OIL AND NATURAL GAS PRICING SCENE - PART 2 TUESDAY AM 10/20/98
10/19 20:16 U.S. West Coast crude discounts flat in idle trade
LOS ANGELES, Oct 19 - U.S. West Coast spot crude oil differentials were flat on Monday with trade dampened by an industry conference, though notional prices fell in response to sharp losses for NYMEX oil futures.
The last deal for Alaska North Slope (ANS), the primary grade on the West Coast, was done Oct. 9 at a discount of $1.025 a barrel to the benchmark U.S. crude, West Texas Intermediate (WTI).
The notional price for West Coast ANS at the same discount fell to $12.28/45 a barrel from $13.05/22.
No fresh trades were reported with most traders at an industry golfing event.
"It's been really quiet with everyone out," a West Coast trader said.
Several major oil firms cut their posted prices for West Coast crudes by 50 cents to 75 cents a barrel Monday, bringing their prices in line with a 80-cent slide in oil futures on the NYMEX.
10/19 20:34 Crude oil futures ease in U.S ACCESS trade
LOS ANGELES, Oct 19 - U.S. November crude oil futures eased from their NYMEX close in active after-hours trading on Monday, traders said.
By 1720 PDT, the November crude contract was trading at $13.34 a barrel, a loss of one cent from its NYMEX close where it finished the session with a loss of 80 cents at $13.35.
Dealers said this indicated that traders were wanted to sell their crude before it slipped any further.
"It looks like we will see continued downside pressure," a dealer said. "December (crude) has been trading the most."
Traders expected weekly supply data on Tuesday to show builds in U.S. supply and weaken prices further.
Volumes in the crude oil were heavy, with 2,289 lots traded in all futures months, and 455 in the front-month.
Heating oil and gasoline contracts heavily traded as well, after prices dropped sharply on NYMEX.
The November heating oil contract closed 1.40 cents lower on NYMEX at 37.72 cents a gallon, and lost 0.02 cent a gallon more to 37.70 in ACCESS trade.
10/20 03:00 US Crude Outlook - Oversupply turns market bearish
NEW YORK, Oct 7 - The U.S. crude oil market will feel the pressure of several ships of foreign oil heading to the U.S., particularly since U.S. demand for crude is not very strong, traders and analysts said on Wednesday, after the release of the latest U.S. inventory data.
"I think we are heading down. There is a significant upswing in (crude) imports," Ritterbusch said, pointing to a fleet of ships carrying Brent towards the U.S. market.
One U.S. trader is said to be bringing four Ultra Large Crude Carriers (ULCCs) of the light sweet European crude towards the Gulf Coast, while other traders are also said to be showing November Brent in the U.S. Gulf at discounts around 75 cents under December West Texas Intermediate. Each ULCC carries more than 300,000 tons, or more than two million barrels of crude.
While imports are said to be streaming in, few companies are keen to build stocks any higher given the relatively narrow "roll" between November and December prices of U.S. benchmark WTI.
"The roll is coming off at the moment, but you're not going to see anyone rushing to build stocks with this contango," said one Gulf Coast crude trader. November crude is now trading between 20-18 cents a barrel lower than December crude, not enough incentive to store barrels.
News of production disruptions in Nigeria is not proving especially supportive of crude markets, traders said, noting that there were still ample early November barrels and still some October barrels of West African crudes as yet unsold. A series of community disturbances in Nigeria have stopped one fifth of the country's production, but traders said they were still monitoring the situation.
The latest U.S. inventory figures released earlier this week are not much help either, and traders dismissed the odd figures, saying they reflected short-term disruptions caused by hurricane Georges. While the American Petroleum Institute (API) figures showed a sharp drawdown of 3.8 million barrels, the U.S. Department of Energy report showed a build of 2.7 million barrels in U.S. stocks of crude oil.
"The statistics were neutral to bearish," said Nizam Sharief of Hornsby & Co., adding that the the disparity in the weekly reports reflected the disruptions caused by hurricane Georges, the fourth storm to pound the Gulf of Mexico in as many weeks.
"In the very near term, we are going to drop below $15," Sharief predicted. The front-month November contract on the New York Mercantile Exchange settled 44 cents lower at $15.06 on Wednesday, and touched a low of $15.02 in intraday trading.
