OIL AND NATURAL GAS PRICING SCENE - PART 2 THURSDAY 10/15/98
North Sea Brent up 1 cent in aftermarket trading
North Sea Brent gained a cent in late U.S. trading, dealers said Wednesday.
December Brent was valued at $13.11 a barrel after finishing the day at $13.10 a barrel on the International Petroleum Exchange in London.
Dealers said no full or partial cargoes of November Brent changed hands. Three 200-lot cargoes was sold. Two were done at $13.12 per barrel with the third at $13.08 per barrel.
November Brent closed at $12.69 per barrel.
Also, the Brent November-December spread traded twice at minus 38 cents and once at minus 37 cents.
NYMEX crude ends near $14; API stockbuild seen
Expectations of a big weekly build in U.S. crude stocks cut down the front month contract on the New York Mercantile Exchange to as low as $14 a barrel Wednesday ahead of the weekly industry inventory report, traders said.
A bit of late buying at the close pushed up NYMEX November crude, which closed at $14.05, down 18 cents from Tuesday's settlement. In the morning, the contract hit an intraday high of $14.28, up five cents.
Market forecasters were anticipating a large build of 4.875 million barrels for the week ending Oct. 9, reflecting return to near-normal production in the Gulf of Mexico and a catch-up in usual offloading of crude on the Louisiana Offshore Oil Port (LOOP), they said. The forecasters noted that previous big draws in recent weeks were due to production shut-ins as well as delays in offloading imports on the LOOP.
"Cargoes were being offloaded normally on the LOOP last week," said Tom Bentz, an analyst at Cresvale International, adding that the facility had been open all of last week.
November gasoline settled at 43.52 cents a gallon, up 0.06 cent. The contract traded between 43.10/44.00 cents a gallon.
November heating oil ended at 38.16 cents a gallon, down 0.43 cent, afer hitting a session high of 39.10 cents.
Ahead of the API data for last week, traders and analysts polled by Reuters said they expected a large build of 4.875 million barrels in crude. They also predicted a small build of 666,000 barrels in distillate stocks, which include heating and diesel oil, and a similar slim increase in gasoline stocks of 687,000 barrels.
Those polled noted that the effects of hurricane-induced production disruptions in the Gulf of Mexico and refinery shutdowns on the Gulf Coast have largely eased.
One market contrarian said, however, that he expected a draw in crude stocks of up to 1.5 million barrels. He said there would also be draws of between 1.2 million to 2.3 million in gasoline and 1.0 to 2.0 million in distillates.
Otherwise, news on Wednesday of continued unrest in Nigeria's oil rich Niger Delta, which has shut in production, and delays in shipments of Nigeria's Forcados crude had little impact. Traders attributed their non-interest to high U.S. crude inventories, which on Oct. 2 stood at 319.1 million barrels, up by some 11 million barrels from a year ago, despite a 3.9-million-barrel draw in the API data for the same week.
U.S. Cash Crude - Sweet and sour suffer losses
U.S. cash crude prices were pounded lower Wednesday by concerns about both sweet and sour imports steaming toward a market already battling against a supply glut.
West Texas Sour/Midland was the hardest hit of domestic crudes, as differentials slumped 15 cents a barrel over the course of the day. Light Louisiana Sweet/St. James fared only slightly better, losing about 10 cents in relation to West Texas Intermediate/Cushing.
The American Petroleum Institute (API) stock figures, delayed a day this week because of a holiday, were due to be released after the market closed Wednesday and could add further to the bearish sentiment which has taken hold of the market this week.
Crude traders appeared to be betting early that the statistics would indeed show a rise in crude stocks, as they sold crude futures 18 cents lower on the New York Mercantile Exchange. The November contract stood at $14.05 a barrel when trading closed Wednesday, just above the session low of $14.00.
That left WTI/Cushing, the cash crude benchmark, camped at just under $14.10 a barrel traders said, pointing to an exchange-for-physical premium of about four cents a barrel.
WTI/Cushing prices closed down a similar amount Tuesday despite comments by oil ministers from Kuwait and Algeria that further production cuts could be agreed by OPEC.
OPEC producers have been banking on two rounds production cuts to arrest a fall that has swiped more than six dollars from oil prices in the last year, but have been frustrated by a stubborn supply glut at every turn.
In the U.S., even though crude stocks have dropped sharply over the last two months they still stand 11 million barrels above year ago levels at 319 million barrels, according to API data published a week ago.
