NATURAL GAS AND CRUDE OIL MORNING UPDATE / 12/04/98
12/04 09:46 NYMEX Hub gas called to open steady despite cash
NEW YORK, Dec 4 - NYMEX Hub natgas futures were expected to open mostly steady Friday as technicals defied the cash market's 95-cent discount to futures, industry sources said.
January over-the-counter traded at $1.955-1.965 per mmBtu this morning after settling Thursday at $1.959 and rising to a high of $1.975 on ACCESS.
"We're either going to move into the gap ($2.06-2.19) or collapse. It's technicals versus cash right now," a Midwest trader said, noting Henry Hub cash was trading at $1.00 this morning.
Technically, January support was seen at $1.85, and then at the contract low of $1.811, $1.78 and $1.61. Some resistance was seen at $1.975, with stronger resistance expected at the gap between $2.06 and $2.19.
Lending some support to the market, sources said, were weather reports now calling for a colder second half of December in the eastern half of the U.S., a trend which may continue into January.
Following a warmer-than-normal week, cooler weather is forecast to arrive in the central U.S. early next week, pushing midwestern temperatures back to near-normal levels, with highs in the 40s and lows in the mid-20s to low-30s.
Cooler weather is also forecast for the Mid-Atlantic area over the weekend and into next week, though temperature highs are still expected to hover in the low-50s, Weather Services Corp. (WSC) said.
Below-normal temperatures are also expected to linger in the West into early next week, according to WSC.
12/04 04:03 Crude futures rebound slightly in Asia after losses
SINGAPORE, Dec 4 - Crude futures prices in Asia were slightly firmer on Friday, rebounding from overnight losses but failing to shrug off the bearish sentiment that has dogged the market post-OPEC all week.
New York Mercantile Exchange (NYMEX) January futures were last traded at 0854 GMT at $11.28 per barrel, up nine cents from the overnight New York close.
North Sea January Brent futures, trading on the Singapore International Monetary Exchange (SIMEX), were last traded at $10.24, for a gain of six cents compared with London's close overnight.
Both London and New York failed to hold intraday gains on Thursday, hit by late sell orders.
Traders on Friday said market sentiment remained bearish, with expectations that market reaction to single digit prices would be tested in coming sessions.
January Brent dropped to a 12-year low of $10.06 per barrel on Tuesday and NYMEX January crude hit a 12-year low of $10.82 on Monday.
Markets have been hit since OPEC last week failed in a meeting in Vienna to offer any fresh initiatives to bolster stubbornly low oil prices.
Oil markets had at least expected the grouping to extend the current production cuts of 2.6 million barrels per day (bpd) by six months to the end of 1999.
12/04 07:46 World Oil ticks higher, but bears prevail
LONDON, Dec 4 (- Depressed oil prices gained a little ground on Friday even though weak demand and a divided OPEC continued to drive bearish market sentiment.
"These little movements are just background noise," said Peter Gignoux of Salomon Smith Barney in London.
The International Petroleum Exchange benchmark Brent contract stood 14 cents higher at $10.32 a barrel on Friday but average oil prices this year, at around $13.06, are at their lowest since 1976.
The market remained smothered by an enormous stock overhang created by a demand collapse in Asia, an unusually warm start to winter in the northeast United States and rising Iraqi exports.
Even with a cold snap in Europe and Asia, and the forecast of cooler temperatures in the United States next week, heating oil stocks in particular were bursting.
"The problem is where to put them," an analyst said.
Traders were still vexed about the failure of the Organisation of the Petroleum Exporting Countries (OPEC) to take steps last week to support prices, which fell to a 12-year low of $10.06 on Tuesday.
"We are 12 cents away from the OPEC basket (crude price) being 50 percent down on the 1997 average," Gignoux said. "That in itself is a pretty damning indictment of OPEC's aptitude for price stabilization."
OPEC members were divided at a winter meeting last week as Iran and Venezuela were charged with ignoring production curbs, which stand at 2.6 million bpd.
The group neither extended current restraint beyond the agreed June 1999 limit nor agreed to deepen cuts. Instead OPEC appeared to pin its hopes on a further meeting in March. The research arm of Dresdner Kleinwort Benson bank in London on Thursday said OPEC output actually rose by 500,000 bpd in November to 27.5 million bpd after falling slightly in October.
