DAILY REVIEW OF NATURAL GAS & CRUDE OIL PRICING - ALONG WITH RELATED NEWS / Part 3
Index Of Articles
11/12 20:30 No More Warnings For Iraq, Says Albright
11/12 15:32 World Oil gains as Iraqi crisis escalates
11/12 16:48 NYMEX oil, products end up as Iraq crisis deepens
11/12 17:18 U.S. cash crudes - Louisiana up, Texas grades down
11/12 17:26 U.S. foreign crude -Ecopetrol tenders four Cusiana
11/12 17:34 North Sea Brent steady in late U.S. trading
11/12 17:58 U.S. spot distillates crack on Colonial freeze
11/12 22:57 U.S West Coast crude diffs flat, traders sidelined
11/13 04:32 Morning Update - SIMEX Brent rises, Iraq tensions build
11/13 06:32 Morning Update - World Oil Up Again On Iraq
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11/12 20:30 No More Warnings For Iraq, Says Albright
WASHINGTON, Nov 12- The United States sent more forces to back up a lethal presence in the Gulf on Thursday and warned Iraq of "significant" military strikes if it failed to end a ban on U.N. arms inspections.
"The Iraqis do not need any further warnings," Secretary of State Madeleine Albright said.
"The president has all the options, and we are watching very carefully ... We have basically said that this cannot go on indefinitely," Albright said in an interview on public television's "NewsHour with Jim Lehrer".
B-52 bombers and radar-avoiding F-117A stealth fighters were ordered to the Gulf. Twelve B-52s were moving from bases in Louisiana and North Dakota to the island of Diego Garcia in the Indian Ocean and the same number of F-117s were flying from a base in New Mexico, to be based in Kuwait.
The giant B-52s, which can fire up to 20 air-launched cruise missiles, and the bat-winged F-117s, built to foil enemy radar and armed with laser-guided bombs, would augment forces already centered around the aircraft carrier Eisenhower.
The additional aircraft are among a total of 139 U.S. combat and support planes being sent to join about 170 already in the region.
There are now 23 U.S. combat ships in the Gulf, including the Eisenhower and its 70 combat and support planes. Eight of the 23 ships are armed with sea-launched Tomahawk cruise missiles. The carrier Enterprise is also en route and is due to arrive in the Gulf over a week from now.
Defense Secretary William Cohen, visiting a Navy base at Norfolk, Virginia, said no time frame had been decided for military strikes. If they were carried out, said Cohen: "They will be significant."
Cohen had talks at the Pentagon with Kuwaiti Defense Minister Sheikh Salem Sabah al-Salem al-Sabah, whose nation was invaded by Iraq in 1990, touching off the 1991 Gulf War that resulted in the inspections regime on Iraq.
The United States brushed off criticism from Iraqi Deputy Prime Minister Tareq Aziz as an attempt to shift the blame for the crisis and said Iraq was more isolated than ever.
Aziz complained Iraq had cooperated with U.N. inspectors for 7-1/2 years after its invasion of Kuwait but U.N. sanctions still had not been lifted due to pressure from Clinton.
Albright noted that Syria and Egypt had issued a statement Thursday affirming Saddam's responsibility for the standoff.
Iraq's demand that sanctions be lifted before weapons inspections were completed was unacceptable, she said. "It's like somebody going to a doctor and insisting he get a clean bill of health, even while the doctor has been telling him that he is sick."
The United States will have no negotiations with Iraq nor will it lay down any final ultimatums or deadlines, White House spokesman Joe Lockhart said.
"There's really nothing to negotiate here. The international community sent a strong, clear message to Saddam Hussein," said Lockhart. "The question is will he hear it."
The timing of an attack remained secret. National Security Adviser Sandy Berger met top foreign policy and military officials at the White House on Thursday evening.
The White House said Clinton still planned to depart on Saturday for an Asia-Pacific economic summit in Malaysia, the first stop on a 10-day trip. It seemed doubtful he would launch a U.S. military operation while overseas.
Lockhart said Clinton consulted by phone with German Chancellor Gerhard Schroeder and the prime ministers of Belgium, the Netherlands and Sweden.
Albright spoke by phone to the foreign ministers of Germany, Slovenia, France, Portugal, Japan and Sweden and was also speaking with key members of Congress.
Sen. Joe Biden, a Delaware Democrat, on Thursday backed a call by Pennsylvania Republican Sen. Arlen Specter, who is urging Clinton to recall Congress from its recess so it could authorize the use of force against Iraq.