Analysts pointed bearishly to the relatively high product inventories, especially in distillate stocks, which include stocks of heating oil. While U.S. stocks of gasoline are 9.75 million barrels higher than last year's levels, those of distillates are 16.86 million barrels higher than last year.
On the demand side, the picture is also bearish in the short-term, since Sun's cuts of 177,000 barrel per day (bpd) at its two-refinery complex in Philadelphia, Pennsylvania are expected to continue until the end of the month. Similarly, Tosco's 110,000 bpd refinery in Bayway, New Jersey is not expected back up until the second half of October.
Also, the crude unit at British Petroleum's 250,000 bpd Belle Chase refinery in Louisiana still hasn't been brought back on stream after a fire broke out in the unit last week. The crude unit is expected to remain shut for another week or so, according to a company statement.
Expectations are that Chevron's Pascagoula refinery in Mississippi will be shut even longer after it suffered flooding when Hurricane Georges pounded the area late last month.
10/20 03:02 U.S. Product Outlook-firm on extended outages
NEW YORK, Oct 5 - Extensive unplanned refinery shutdowns due to Hurricane Georges last week boosted U.S. Gulf Coast gasoline prices, and the rally is expected to continue as two major plants were affected, traders said on Monday. "Looking at the fundamentals as far as refining is concerned, the shutdowns will put more buyers in the market than anticipated,"a Gulf Coast trader said.
The hurricane which hit the Gulf Coast a week ago took down at least seven refineries in Louisiana and Mississippi. Five of them escaped any damage but the precautionary shutdowns took out around a week's worth of 928,000 barrel-per-day of production, traders said.
But what sent buyers into the market and prices soaring in "refining row", was the longer lasting mayhem the hurricane brought at Chevron Corp's <CHV.N> and BP's <BP.L> plant.
Hit by floods, Chevron's 295,000 bpd refinery at Pascagoula, Miss. had some five feet of silt and would take at least a month to begin its start up process, traders said.
More pessimistic sources said the plant will be shut until the end of the year but the company declined to comment on the duration of the shutdown.
Although largely unscathed by the hurricane, a fire broke out at BP's 250,000 bpd Alliance refinery at Belle Chasse, LA. during its start up process on Wednesday. It restarted its 100,000 bpd catalytic cracker and 37,800 bpd reformer and other secondary units on Sunday but its crude unit will remain shut for another seven to ten days.
"Chevron is quite a large producer on the Gulf Coast and I think it will keep the market supported," a trader said. "Gasoline will and can climb even higher...I wouldn't be surprised if the conventional gasoline will go into a premium...it is near enough."
Gasoline outright prices on the Gulf Coast rose nearly 3.00 cents per gallon last week to around 45.00 cents. Its differential to the NYMEX rose from a 3.75 cent discount to the NYMEX before the hurricane hit, to 0.25 cent premium on Monday.
With the cut in output, traders expected another drawdown in gasoline stocks which fell 1.8 million barrels to 21 million in the week ending Sept. 25 according to the American Petroleum Institute (API).
Both BP and Chevron were amongst the aggressive buyers seeking mainly the gasoline, jet fuel and low sulphur diesel.
But high stocks of heating oil capped any rallies in both the Gulf and the northeast, and prices in both hubs slipped by around 1.5 cents per gallon to around 40 cents per gallon.
The API reported weekly stocks grew 2.5 million barrels to 15.3 million, around 16.7 million higher than last year's build.
While an influx of Russian gas oil was also putting a lid on New York Harbor heating oil prices, gasoline arbitrage cargoes were also going to depress Harbor prices.
"Give it five to six days...then prices will be slaughtered," a trader said on the expected arrival of cargoes.
But other traders were more skeptical.
"There is a lot of talk of incoming cargoes but until I see them will I believe it. You won't be seeing these sort of premiums if the market wasn't tight," a trader said.
Harbor outright gasoline prices have actually fallen a quarter cent to around 45.60 cents per gallon, but reformulated grades differentials have risen by nearly 1.75 cents, climbing into a premium of around 1.25 cent to the NYMEX on Monday.
Conventional differentials on Monday also flipped to 0.25 cent over the NYMEX from a discount as low as 0.50 cent.
10/20 07:04 FOCUS-Oil greets winter with another price slide
LONDON, Oct 20 - World oil prices were back in the bargain basement on Tuesday after a heavy price slump on Monday which caught dealers unaware with its severity.
London December futures for benchmark British Brent blend were valued at $12.49 a barrel in early trade, up ten cents, following a 74 cent slide on Monday.