For the most part, traders expected Wednesday's data to show a sharp rise in stocks, possibly by as much as five million barrels, and a jump in overall crude imports.
Concerns over the last few days that a rush crude oil imports could be steaming across the Atlantic toward the Gulf coast have put sharp pressure on Light Louisiana Sweet/St. James, the grade likely to be hardest hit by any build in light, sweet crude supplies.
By late Wednesday, cash crude traders said it had tumbled to 37, 38, and 39 cents below WTI/Cushing after starting the day at a 30 cent discount to the benchmark.
"Dated Brent came off hard today, and over here everything just seemed to follow suit," said one trader, referring to the 20 cent drop witnessed in Dated Brent. The trader said that the losses only added fuel to concerns about foreign competition in a market where North Sea crude is already being shown at "pretty cheap" prices.
Heavy Louisiana Sweet/Empire has largely taken its lead from LLS, and on Wednesday started at minus 80 cents then slipped to minus 90 cents a barrel beneath WTI/Cushing.
West Texas Sour/Midland jumped several cents on Tuesday but retreated again in the early hours of trade Wednesday changing hands at minus $1.40 and $1.41 a barrel. But as the day progressed, it too was hit by competition from foreign sources, and plummeted to discounts of $1.50 and $1.52 a barrel Other cash crude differentials were largely stuck in a narrow range, traders said. West Texas Intermediate / Midland was discussed between 27 and 25 cents below the benchmark, while postings plus was pegged at $2.35 to $2.38 a barrel.
U.S. West Coast ANS slips lower in listless trade
U.S. West Coast Alaska North Slope (ANS) crude prices slithered lower in response to weaker oil futures, which undercut prices for U.S. benchmark West Texas Intermediate/Cushing, traders said Wednesday.
While no fresh ANS trades were reported, there was talk that several sellers have emerged and the market could feel additional downward pressure in the days ahead.
"There's only one buyer and several sellers in the market right now," one trader said, adding that with "products still sloppy, refining margins just don't look that good."
The outright price for ANS on Wednesday followed the nearly 20 cent drop in WTI cash prices. The last deal for ANS was Friday, when a cargo was sold at $1.025 under November WTI.
In the futures market, the New York Mercantile Exchange November contract settled lower at on continuing concerns about a stubborn supply glut.
Figures released by the American Petroleum Institute (API) Wednesday evening showed a 8.2 million barrel build in nationwide crude stocks last week, leaving inventories at 327 million barrels.
On the West Coast, crude inventories jumped by 3.7 million barrels last week to 56.4 million barrels, the API reported.
U.S. spot products -Steady, awaits stock direction
U.S. spot product differentials were rangebound late Wednesday as activity shriveled up ahead of stock data reports and as an industry outing took players out of the market, market sources said.
"Its been pretty quiet...everyone is away in Texas for the Conoco outing," a broker said.
The market was also looking to the the weekly inventory data from the American Petroleum Institute due out later Wednesday.
Traders and analysts said they predicted a small build of 666,000 barrels in gasoline to 208 million, and a 687,000 barrels rise in distillates to 153 million.
But crude stocks were expected to rise by five million to 319 million barrels as hurricane-induced production disruptions for most of September are now over.
They also see refineries raising processing runs by 2.5 percentage points, edging up to the high pre-hurricane season levels and ahead of the seasonal plant-maintenance period.
The forecast weighed November crude on the NYMEX - falling 18 cents per barrel to $14.05. November products rose however -- gasoline up 0.06 cents per gallon to 43.52 cents and heating oil
On the NYMEX, crude oil settled down 18 cents to $14.05 a barrel, while November heating oil closed down 0.43 cent to 38.16 cents a gallon, and November gasoline closed six cents higher at 43.52 cents a gallon.
GULF COAST
Prompt conventional gasoline edged up a shade amid thin trade, traders said.
Regular conventional M3 gasoline was traded around a quarter firmer at 2.85 cents under the screen, with the anys at 3.40/3.25 cents under. Prompt A3 reformulated gasoline was pegged at 1.70 cent regrade.
Jet fuel 54-grade slipped down around a quarter cent to a 3.00 cents premium.
Distillates were rangebound to firm amid scheduling on the back 29 cycle of heating oil which traded up a quarter to 1.50 cents under the screen. The anys were pegged at 1.50/1.60 cent discount.