"I think it would be politically smart, it'd be substantively sound," Biden told reporters. A congressional resolution would give Clinton "incredible strength ... in undertaking whatever efforts will be taken," Biden said.
Lockhart has said consultations with congressional leaders were sufficient.
11/12 15:32 World Oil gains as Iraqi crisis escalates
LONDON, Nov 12 - U.S. preparation for military strikes against key producer Iraq pushed oil prices higher on Thursday despite doubts that crude exports would be disrupted. International benchmark Brent ended 31 cents up at $12.42 a barrel as U.S. forces began to converge on the Gulf and President Bill Clinton warned he was ready to use force to stop Baghdad obstructing weapons inspections.
Iraq said it saw "no light at the end of the tunnel" in the standoff over weapons inspections and blamed the United States for the impasse.
U.S. Defence Secretary William Cohen warned Baghdad that any strikes would be "significant".
Egypt, Syria and six Gulf Arab states bluntly told Iraq it would be solely to blame for any military action if it failed to heed U.N. demands.
The U.S. is deploying 129 additional aircraft and more than 3,000 troops while all U.N. weapons inspectors and support staff are being withdrawn from Iraq for the first time in seven years.
Yet oil traders remain sceptical that the brewing crisis will actually cause any disruption to Iraqi crude exports except in the unlikely event that energy facilities are directly targeted.
Iraqi crude loadings under its "oil-for-food" programme continued normally on Thursday while the United Nations said it had no intention of withdrawing oil export monitors.
Iraq's state oil company SOMO earlier said that it would have to stop crude loadings, currently worth some two million barrels per day (bpd), if the export monitors were withdrawn.
The oil market's stubborn supply glut is helping to blunt the price impact of rising Middle East tensions.
The head of Mexican state oil company Petroleos Mexicanos (Pemex) said on Wednesday said that economic slowdown in Western industrial countries as well as in Asia was keeping world oil inventories well above last year's levels.
"Despite the reduction in the oil supply by OPEC and other producers, the global oil inventories do not seem to have fallen in a significant manner," said Pemex Chief Executive Adrian Lajous.
Non-OPEC Mexico joined up with OPEC powerhouses Saudi Arabia and Venezuela to marshall two rounds of output cuts this year aimed at rescuing prices with 3.1 million bpd of supply cuts.
Saudi Arabia and Venezuela have emphasised that compliance with existing cuts takes precedence over any new measures as OPEC approaches its full ministerial meeting on November 25.
11/12 16:48 NYMEX oil, products end up as Iraq crisis deepens
NEW YORK, Nov 12 - NYMEX crude oil and product futures ended with good gains Thursday as the United States brushed off Iraq's blame shifting and kept up a buildup of arms and men in the Gulf in the deepening crisis over arms inspections.
"Iraq's the only news today," said a NYMEX floor trader, who added that buying interest was keen throughout the day.
The December crude contract peaked at $13.94 around midday after the latest warning to Iraq from the U.S. defense chief. The contract eased later and settled at $13.84, up 29 cents.
In London, December Brent on the International Petroleum Exchange ended at $12.42, up 31 cents.
The NYMEX front-month heating oil contract ended at 38.70 cents a gallon, rising 0.78 cent. It reached a session high of 39.00 cents and traded as low as 38.40 cents.
News that Colonial Pipeline had frozen November distillate nominations because its No. 2 line was full supported heating oil's advance, a trader said.
The December gasoline contract finished at 41.63 cents a gallon, up 1.09 cents, just a touch below its session high of 41.70 cents. The contract rebounded from Wednesday's heavy selling due to a 1.6 million
barrel stockbuild in the latest weekly inventory report of the American Petroleum Institute.
Traders said the latest U.S. inventory data from the Department of Energy, released early Thursday, a day later than usual because of the Veterans Day federal holiday, "were neutral to slightly supportive."
The DOE said that for the week ended Nov. 6, U.S. crude stocks fell 800,000 barrels. Distillates, mostly heating oil and diesel, increased 100,000 barrels while gasoline rose 1.6 million barrels, it added.
"Despite the data, the bottom line is that we still have a lot of oil everywhere. Any disruption caused by a military conflict in the Gulf could change the situation," said a New York oil trader.
The U.S. military threat against Iraq intensified midday when Defense Secretary William Cohen warned Baghdad that any strikes launched in retaliation for Iraq's ban on U.N. weapons inspectors would be "significant."
