AROUND THE KORNER WITH OIL AND GAS PRICING
Closing of Thursday 092498
World Oil Rises As Output Cuts Reduce Stockpile
Oil prices got another boost on Thursday as some fresh buying helped underline a six-week recovery which has added $3 a barrel to the value of crude.
Benchmark Brent blend rose 23 cents to $14.75 a barrel by 1730 GMT, advancing from a mid-August lowpoint which had producers worried there output-cutting attempts to revive the market had failed.
Prices are still nearly 25 percent lower than last year's average and analysts warn that the threat of global economic slowdown will hamper a fully-fledged recovery.
A sixth straight weekly crude stock draw in the key U.S. market has helped reduce massive world stockpiles.
The year-on-year U.S. inventory overhang has now halved from 30 million barrels earlier this summer.
Traders cautioned that the fall in U.S. refinery runs and a large rise in product stocks implied that demand prospects may not be that bright.
''No-one should imagine that this market is out of the woods yet,'' commented a London trader.
Yet recent price gains have relieved some pressure on oil producers who have had to club together this year for some three million bpd of output cuts.
Oil ministers from Iran, Algeria, Kuwait, the UAE and Oman said after a short meeting on Wednesday kept open the prospect of further production cuts.
Kuwaiti Oil Minister Sheikh Saud Nasser al-Sabah said after the gathering that producers might even agree on new cuts before a ministerial meeting of the Organisation of the Petroleum Exporting Countries on November 25.
Others appeared more cautious after the talks which ended with a statement that said the ministers would examine necessary measures including cuts to support prices.
Crude Oil Up As Georges Eyed
Oil prices closed higher Thursday as traders worried that possible damage from Hurricane Georges to oil rigs or shipping operations in the Gulf of Mexico could further reduce American oil stockpiles.
At the New York Mercantile Exchange, crude oil for November delivery closed 17 cents higher at $15.98 a barrel.
While the hurricane's potential impact on Gulf offshore oil and gas supplies was still unclear, consensus was building that "there is more risk to the Gulf than yesterday," said Richard Redash, senior energy analyst at Prudential Securities.
Earlier storms such as Hurricane Earl this month prompted closures and evacuations of crews in the Gulf, a key oil pumping region as well as an off-loading gateway for U.S. oil imports.
Those disruptions in turn caused consumers to turn to U.S. oil stocks, reducing them 9 million barrels last week alone.
The National Hurricane Center said Georges, which has battered the Caribbean from the Virgin Islands to Cuba this week, was expected to reach the Florida Straits by Friday.
Tracking the nervous gains in crude oil, November heating oil closed 0.57 cent a gallon higher at 43.74 cents and November gasoline 0.26 cent a gallon higher at 45.99 cents.
NYMEX Hub Natural Gas Ends With Technical, Storm Gains
NYMEX natural gas futures ended higher Thursday in moderate trade, boosted most of the session by technical buying and renewed concerns Hurricane Georges would threaten U.S. Gulf Coast gas production, sources said.
October climbed 4.8 cents to close at $2.179 per million British thermal units after trading between $2.11 and $2.23. November settled 3.8 cents higher at $2.412. Other deferreds ended up 0.6 to 3.6 cents.
''They knocked it down early, but it held yesterday's lows and the locals drove it up. There's still a lot of people holding length as insurance against the hurricane (Georges),'' said one Texas-based trader, adding if Georges does not hit production zones in the Gulf, prices should fall sharply.
At 1700 EDT, Hurricane Georges was 255 miles southeast of Key West, Florida, moving west-northwest at 14 mph with maximum sustained winds of 80 mph. Georges is expected to strengthen over the next 24 hours and should be in the Florida straits tonight.
Also, brewing in the Atlantic was Hurricane Jeanne, which at 1700 EDT was about 710 miles west of the Cape Verde Islands, moving west-northwest at 15 mph with maximum sustained winds of 105 mph.
WSC expects below normal East Coast temperatures Thursday to climb to above normal Friday through Monday. Florida mostly will range from normal to slightly above normal through Monday, while readings in Texas will mostly remain several degrees F above normal for the period. Normal to above normal Midwest temperatures Thursday and Friday will cool to below normal this weekend. The Southwest will range from one to six degrees F below normal.
Technically, October support was pegged at $2.11 and then at $2.075, with further buying expected at $1.98, $1.835 and the Sept 9 low of $1.78. Resistance was seen at the $2.34-2.35 double top, then at $2.48 and the July 1 high of $2.56.
