MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY JULY 13, 1998 (4)
OIL & GAS
Saudi Cuts More from August European Crude Sales
LONDON, July 14 - Saudi Arabia has made larger reductions in crude sales to European buyers for August after pledging at OPEC talks in June to slice production by five percent, traders said on Tuesday.
Customers were informed of the reduced allocations in the past few days after making their nominations for August liftings under Saudi term contracts, the traders said.
''The reductions are larger in August than in July,'' said a trader with one major Saudi customer. ''I'd say they're down about eight or nine percent on average altogether.''
Dealers said the reductions centred where possible on state oil company Saudi Aramco's cheapest grade Arab Heavy. Arab Light sales were also cut in some cases.
Saudi Arabia, the world's biggest oil exporter, had already told some of its European customers to expect lower liftings in July.
Aramco had earlier in the year dealt with its commitment to OPEC to reduce output by about three percent from April 1 by wiping out incremental sales on top of normal term contract volumes.
The latest round of producers' output cuts, effective from July 1, took total Saudi reductions since March to 725,000 bpd on export sales of about six million barrels daily.
Asian buyers were first to see larger reductions when Aramco in June told customers that it was cutting their supplies by 7-8 percent.
OPEC Oil Prices Stable
VIENNA (July 13) XINHUA - The Organization of Petroleum Exporting Countries (OPEC) said on Monday that the average price of its basket of seven crudes stood at 11.53 dollars a barrel last week, roughly the same with 11.54 dollars a week earlier.
The average crude oil price last month was 11.65 dollars per barrel, far less than last year's annual average of 18.68 dollars and the benchmark price of 21 dollars per barrel set by OPEC.
To stablize and boost oil prices, OPEC oil ministers agreed on June 24 to cut down the production ceiling by 1.35 million barrels a day.
The OPEC groups Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, Venezuela and the United Arab Emirates. It is estimated that OPEC members possess 75 percent of the world's known reserves of crude oil.
WORLD CRUDE
Oil Down As Iran Cutback Doubts Deepen
LONDON, July 13 - World oil markets hobbled lower on Monday, as a report of rising Iranian output aggravated doubts over producers' determination to cut back.
International benchmark Brent had dipped to $12.82 a barrel by 1645 GMT, down four cents over the day and now less than a dollar above 10-year lows set in March.
The latest losses will intensify the strain on OPEC producers to carry through 2.6 million barrels per day (bpd) of output cuts agreed so far this year.
''The market remains sceptical about OPEC's ability to maintain output disruption long enough to alter the structural surplus in the crude oil market,'' said a recent report by Washington-based consultants Petroleum Finance Company.
Doubts over producers' determination were exacerbated by a report from the Middle East Economic Survey (MEES) that Iranian output had shot well above its supposed OPEC strictures.
The respected industry newsletter said Iranian production had risen to 3.832 million bpd in June -- up 230,000 bpd from May and almost at par with the April figure of 3.833 million bpd.
This is 350,000 bpd more than Iran agreed to in March's producer pact, and over 500,000 bpd above its the output it pledged from July 1 at last month's OPEC meeting.
Iranian production has been under particular scrutiny since Luis Guisti, head of Venezuela's state oil firm PDVSA, last week publicly berated Iran for cheating on its cutback commitments.
Analysts say that if producers maintain their current 75 percent cut compliance rate they should drag Brent prices back up to around $16 a barrel by the end of the year.
But they caution that the size of the stock surplus piled up so far this year means that any infant recovery would be at the mercy of further economic downturn in Asia, or a slackening of cutback efforts.
''It will take close to two quarters of concerted restraint by OPEC to balance crude oil markets,'' said PFC.
Prospects also retreated of prices getting a lift from supply disruptions in Nigeria, Africa's largest producer
Rioting triggered last week by the death of opposition leader Moshood Abiola cooled off after an autopsy by U.S., British and Canadian experts found he died of natural causes and ruled out poisoning.
NYMEX CRUDE
Oil Prices Slightly Higher in Quiet Trading
NEW YORK (AP) Crude oil prices ended slightly higher Monday in quiet trading as investors shrugged off news of a Russian aid package and renewed political turmoil in Japan.
Traders said the main focus for energy traders remained OPEC's promises to cut back on oil production and whether those nations will follow through.
Light sweet crude oil for delivery in August settled at $13.91 per barrel, up 4 cents, at the New York Mercantile Exchange.
Unleaded gasoline fell .09 cents to 46.72 cents a gallon, and home heating oil rose .14 cents to 37.66 cents a gallon.
NYMEX NATURAL GAS
NYMEX Hub Natural Gas Ends Down On Weaker Technicals
NEW YORK, July 13 - NYMEX Hub natural gas futures ended lower across the board Monday in quiet trade, with deteriorating technicals and softer Gulf Coast physical prices undermining the complex despite warmer forecasts, industry sources said.
