OIL AND NATURAL GAS PRICING SCENE - PART 1 THURSDAY AM 10/22/98
10/21 16:16 FOCUS-Oil rebounds as speculators go shopping
LONDON, Oct 21 - Oil prices trimmed gains as speculators pocketed profits after a buying spree in the bargain basement.
December futures for benchmark Brent blend crude oil ended 49 cents higher at $12.85 a barrel on London's International Petroleum Exchange. Earlier, the contract had soared 82 cents to $13.17, triggered by a buying frenzy as speculators took the opportunity to buy as prices drooped to lowly levels.
"Monday's fall came as a shock. This just evens things out," said a dealer in London. "Some of those that shorted the market on Monday have had to jump back in again."
Dealers said better-than-expected weekly inventory data from the American Petroleum Institute had sparked the rise after a surprise slump on Monday.
The data released late on Tuesday showed a small draw in U.S. crude oil stocks in the week to October 16 when dealers were expecting a stockbuild.
Nevertheless, the U.S. crude stockpile remains nearly 27 million barrels higher than a year ago. U.S. distillate inventories, including heating oil, still are almost 11 million barrels up on the year.
Oil prices are also more than $6 a barrel short of last year's and were reflected on Tuesday in a 23 percent fall in the third quarter earnings of the world's largest oil company Exxon <XON.N>.
The U.S. giant said the decline in oil prices had sliced its upstream earnings by nearly 46 percent, compared to the same period last year, to $485 million.
Besieged oil producers, who have already twice this year executed export reductions, are divided on whether further output cuts should be implemented.
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.
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.
OIL AND NATURAL GAS PRICING SCENE - PART 1 THURSDAY AM 10/22/98
10/21 16:08 NYMEX crude ends above $14 on late profit-taking
NEW YORK, Oct 21 - Crude oil futures on the New York Mercantile Exchange (NYMEX) moved sharply higher late Wednesday, lifted by fund short covering and fresh buying of the near-month contract, but eased off considerably on profit-taking at the close, traders said.
The market appeared to have rebounded from its oversold condition, some traders said, although others said a small draw in U.S. crude stocks in the weekly inventory data issued Tuesday by the American Petroleum Institute was supportive.
Many traders were skeptical of the API data, which showed a small draw of 290,000 barrels for the week ended Oct. 16, surprising the market, which had expected a build of about four million barrels.
The draw came amid a slower pace of refinery runs and increased imports, traders noted.
"They must have a new math at the API," one trader said.
The U.S. Department of Energy's own weekly report contradicted the API data -- it showed a build of 3.9 million barrels, but the market reacted to the APIs, adding to the confusion.
The day's short-covering push lifted the new December crude contract as much as 88 cents, when it touched an intraday high of $14.40 a barrel. But some late selling cut it down to $14.08 at settlement, a gain of 56 cents. The contract traded as low as $13.57 near the opening.
November heating oil rose more than two cents to 39.90 cents a gallon, the intraday high, in reaction to API's and DOE's stockdraws of distillates, which include heating and diesel oil, of 2.4 million and 1.9 million barrels, respectively. The contract eased late, ending at 39.17 cents, up 1.42 cents.
Gasoline futures rose along with crude, with the front- month contract gaining 1.03 cents to end at 43.98 cents a gallon, after hitting a session high of 44.40 cents, up 2.32 cents. Traders said the week's stockbuilds were within market expectations.
In London, December Brent crude ended at $12.85, up 49 cents, moving up with New York's bounce.
Market participants said funds were behind the the market's advance.
"It just seemed like Tuesday's relatively firm expiration of the November contract, plus today's API draw on crude, encouraged the funds to take that big round of covering," said Jim Ritterbusch, a trader at Chicago-based Sweeney Oil.
The November contract bowed out Tuesday at $13.43, up eight cents.
Ritterbusch said the current trading range's resistance will be around $14.50, just above Wednesday's high of $14.40.
A Midwest oil trader said one explanation for crude's bounce is that recent selling has been overdone and the market was ripe for a rebound.
"But the way it looks, this rebound may be a little overdone, too," he said, adding: "That makes it difficult to see which way the market may be going."
Others were more confident about the market's direction.
"We've seen the worst, we've probably seen the lows this week," said Warren Tashnek, an analyst at FIMAT USA Futures.
"On fundamentals, OPEC has done its job," he noted, citing the group's 98 percent compliance with its pledge earlier this year to cut production by 2.6 million barrels per day, to help boost ailing prices. "We'll probably go higher but there is resistance at $15, he said, noting that much-needed macro indicators need to show, for example, that demand from Asia has improved.
On Wednesday, Stephen Pryor, Mobil Corp.'s <MOB.N> president for international marketing and refining, told New York analysts that he was "starting to see the light at the end of the tunnel," in Asia.
"Some countries, for example, South Korea, Thailand and now Japan, are taking the necessary steps to restore confidence and stimulate renewed growth," he said.
"The turning point for Asian oil (product) demand is likely to occur in late 1999 or 2000, putting the region back on the path of sustained growth..." Pryor said.
But Sweeney's Ritterbusch said such a recovery was too far off for the crude market to react positively.
"The market is concerned with what's happening now, not the year 2000," he said.