Low sulphur diesel was pegged a shade firmer at 1.60 cents over the print.
NEW YORK HARBOR
Differentials added slightly to or held Tuesday's gains Wednesday as players covered shorts ahead of an industry in the U.S. Gulf later in the week, traders said.
Prompt heating oil was steady, pegged at 1.70/1.40 cents under the screen, keeping a grip on Tuesday's 0.40 cent gains, and trading at 1.60 cents under the screen.
Low sulphur diesel was rose about 0.30 pegged at 2.75 to 3.25 cents over the screen.
Prompt M4 Harbor gasoline was steady, pegged at 1.50/1.25 cent under the November screen, amid thin trade, players said.
Jet fuel 54-grade added 0.25 cent to Tuesday's penny gains, at 5.25/5.50 cents. Jet-kerosine 55-grade was pegged at 5.75/6.00 cents over, traders said.
Meanwhile A4 regular reformulated rose about 0.20 cent on poor refining economics for the product.
On the premium grades, conventional V4 was pegged at 2.75/3.00 cents premium and D4 RFG was pegged at 4.75/5.00 cents premium.
MIDCONTINENT
Differentials were steady as the market awaited stock data direction, sources said.
Prompt Chicago regular gasoline was pegged at a 3.00 cent discount to the screen and premium grade was at a 2.75/3.00 cents regrade.
Group Three's regular gasoline was pegged at 1.70 cent under. Premium grades were pegged at a 6.25/6.50 regrade.
Low sulphur diesel in the Group was assessed at 3.00 cent premium to the print, while Chicago was at a 2.10 cents premium.
NYMEX natural gas ends down, ACCESS rebounds after AGAs
NYMEX Hub natural gas futures, hit by technical selling after an early rally stalled, ended lower Wednesday in quiet trade, then climbed on ACCESS after a bullish weekly inventory report, industry sources said.
In the day session, November slipped 4.3 cents to close at $2.041 per million British thermal units after trading between $2.035 and $2.15. Then on ACCESS, the spot contract traded up to $2.075 shortly after the AGA storage report. December settled 5.8 cents lower at $2.308. Other deferreds ended flat to down 4.9 cents.
''I was surprised by the (AGA) number, but I don't think storage makes any difference now. The bottom line is weather, and there's no real cold forecast for the next 10 days,'' said one East Coast trader, noting November rallied early today with the cash but failed to fill the gap above $2.16.
AGA said Wednesday U.S. gas stocks rose last week by 41 bcf to 93 percent of capacity, well below Reuter poll estimates in the 55-65 bcf range. Overall stocks slipped to 232 bcf, or 8.5percent, over a year ago.
Eastern inventories rose 29 bcf and were three percent above last year. Consuming region west storage, which climbed six bcf for the week, was up 13.5 percent from 1997 levels. Stocks in the producing region were up six bcf and stood 20 percent over year-ago.
To get stocks to 3.1 trillion cubic feet by October 31, weekly injections of about 49 bcf are needed.
While firmer physical prices today helped narrow the gap to paper, some still expected mild weather and the 30-cent futures premium to cash to weigh on the market near-term.
WSC expects slightly below normal midweek temperatures in the Northeast and Mid-Atlantic to warm to four to eight degrees F above normal by Sunday. The Southeast and Florida will average one to eight degrees above normal through Sunday. Seasonal midweek readings in the Midwest will climb to as much as 12 degrees above normal by the weekend. The mercury in Texas will vary several degrees on either side of normal for the period, while the Southwest will average two to 12 degrees below normal.
Chart traders pegged November support in the $2.03 area, with further support at $2.015 and then in the mid-$1.90s, a measurement from Monday's gap. Interim resistance was seen at the $2.16-2.18 gap, then at $2.25 and then in the $2.40 area. More selling was likely at the Oct 1 high of $2.53.
In the cash Wednesday, Gulf Coast swing quotes firmed about a dime to the mid-to-high $1.70s. Midwest pipes were up seven cents to the mid to high $1.70s. Gas at the Chicago city gate was about five cents higher in the low-$1.90s, while New York gained 10 cents to about the $2.00 level. In the West, El Paso Permian jumped more than a dime to low-$1.80s.
The NYMEX 12-month Henry Hub strip slid 2.2 cents to $2.217. NYMEX said an estimated 52,954 Hub contracts traded today, down from Tuesday's revised tally of 57,166.