"If our estimate of a rebound in OPEC output proves true, prices could dip further in the near term," the Dresdner Kleinwort report said.
Brokers GNI said the output increase reduced the compliance rate to 74 percent from October's 90 percent.
"These numbers are simply not good enough and prices will fall further unless certain producers see sense," a GNI daily market report said.
Dresdner lowered its average 1998 Brent price forecast to $13.00 a barrel from $13.30 in view of poor fundamentals. It also cut its 1999 Brent forecast to $13.00 from $15.00.
"Short of a miraculously cold first quarter which might add 0.5 million barrels per day to demand, there is little prospect of any meaningful increase in oil prices before March," said the bank's latest oil and gas bulletin.
Even Saudi Arabia, the world's top crude oil exporter, was feeling the pinch. The Financial Times said on Friday that falling prices had forced the kingdom to turn to its United Arab Emirates neighbour Abu Dhabi for a loan estimated by Saudi bankers at $5 billion. The report said the loan was needed to finance the Gulf state's soaring budget deficit.
12/04 11:02 NYMEX crude, products up in choppy trade early
NEW YORK, Dec 4 - Front month oil futures on the New York Mercantile Exchange (NYMEX) trimmed opening gains in choppy trading and moved back up on pre-weekend short-covering early Friday, traders said.
Moving technically, the January contract traded sideways at the opening, setting an early low of $11.13. It then rose by as much as 16 cents to $11.35, its early high, before slipping to near its $11.19 closing on Thursday.
At 1055 EST/1555 GMT, January crude traded at $11.30, up 11 cents cents.
"The early selling is not aggressive, but you may see a late kick," said a NYMEX floor trader.
Another trader said players challenged the $11.35 level and the front month contract came back down after that.
"The market appears to be consolidating and the bloodbath may be over. No one seems inclined to sell crude below $11 now and we are a little bit comfortable at this levels, but the market is relatively quiet," said Dominick Cagliotti, a trader for ABN AMRO-Energex in New York.
Front month refined products traded were mixed, trading sideways.
January heating oil traded at 32.80 cents a gallon, up 0.33 cent. The contract traded between 32.20/32.85 cents.
January gasoline traded at 34.60, up 0.09 cent, a touch near its early high of 34.65 cents. It has climbed from an early low of 33.90 cents.
In London, January Brent crude on the International Petroleum Exchange was rose a bit at $10.28, up 10 cents at 1058 EST/1558 GMT. Traders expected small rallies on short-covering before a price slide in late trade.
12/04 11:03 U.S. cash crudes up slighly, LLS leads advance
NEW YORK, Dec 4 - U.S. light, sweet crude prices climbed slightly higher in the cash market early Friday, reacting to what appears to be a slowdown in competing imports, traders said.
Light Louisiana Sweet/St. James was discussed at just two cents under the cash crude benchmark, West Texas Intermediate/Cushing, compared to a discount of nearly 15 cents a barrel earlier in the week.
The advance came as the spread between U.S. and North Sea crude prices narrowed, making it less economic to move incremental European cargoes which would normally compete with LLS into the Gulf Coast.
LLS prices, as well as prices for other cash market crudes, also benefited from stronger futures, which pushed benchmark WTI/Cushing almost a dime higher to over $11.30 a barrel.
In New York Mercantile Exchange (NYMEX) trading, the front-month January crude futures contract was nine cents higher early Friday, at $11.28 a barrel.
Though crude prices stepped higher with the futures market, traders pointed out that differentials for individual grades in the cash crude market were barely changed during the first hours of the session.
West Texas Sour/Midland was assessed by traders at about $1.45 under WTI/Cushing following a deal late Thursday at that level. West Texas Intermediate/Midland, meanwhile, was talked at a discount of 30 cents a barrel.
Louisiana offshore grade Eugene Island was pegged at -$1.30/-1.20 a barrel.
Meanwhile, WTI/Cushing postings-plus was holding between $2.10 and $2.15 a barrel, considering a spread between January and February futures prices of just over 35 cents. That spread, which typically dictates the direction of postings-plus, had at one point moved as wide at 40 cents a barrel Friday morning. |