In the cash Thursday, Gulf Coast swing quotes lost one cent to the low-to-mid teens. Midwest pipes were two cents lower in the $2.01-2.06 area. Gas at the Chicago city gate was little changed in the low-$2.20s, while New York also held fairly steady in the mid-to-high $2.30s. In the West, El Paso Permian slipped a few cents to the mid-to-high $1.90s.
The NYMEX 12-month Henry Hub strip rose 1.8 cents to $2.301. NYMEX said an estimated 80,000 Hub contracts traded today, up from Wednesday's revised tally of 67,256.
NYMEX October natural gas futures expire Monday, Sept 28.
U.S. Spot Gas Off Slightly After Early NYMEX Slump
U.S. spot natural gas prices were mostly weaker on Thursday, coerced lower early by a softer futures market, industry sources said.
Cash prices at Henry Hub, La., remained fairly close to futures today, though cash for the most part shrugged off the late morning uptick on NYMEX.
Henry Hub deals were reported done at $2.14-2.19, with most business seen at the higher end of the range.
NYMEX's October contract, which expires Monday, was traded more widely at $2.11-2.23.
In the Midcontinent, swing prices drooped two cents to about $2.03-2.04, with Chicago city-gate pegged mostly in the low-$2.20s.
Western Texas prices showed a sharper loss as buyers stepped away from the market late. Permian Basin gas prices were quoted at $1.95-2.00, while San Juan gas prices slipped by a similar amount to $1.82-1.84.
On the East Coast, both New York and Appalachian swing prices were in convergence in the mid-to-high $2.30s, sources said.
Meanwhile, Hurricane Georges was about 330 miles southeast of Key West, Fla., moving west-northwest at 12 mph.
The storm was expected to intensify over the next day, with a Category 3 status possible by Friday when it is expected to reach the Florida Keys, forecasters said.
NYMEX Hub Natural Gas Called Up Sharply On Storm Hype
NYMEX Hub natgas futures were expected to open 12-15 cents higher Friday, following a firm ACCESS session and rising concerns Hurricane Georges would disrupt some U.S. Gulf gas production, industry sources said.
October over-the-counter trade this morning climbed to $2.325-2.34 per mmBtu before backing off slightly to $2.29-2.33. On Thursday, Oct settled at $2.179, then climbed to a high of $2.249 during the ACCESS session.
''They're going to jack this thing higher this morning on the storm, but if they can't get through $2.36-2.38 (basis October), you could see it selloff later,'' said one Midwest trader, adding Georges should be enough to keep aggressive sellers at bay today.
Early cash quotes at Henry Hub were in the $2.30 area, up from the high-teens on Thursday.
Hurricane Georges as of 0800 EDT was 50 miles southeast of Key West, Fla., moving west-northwest to northwest at 14 mph, with maximum sustained winds of 100 mph. The storm has been upgraded to a Category 2 hurricane and further strengthening is expected during the next 24 hours.
According to Accu-Weather, there is a one in four chance Georges will reach Category 4 status by tomorrow, adding that some weather models show Georges not reaching southeast Louisiana until Wednesday.
Technically, October resistance was seen at the $2.34-2.35 double top, and then at $2.48 and the July 1 high of $2.56. Support was pegged at $2.11 and then at $2.075, with further buying expected at $1.98.
Oil rises as output cuts reduce stockpile
Canada Spot Natural Gas Prices Mostly Steady Amid Outages
Canadian spot natural gas prices were mostly steady Thursday as ongoing plant outages kept supply fairly tight in the west, industry sources said.
NYMEX's October Henry Hub contract had reached a high of $2.23 per mmBtu by this afternoon, which was up 9.9 cents from Wednesday's settlement.
Prices at Alberta's AECO storage hub were discussed at C$2.13-2.20 per gigajoule (GJ), compared with Wednesday's range of C$2.14-2.19. October was quoted a bit higher at C$2.24-2.25 per GJ, while winter business was reported done at C$2.79.
One Calgary-based trader estimated about 250 million cubic feet per day (mmcfd) of gas was off the system due to plant turnarounds.
Also keeping prices firm was a steady pace in storage injections, with Wednesday's tally reported at 667 mmcfd.
At the Sumas/Huntingdon export point, prices were also fairly flat around US$1.57 per million British thermal units(mmBtu).
To the east, prices slipped three cents to US$2.18-2.22 per mmBtu at the Niagara export point.
Weekly Canadian Spot LPG Prices Sept 24
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Canadian Spot Natural Gas Export Prices - Sept 24
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Canadian Spot Natural Gas Domestic Prices - Sept 24
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