As this developed, the U.S. State Department said Baghdad was trying to shift blame for the crisis on the U.S., but the effort was "failing completely." The State Department was responding to a blast from Iraq's Deputy Prime Minister Tareq Aziz, who asserted in Baghdad that his country had cooperated with the inspectors for 7-1/2 years after its invasion of Kuwait, but still had not seen U.N. sanctions lifted because of pressure from Clinton not to do so. Aziz said he saw "no light at the end of the tunnel."
Despite the crisis, the U.S. wants Iraqi oil exports to keep flowing under the United Nations-sponsored oil-for-food program, even while the latest tension appears headed toward a military conflict, said a U.S. State Department official involved in Iraq policy.
Even with the continuation of the U.N./Iraq program, however, one analyst noted there could still be some disruption in shipment of Iraq's oil exports.
"Even without the (current) hostility, there could be an interruption of three to four weeks," said Tim Evans, an analyst for Pegasus Econometric Group. "In the current climate, it could be longer."
11/12 17:18 U.S. cash crudes - Louisiana up, Texas grades down
NEW YORK, Nov 12 - Outright prices for all U.S. domestic crude oil grades were up on Thursday because of the surge in the futures New York Mercantile Exchange, which rose 29 cents to $13.84 per barrel for the front-month December contract.
As far as differentials to the benchmark of the cash grades, the story was Louisiana up significantly, Texas down a bit.
Concern about possible military action against Iraq was the main reason for the rise in values on the futures market, traders said.
Light Louisiana Sweet/St. James and Heavy Louisiana Sweet/Empire rose to about the same level. LLS/St. James was done as strong as 32 cents under the benchmark West Texas Intermediate/Cushing and HLS/Empire was done as strong as minus 37 cents to WTI/Cushing.
After remaining relatively stable for several days, the Louisiana grades took off on Thursday morning and held those values for most of the day, falling off a few cents on Thursday afternoon in the case of LLS.
HLS was the big gainer, going from -75/-70 cents to WTI/Cushing in the early morning to -40/-33 cents in the late afternoon.
LLS went from -46/-43 cents to -38/-32 cents, and was done at -38 and minus 35 cents as well as minus 32 cents. WTI/Cushing was done at $13.87 and $13.86 per barrel after the NYMEX closed on Thursday.
The Texas grades lost several cents in their relations to WTI/Cushing.
West Texas Intermediate/Midland lost about three cents on the day to end pegged at -41/-38 cents.
West Texas Sour/Midland lost about eight cents on the day to be done at minus $1.78 and pegged at minus $1.79/minus $1.76.
Eugene Island crude joined the other major Louisiana grades in gaining value in terms of differentials on Thursday. It ended pegged at -$1.32/-$1.22, up about 12 cents.
Postings-related WTI/Cushing were also steady, with deals heard done at $2.32 and $2.33. Postings were valued at $2.32-2.34.
11/12 17:26 U.S. foreign crude -Ecopetrol tenders four Cusiana
NEW YORK, Nov 12 - The U.S. market for imported crude remained in the doldrums Thursday even as the latest row between Iraq and the U.N. raised concerns that Iraqi crude exports could be in jeopardy.
Those concerns pushed crude futures 29 cents higher to $13.84 a barrel in New York, but carried less weight in a spot market saturated with oil from the North Sea, West Africa, and Latin America.
WEST AFRICAN, NORTH SEA
-- The trans-Atlantic arbitrage has narrowed slightly, but still finished Thursday at $1.42 a barrel, leaving the door open for crude to move profitably from the North Sea to the Gulf Coast.
-- In the latest physical deal, a trader confirmed selling a mid-December Oseberg cargo destined for the U.S. Gulf Coast at January WTI less 90 cents a barrel.
-- Even though another trader was said to have withdrawn an offer for a million barrels of December North Sea Brent, there was speculation that between two and three million barrels could be moved to the U.S. at a discount to January WTI of about $1.00 a barrel.
"There's a lot of sweet crude out there, a lot of West African, Brent, and Cusiana," one trader said Thursday.
LATAM - VENEZUELA, COLOMBIA, ECUADOR, CHILE, MEXICO
-- Indeed, Colombia's Ecopetrol has issued a tender for four cargoes of Cusiana, its main light crude, loading December 29-January 4. The deadline for bids is November 17.
For the moment, Cusiana is being discussed by traders around $1.50 to $1.60 under WTI.
-- Crude traders said an Ecopetrol tender for a December Vasconia cargo is expected to be awarded on Friday.
