forecast was not unanimous. Some traders said they think last week's rise in refinery runs meant more crude stocks were processed, resulting in a small dip in inventories.
Still, some traders said they believed the latest API statistics would be "neutral," playing "catch-up" to the U.S. Department of Energy's data, which last week showed a smaller build in crude for the Oct. 30 week, in line with market estimates.
December crude futures settled at $13.52 a barrel, a gain of 14 cents, easing from a session high of $13.64. The contract hit a new contract low of $13.23 at midday in a technically driven slip, but bounced back on Iraq-related news.
December heating oil finished at 37.76 cents a gallon, up 0.31 cent, recovering from a contract low of 37.10 cents.
December gasoline ended at 41.20 cents a gallon, up 0.40 cent. It regained lost ground after hitting a contract low of 40.60 cents.
In London, December Brent crude on the International Petroleum Exchange closed at $12.01, up 14 cents, on a late short-covering spurt, but off its intraday high of $12.20.
At the NYMEX, December crude rose more than 20 cents at midday in a short-covering buildup on news that appeared to show at first glance that the U.S. was raising the stakes in the latest Iraq/United Nations confrontation over arms inspection.
However, while U.S. Defense Secretary William Cohen said "time is running out" for Iraq to comply with U.N. weapons inspections, he also reiterated that President Bill Clinton had made no final decision whether to launch a military strike against Baghdad.
Cohen also said he had ordered the U.S. aircraft carrier Enterprise -- now en route to the Gulf from Norfolk, Va., to replace the carrier Eisenhower -- to speed up its transit and arrive on Nov. 23 instead of the 26th. But he said there was no plan at this time to station both carriers in the Gulf region.
"There was no follow-up news on these developments, and so people took early profits," said a NYMEX trader.
Meanwhile, ahead of the American Petroleum Institute's inventory data, traders and analysts told Reuters in a poll that they expect a crude stockbuild of 2.75 million barrels, stemming from a what they saw as a small rise in refinery runs and a continuing high level of imports.
But the forecast was not unanimous. Some poll participants said the data could go the opposite way and show a draw of between 1.0 million and 3.0 million barrels.
Traders and analysts said they also anticipate a build in distillate stocks, which include heating oil and diesel, of 1.125 million barrels.
A draw of 1.1 million barrels in gasoline stocks was also expected, they said.
11/10 16:55 U.S. spot products-NYH heats up as contango widens
NEW YORK, Nov 10 - Heating oil in New York Harbor extended its gains late Tuesday, rising over 0.60 cent per gallon on its differentials amid a widening contango market, traders said.
December heating oil on the NYMEX settled 0.31 cent per gallon firmer at 37.76 cents, climbing at a faster rate than the January contract which settled 0.23 cent up at 39.04 cents.
The steep contango was making it more attractive to store the barrels, leading to sellers raising their offers in the northeast, traders said.
The Gulf Coast market largely ignored the gains with differentials across the clean barrel slipping on high stocks.
Meanwhile in the Midwest, independent refiner Clark USA Inc denied market talk of problems at its 75,000 barrel-per-day (bpd) Blue Island, Illinois refinery after some traders said the rumor boosted gasoline and diesel differentials by 1.50 cents per gallon.
But by mid-afternoon, differentials already started to ease with only offers heard in the market as traders started to shrug off the rumor.
Ahead of the weekly inventory report from the American Petroleum Institute (API), traders and analysts polled by Reuters said they expected a moderate rise in crude stocks of 2.75 million barrels to 343.7 million for the week ending Nov. 6, reflected by a small increase in refinery runs and strong imports.
But as refineries increase runs, distillates stocks were expected to increase 1.125 million barrels to 146.8 million.
The forecasters also saw a small draw of 1.1 million barrels in gasoline stocks to 200.5 million, saying demand was seen rebounding from the previous week's low level.
On the NYMEX, December gasoline ended up 0.40 cents per gallon up at 41.20 cents per gallon and crude settled up 14 cents per barrel at $13.52.
NEW YORK HARBOR
Harbor heating oil differentials continued to firm from themorning and Monday, totaling a 0.60 cent per gallon rise as sellers were reluctant to sell as players sought supplies to store to take advantage of the strong futures contango, traders said.
Prompt heating oil traded up to a 0.40 cent discount from 0.75 in the morning and 1.05 cent on Monday as the heating oil contango on the NYMEX continued to widen.
Low sulphur diesel was unchanged in thin trade at 0.15/0.25 cent over the December screen, with only pipeline trade heard at 0.30 cent over the print.
Jet fuel's 55-grade traded at a 5.90 premium with bids remaining there, and the 54-grade pegged a 5.40/5.60 cents premium, down a shade on the weaker Gulf Coast.
On the gasoline, conventional regular M5-gasoline differentials were steady with supplies by Nov. 15 pegged at 2.00/1.75 cents under the screen, and the anys at 2.25 cents.
Regular RFG A5 grade was steady at a 0.35/0.50 cent premium, A9 at a 1.50 cents premium, and premium grade D5 at a 2.25/2.50 cents premium.
MIDCONTINENT
While Chicago was still firm amid Clark's refinery rumor, Group Three differentials continued to slide on Tuesday afternoon as the harvest demand died down and high stocks started to reassert themselves.
"Clark has been really aggressive selling at the rack, at its terminals. I don't think it has a problem," said a trader in the Chicago market.
Prompt low sulphur diesel in the Group was talked at flat to 0.25 cent after trading as high as a 1.00 cent premium early in the day. The anys were pegged at a 0.25 cent discount to flat to the screen. Group regular gasoline also slipped a quarter cent to trade at 5.00 and 4.90 cents below the print with the premium pegged ata steady regrade of 2.75/3.00 cents.
Chicago started to ease amid the emergence of sellers but was still firmer than last week.
Prompt Chicago regular gasoline offers fell by over half a cent to a 2.50 cents discount, while low sulphur diesel offers slipped by 0.25 cent to a 4.25 cent premium.
Premium gasoline was pegged at 2.35/3.00 cent regrade.
GULF COAST
Differentials drifted down a shade, attracting a little more trade as most traders were away for a conference in San Francisco.
"It is hard to get things done," a broker said.
Prompt regular conventional M4 gasoline on the back 32 cycle traded at a 5.85 to 6.00 cents discount, down around 0.25 cent while the anys were pegged around 5.75 cents under the December screen.
Premium conventional V4 grades were pegged at a 2.75/2.60, under the screen or around half a cent firmer on its regrade to the M4, pegged at a 3.10/3.45 cents regrade.
The regular reformulated grades was heard traded nearly a penny lower at a 2.75 cents discount to the print, traders said.
On the distillates, prompt low sulphur diesel traded steady at 1.50 cent under, heating oil on the back 33 cycle at 2.65 under.
Jet fuel was the most actively traded with 54-grade traded a shade softer between 1.00 to 1.15 cents over the screen and the 55-grade pegged at a 1.00 to 1.10 cent regrade.
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