U.S. spot natural gas prices rebound with NYMEX
U.S. spot natural gas prices rebounded Wednesday in conjunction with an early uptick on NYMEX ahead of this afternoon's American Gas Association (AGA) storage report, industry sources said.
A Reuters poll revealed that most were expecting an injection between 55 and 65 bcf when the AGA releases their data later Wednesday.
Swing gas prices at Henry Hub were up an average of 10 cents to $1.72-1.85, sources said.
Cash continued to hold a significant discount to November futures, which jumped to a high of $2.15 this morning.
In the Midcontinent, prices tacked on about seven cents to reach the mid-$1.70s to low-$1.80s, while Chicago city gate was pegged mostly at $1.90-1.94.
In west Texas, El Paso Permian gas traded at $1.78-1.85, while Waha values were quoted similarly higher at $1.80-1.88.
The San Juan and Southern California markets also firmed, with deals reported done at $1.75-1.83 and $2.23-2.30, respectively.
On the East Coast, New York city gate prices were quoted widely at $1.92-2.05, while Appalachian quotes were heard mostly near $2.
U.S. spot natural gas prices - October 14
OCTOBER ($/mmBtu)........................10/14...............10/13
U.S. GULF OFFSHORE...................1.69/1.74.......1.59/1.64
TEXAS COAST................................1.73/1.78.......1.62/1.67
WESTERN TEXAS...........................1.79/1.84.......1.66/1.71
LOUISIANA COAST.......................1.74/1.79.......1.64/1.69
NORTHERN LOUISIANA...............1.76/1.81.......1.66/1.71
OKLAHOMA ..................................1.75/1.80.......1.68/1.73
APPALACHIA .................................1.97/2.02.......1.86/1.91
SO. CALIFORNIA BORDER ..........2.24/2.29.......2.13/2.18
HENRY HUB ...................................1.78/1.81.......1.68/1.71
WAHA HUB ....................................1.81/1.86.......1.69/1.74
Canadian natural gas firm on low supply, cold weather
Canadian spot natural gas prices were firm on Wednesday as continued tight supply and cold weather forecasts in Alberta maintained upward pressure on prices, industry sources said.
''There's just not as much supply out there as everybody thought there would be,'' said a Calgary-based marketer. "And they're calling for cold weather tomorrow."
Day prices at Alberta's AECO storage hub were steady at C$2.63/2.68 per gigajoule, almost even with the November contract, which was quoted at C$2.68 per GJ.
Prices at Westcoast Energy's Station 2 compressor tracked up to match AECO prices, trading at C$2.64/2.66, up about eight cents from Tuesday.
At the Sumas/Huntingdon export point, prices were up sharply to US$1.87/1.92 per million British thermal units, an increase of 22 cents over Tuesday trade.
Export prices at Emerson were discussed at US$1.80/1.84 per mmBtu, up about seven cents on the day.
Canadian spot natural gas export prices - Oct 14
EXPORT (OCT SALES)......................$CDN/GJ .........$US/MMBTU
HUNTINGDON B.C. .......................2.69/2.76.........1.87/1.92
KINGSGATE B.C. (TO PNW)..........2.67/2.75 N.....1.86/1.91 N
MONCHY SASK .............................2.08/2.16 N.....1.45/1.50 N
EMERSON MAN .............................2.59/2.66.........1.80/1.85
NIAGARA ONT ...............................2.83/2.90 N.....1.97/2.02 N
Canada/U.S. dollar conversion based on Bank of Canada rate.
Canadian spot natural gas domestic prices - Oct 14
DOMESTIC (OCT SALES).................$CDN/GJ.........$US/MMBTU
ALBERTA PLANT-GATE ................2.51/2.56.............1.75/1.78
ALBERTA BORDER - EMPRESS.....2.74/2.79.............1.91/1.94
STATION 2, B.C. .............................2.63/2.68.............1.83/1.86
SASK. PLANT-GATE ......................2.51/2.56.............1.75/1.78
TORONTO CITY-GATE ..................2.80/2.87.............1.95/2.00
1-YR PCKGS - EMPRESS ...............2.74/2.79.............1.91/1.94
AECO ................................................2.63/2.68.............1.83/1.86
N=notional. One yr package beginning November 1.
Canada/U.S. dollar conversion based on Bank of Canada noon rate.
One year packages converted to U.S. dollars at a 12-month forward rate. |