-- Meanwhile, Ecopetrol said Thursday the Cano Limon-Covenas pipeline had been repaired and was pumping again after it was bombed earlier this week by leftist rebels. It was the 70th time the pipeline has been bombed so far this year.
-- Only one or two cargoes of Venezuela's light sweet Mesa/Furrial remain on offer for December, traders said, as steady sales of the crude into the Caribbean over the last two months have cut into spot availabilities.
Mesa/Furrial changed hands earlier this week at $2.73 under WTI, they added, or about five cents weaker than trades a week ago.
Santa Barbara, another light sweet crude, was last done at $1.65 under the U.S. benchmark.
IRAQ
-- The sour crude market remains well offered, with Iraq's Basrah Light being shown in the Gulf Coast at WTI less $2.10 a barrel for early January arrival.
It remains to be seen, however, if rising tensions between the U.S. and Iraq will impact Baghdad's oil exports. Despite threats of military strikes, a U.S. State Department official said Thursday that the U.S. wants to keep Iraqi oil exports flowing under the oil-for-food deal.
11/12 17:34 North Sea Brent steady in late U.S. trading
NEW YORK, Nov 12 - North Sea Brent remained steady in late trading in the U.S. on Thursday, traders said.
January Brent was unchanged from its close on the International Petroleum Exchange at $12.73 a barrel.
Aftermarket activity on Thursday included a full cargo of January cash Brent at $12.72, traders said.
Other activity included 100 lots of January Brent cash partial cargoes at $12.72 and 550 lots of January cash partials at $12.75.
Traders said there were no spread deals in Thursday's aftermarket.
11/12 17:58 U.S. spot distillates crack on Colonial freeze
NEW YORK, Nov 12 - U.S. Gulf Coast distillates crumbled late Thursday after the Colonial Pipeline froze nominations on the prompt 32 November cycle, traders said.
Colonial Pipeline officials said late Thursday morning the distillates number two line was full for November.
"Nobody will add to the 32 cycle after this morning," said Woody Reynolds, a Colonial Pipeline coordinator.
The freeze on November distillates follows Colonial Pipeline's freeze of November gasoline nominations Wednesday.
The freeze also thrashed jet fuel differentials on the refining row, wiping out the premium as it erased the early morning gains and jitters on the growing tensions in the Iraq crisis.
Both New York Harbor heating oil and gasoline fell due to the drop on the Gulf, but some traders thought the proration on the Colonial pipeline would strengthen the market sometime next week.
"There is a glut of product on the Gulf and a shortage in the northeast," a trader said.
The freeze also shrunk the diesel premium in Chicago by 2.0 cents.
"If you can't get the oil into the Colonial, it will have to go to the Explorer (pipeline) which means you have to sell it in Chicago," a trader said.
On the NYMEX, crude oil and product futures ended with good gains as the U.S. brushed off Iraq's blame shifting and kept up a buildup of arms and men in the Gulf in the deepening crisis over arms inspections.
The December crude contract settled at $13.84 per barrel, up 29 cents, front-month heating oil contract ended at 38.70 cents a gallon, rising 0.78 cent and gasoline finished at 41.63 cents a gallon, up 1.09 cents.
GULF COAST
Jet fuel crashed by late Thursday after a brief early morning rally on tensions with Iraq, while the other distillates similarly shed over a penny on the Colonial distillate line proration, traders said.
"No one is looking to sell and buyers are trying to pressure down the market...it is the typical reaction to proration," a trader said.
Prompt front 33 cycle jet fuel on the 54-grade last heard offered at flat to the December NYMEX heating oil screen after bids as high as a 1.50 cent premium in the morning after ittraded at 1.25 to 1.35 cent over the screen. On Wednesday it traded at 1.00 to 1.15 cents.
Prompt low sulphur diesel lost around 0.8 point to 2.25 cents under the print and heating oil traded 1.20 cent lower at a 3.90 cents discount after the Colonial freeze announcement. The focus shifted away from the gasoline with the prompt gasoline 32 cycle which was frozen on the Colonial Pipeline pegged at 6.65/7.00 cents, holding the previous day's losses.
More talk was heard on the front 33 cycle was pegged at a 6.60/6.50 cents discount on the regular conventional M4 gasoline. The anys, or back 33 were at a shade firmer at 6.40/6.25 cents under the print.
Premium conventional V4 grades were offered lower at a 3.00cent regrade to the M4, the reformulated regular A4 at a 2.75/2.50 cents discount to the print.