Brent is now just a dollar above mid-August's 10-year low, having foiled the efforts of the major producing countries who this year have sliced exports to raise prices.
"It must be very disappointing for producers to see the opening of the winter consuming season greeted by such a firm thumbs down from the market," said Peter Gignoux at Salomon Smith Barney. "The depth of Monday's sell-off caught most people by surprise."
Bulging world oil inventories have eased from their summer peak but still remain well above year-ago levels. Nevertheless, oil's September recovery, which took Brent to $14.90 a month ago, had been expected to hold prices at steady or slightly higher levels into the northern hemisphere winter months.
Instead, said dealers, the investors who might have been attracted to buy oil futures in the approach to winter will view the latest price slump as a danger sign.
"Seasonality is thrown out of the window," said Gignoux.
For oil companies whose shares had welcomed the improved market in September the latest price retreat means bad news. Europe's two biggest companies Royal Dutch/Shell and British Petroleum were downgraded on Monday by stockbrokers Dresdner Kleinwort Benson.
For besieged oil producers, who have already twice this year executed export reductions, it appears to be a case of back to the drawing board.
But analysts said the policy rifts which the exporters were able to overcome earlier in the year to agree some three million barrels a day of output cuts were beginning to reemerge.
While some Gulf oil nations like Kuwait are keen to embark on further supply reductions, key exporters like Saudi Arabia and its Latin American rivals in the U.S. market, Venezuela and Mexico, are not prepared to take further action.
"Clearly, the adverse effects of low oil prices are taking their toll on oil exporters, and domestic political consideration could start to take precedence over OPEC commitments," said Washington's Petrofinance in a report.
Oil prices remain low despite OPEC's good record of compliance with the 2.6 million barrels a day of output cuts its members have pledged.
Producers are expected to compare notes on the market in a week's time on the sidelines of an international energy conference in Cape Town, South Africa.
OPEC's main producers and non-OPEC suppliers Mexico and Norway will be represented at ministerial level in Cape Town.
"I can't imagine the Saudis doing any more in the way of cuts without the Venezuelans and the Mexicans on board," said a senior oil trader in London. "And they've made clear they're not interested."
10/20 09:23 NYMEX oils to open flat to lower on technicals
NEW YORK, Oct 20 - November crude futures on the New York Mercantile Exchange (NYMEX) were called to open unchanged to a slightly lower Tuesday as traders said they expected the market's technically driven downward trend to continue ahead of the contract expiration at the close of the market today.
Refined products were called to open unchanged to 0.20 cent lower.
"The technical traders are bearish and we see no commercial buying coming in, so we think the market will resume its downtrend," said a NYMEX floor trader.
10/20 10:48 NYMEX crude sets new contract low; products off
NEW YORK, Oct 20 - NYMEX November crude futures fell to a new contract low of $13.15 a barrel shortly after the opening as technical selling persisted. But some shortcovering ahead of the contract's expiry at day's end pared loses by midmorning, traders said.
Traders said players continued to unwind positions on the front month contract, while focus has shifted to the incoming December contract, they said.
"We're having a breather here, after yesterday's bloodbath," said a NYMEX floor tradedr.
At 1037 EDT/1437 GMT, November crude was off 10 cents at $13.25, climbing from its contract nadir of $13.15. The previous low had been $13.28.
The incoming December contract moved along with the front month and traded at $13.43, down 10 cents. With the contract already below its contract low of $13.60, possible support is seen at $13.29, analysts said.
Heating oil and refined products, moving in sympathy with crude, posted slight losses.
November heating oil traded at 37.50 cents a gallon, off 0.22 cent while gasoline was marginally lower at 0.02 cent at 42.10 cents.
Technical traders said they think the November crude will hold support at around $13. They pegged resistance at $13.62.
Traders were looking to the weekly inventory report from the American Petroleum Institute to give the market a fresh direction.
"We hope there could be something positive in the report that could break this downswing, but that's hard to say at this point," said one trader.
At 1040 EDT/1440 GMT, December Brent on the IPE traded at $12.32, off seven cents, after failing to breach initial resistance around $12.50 in early trade.
Monday, NYMEX November crude lost 80 cents to $13.35 as funds led contract liquidations. Market talk that Venezuela was seen resisting extending its production cuts beyond mid-1999 also contributed to the sell-off, some traders said.
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