August skidded six cents to close at $2.249 per million British thermal units after trading today between $2.235 and $2.315. September settled 5.6 cents lower at $2.28. Other deferreds finished down 1.5 to 4.9 cents.
"It's all kind of breaking down. The (weak) close on Friday was a key catalyst for me. It feels heavy now, and we could test $2.19 (basis August)," said one Texas-based trader, adding a spot close below $2.19 could send prices to the $2 level.
Despite warmer Midwest and Northeast forecasts this week, traders said concerns about high storage and eroding technicals should make any rally difficult.
Early injection estimates for Wednesday's weekly AGA storage report range from 65-90 bcf. For the same week last year, stocks gained 87 bcf. Storage is still 430 bcf, or 26 percent over year-ago levels.
WSC forecasts through Friday call for mostly above-normal temperatures in the Northeast, Mid-Atlantic and Midwest. Texas is expected to remain hot, with readings still averaging four to 10 degrees F above normal. In Florida and the Southeast, the mercury will average two to eight degrees F above normal for the period.
While chart traders agreed the technicals turned bearish after Friday's break of key support and today's follow through, they noted August was still holding above the 40-day moving average, an important point for funds, and above the 50 percent retracement point in the $2.23 area. Next support was seen at $2.09 and then at $2. Interim resistance was still pegged in the $2.42-2.43 area, which was last week's highs. Better selling should emerge at the $2.52 high from July 1, with next resistance seen at the $2.655 double top from April.
In the cash Monday, Gulf Coast swing quotes on average slipped two cents to the mid-$2.20s. Midwest pipes were flat to down a penny in the high-teens to $2.20 area. Chicago city gate gas firmed about a nickel to the mid-$2.30s, while warmer weather in New York firmed city gate gas a couple of cents to the low-to-mid $2.50s. In the West, El Paso Permian was about five cents higher at $2.20.
In the news, Amoco said its gas processing plant in southwest Kansas will remain off line for "weeks," rather than months, after shutting last Thursday because of an explosion in a heat exchanger. The outage cut about 400 mmcfd of supply from the Hugoton field that flows mostly into the Williams system.
The NYMEX 12-month Henry Hub strip fell 3.3 cents to $2.401. NYMEX said an estimated 44,989 Hub contracts traded today, up from Friday's revised tally of 38,110.
NORTH AMERICAN SPOT GAS
US Spot Natural Gas Prices Mixed, Southern Heat Continues
NEW YORK, July 13 - U.S. spot natural gas prices were higher in the West but unchanged to slightly weaker elsewhere as the stifling heat in the South clashed with the early slump on NYMEX, industry sources said.
Forecasts are calling for normal to slightly above-normal temperatures across the Northeast and upper Midwest this week, while temperatures in Texas and the southern plains are expected to remain several degrees above normal through Friday.
Swing Henry Hub cash traded mostly at $2.29-2.30 per mmBtu, down an average of two cents from Friday and still consistent with August trading on NYMEX.
Separately, Amoco said its gas processing plant in southwest Kansas will remain off line for ''weeks,'' rather than months, after shutting last Thursday because of an explosion in a heat exchanger. The outage cut about 400 mmcfd of supply from the Hugoton field that flows mostly into the Williams system.
In the Midcontinent, swing prices were little changed at $2.19-2.20, with Chicago city-gate business reported done mostly at $2.37.
In west Texas, Permian Basin prices traded anywhere from $2.19 to $2.32, indicating a gain of about seven cents from Friday's levels. Traders blamed the uptick on an Operational Flow Order placed on El Paso's system.
Similarly at the southern California border, prices were sharply higher at $2.46-2.65 as the continuing record heat in the south-central U.S. spread further west.
San Juan deals were reported done at $1.83-2.00.
El Paso Natural Gas Co.'s scheduled maintenance outage at its White Rock station is reducing San Juan Basin capacity by 160 million cubic feet per day (mmcfd) through July 25.
In the Northeast, New York city gate quotes were heard at $2.53-2.55.
Canada Spot Natural Gas Prices Slide In Alberta On Extra Supply
NEW YORK, July 13 - Excess supply and a decline on NYMEX pushed Canadian spot natural gas prices lower on Monday, industry sources said.
The sharpest decrease in price was evident in Alberta, where spot AECO storage prices slid an average of 19 cents to C$1.82-1.84 per gigajoule (GJ).
Field receipts in Alberta rose to 12.666 billion cubic feet per day (bcfd) from the previous 12.465 bcfd.
Restrictions into storage also slowed injections, sources said, with 797 million cubic feet per day (mmcfd) seen put into storage.
In the forward market, August AECO prices were quoted at C$1.83, while one-year business was reported done at C$2.53.
In the export markets, prices at Sumas, Wash., fell 10 cents to US$1.42-1.47 per million British thermal units (mmBtu), while Emerson, Manitoba, was quoted equally lower at US$1.48 per mmBtu.
In the east, gas traded at Niagara at US$2.25 early and as low as US$2.15 late, the softness triggered early by an early move by August futures to a low of US$2.25.
|