MIDCONTINENT
Chicago low sulphur diesel was thrashed down by the news of the Colonial freeze, and abundant selling, traders said.
"There is a lot of volume and abundance of selling," said a trader.
Low sulphur diesel in Chicago dropped 2.00 cents to trade several at a 0.50 cents premium on the prompt cycle, while gasoline which already made its losses on Wednesday was pegged steady at 4.75 cents below the print.
In the Group, gasoline and diesel differentials were steady after regular gasoline slipped early morning to trade a number of times at 5.00 cents under the print and low sulphur diesel was pegged steady at a 0.25 cent discount.
NEW YORK HARBOR
Jet fuel shrugged off war bulls and slipped on the Gulf distillate's crater traders said.
Prompt gasoline differentials also slipped at 2.75/2.50 cents under for material by November 15.
Heating oil differentials weakened slightly on the back of Gulf differentials and were pegged at 0.75/0.50 under the screen, with 0.65 cent under getting done for barge barrels.
Heat was still comparatively strong, about 0.45 cent higher than last week. Sellers were still holding supplies to take advantage of the strong futures contango, traders said. January futures were running more than 1.2 cents higher than December futures.
Low sulphur diesel was unchanged in thin trade at 0.15/0.25 cent over the December screen, with only Laurel pipeline trade heard at 0.30 cent over the print.
Jet fuel 54-grade slipped to 5.35/5.50 while 55-grade was pegged at 6.50/7.00 cents over the screen.
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.
11/12 22:57 U.S West Coast crude diffs flat, traders sidelined
LOS ANGELES, Nov 12 - Differentials for U.S. West Coast waterborne crude oil were steady in thin trade Thursday, with no Alaska cargoes sold, traders said.
Alaska North Slope (ANS) bids were reported much wider than the previous deal of $1.37 a barrel below November West Texas Intermediate (WTI) crude.
"I heard people are bidding a $1.75 a barrel under WTI," one dealer said
Other dealers heard ANS was offered in San Francisco at $1.50 a barrel under WTI but was the sale was turned down.
Refiners remained sidelined, aiming to draw down supplies to avoid large year-end inventories which could result in large tax liabilities.
Dealers said it might take some time for refineries to assess their supply needs for rest of the year and that could dampen trade.
No trades were reported for California grades, traders said.
In foreign trade, there was talk that a distressed cargo of Oriente was offered to the West Coast by a trade house at a $2.80 discount to December WTI.
The discount of ANS crude for delivery on the West Coast remains at $1.37 a barrel, so the notional spot price for ANS rose to $12.59/12.75 a barrel, a rise of nearly 30 cents.
11/13 04:32 SIMEX Brent rises, Iraq tensions build
SINGAPORE, Nov 13 - December Brent futures traded higher in Asia pre-expiry on Friday, propped up by Iraq.
December Brent on SIMEX rose by 17 cents per barrel to $12.58 at 0930 GMT, after settling 30 cents firmer at $12.41 in London on Thursday.
The contract expires later in London.
Tensions between Iraq and the U.S. have been building, with Baghdad showing no sign of reversing its decision to stop cooperation with U.N. arms inspectors, even as Washington prepares for a possible military strike.
On Friday, remaining U.N staff in Baghdad were moved out of their hotels and into the more secure U.N. headquarters building in anticipation of possible U.S. air strikes.
Britain's Prime Minister Tony Blair wrote in an article in the Mirror tabloid that military action would be used if needed, if Saddam Hussein continued to defy the U.N.
December NYMEX on ACCESS was up by 21 cents to $14.05.
It closed 29 cents higher at $13.84 in New York.
MORNING UPDATE
11/13 06:32 World Oil Up Again On Iraq
Gold and oil both rise in London as threat of military action accelerates
LONDON - Oil prices continued to climb in London Friday, adding 18 cents a barrel as the threat of military action in the Gulf moved closer to reality.
Armed conflict would affect supplies in the key oil producing region and while analysts say global oil stocks are high, the price of Brent Crude has been climbing all week.
December Brent crude was up 18 cents or 1.5 percent at $12.59, following a 30 cent gain Thursday. The resistance level is seen at $12.72 then at $13.
U.N. staff in Baghdad were moved out of their hotels into the more secure U.N headquarters ahead of possible U.S. air strikes.
With the crisis deepening, safe haven-investment gold was also heading up. It was fixed at $297.25 in morning trade in London, up one percent to $297.20
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