10/21 17:04 North Sea December Brent unchanged in late U.S.
NEW YORK, Oct 21 - North Sea Brent was unchanged late Wednesday in the U.S., traders said.
December Brent was valued at $12.85, unchanged from its close on the International Petroleum Exchange earlier Wednesday.
Aftermarket activity was very thin, limited to two deals for cash December partial cargoes. Traders said 600 lots of December cash partials were sold.
The Brent November-December spread was done at minus 47 cents, they said.
10/21 17:16 U.S. Cash Crude- All grades down except HLS
NEW YORK, Oct 21 - U.S. cash crude differentials were down sharply on Wednesday with the exception of Heavy Louisiana Sweet/Empire, which gained 20 cents, traders said.
The volatility in the market on Wednesday was caused by traders who fulfilled requirements before the expiration of November cash trade on Friday. Some were required to postpone final commitments for November because of the spate of storms that disrupted refinery operations on the Gulf Coast.
While the November futures contract expired at the market's close on Tuesday, cash crude barrels will continue to trade over the remainder of the week, with prices set by the so-called roll between the November and December markets.
That roll widened from 10 cents early in the day to 21 cents at the close. It was reported done at 21 cents with December's contract being the stronger.
Therefore, the U.S. cash crude benchmark West Texas Intermediate/Cushing was priced at $13.90 per barrel, considering the 21-cent roll and the three-cent premium for exchange-for-physical barrels. The NYMEX December contract settled up 56 cents at $14.08 per barrel on Wednesday.
Heavy Louisiana Sweet was done a full 30 cents stronger on Wednesday than it's value on Tuesday, when it was done at 30 cents under WTI/Cushing. It ended the day bid at minus 40 cents and offered at minus 30 cents.
But HLS was the only grade to increase in value on Wednesday, as far as differentials are concerend. With the 56-point rise in the NYMEX front-month contract, all crudes gained value on an outright pricing basis.
Light Louisiana Sweet/St. James lost eight cents on a differential basis on Wednesday. It ended the day prices at -41/-37 cents, and was last reported done at -40 cents after being done as weak as minus 45 cents.
West Texas Sour/Midland, which ran up 15 cents a barrel in a brief short-covering rally on Tuesday, lost nine of those cents on Wednesday. By Wednesday at end-of-market, it was talked at minus $1.62/1.57.
10/21 18:16 US foreign crude - Ecopetrol offers Dec Cusiana
NEW YORK, Oct 21 - Traders said the U.S. market for imported crudes remained steady, as crude continues to be easily available in the U.S. Gulf.
LATAM - COLOMBIA, VENEZUELA, ECUADOR
-- Traders said bids on Ecopetrol's two December-loading cargoes of 1.1 million barrels of sweet Cusiana were due on Wednesday. The state-owned oil company has not specified loading dates for the cargoes, but has said that it would not allow the cargoes to be separated into smaller pieces.
At least two November-loading cargoes of Colombian sweet crude, Cusiana, are also said to be on offer at $1.39 under December West Texas Intermediate. Last week, state-owned Ecopetrol awarded a November 25-29 loading cargo of Cusiana, reportedly at a discount between $1.40-1.37 to WTI, a good 10 cents weaker than the previous week. Sweet grades have been under pressure in U.S. markets, where traders anticipate huge imports of North Sea Brent through October.
-- The 400,000 barrel per day (bpd) Ocensa pipeline, which was dynamited by Colombian rebels on Sunday, was repaired late Tuesday and pumping is expected to resume slowly. The pipeline carries crude from the giant Cusiana-Cupiagua field to the loading port of Covenas. Separately, BP lowered maximum output forecast for the Cusiana-Cupiagua field to 470,000 bpd, down from initial projections of 500,000 bpd. Production could reach 470,000 bpd by the end of November, BP officials said, but emphasized that total recoverable reserves were unchanged.
-- A cargo of Venezuela's sour crude Mesa/Furrial was sold last week at $2.32 under WTI. But with sour crudes under pressure in the Gulf after a refiner has been forced to sell crude it cannot run at a damaged refinery, there is some talk in the market that private and confidential deals for Mesa were done at significantly weaker levels this week.
-- Traders said that November arrival barrels of Ecuador's sour crude, Oriente were being offered into the U.S. Gulf at $2.60 under WTI.
NORTH SEA, WEST AFRICAN
-- With three Ultra Large Crude Carriers (ULCCs) scheduled to carry Brent to the U.S, traders said there is no dearth of sweet crude. The trader bringing the Brent will also bring a couple of smaller vessels of Brent to U.S. markets in October and November. Each ULCC carries over two million barrels of crude, and the talk has been pressuring sweet crudes in the U.S.
Brent arriving in the second-half of November is on offer at 70-75 cents under December WTI, traders said.
-- Other North Sea grades, such as Troll and Oseberg are also on said to be on offer out of storage. Troll was said to be talked around December WTI minus 50 cents.
-- Disruptions in Africa's largest producer, Nigeria have done little to boost differentials, although some buyers noted the problems had reduced the availability of Brass River. About one-third of Nigeria's average two million bpd exports have been shut in after community protests. On Monday, Italian Agip said it had resumed exports from its Brass River terminal, where 130,000 bpd had been shut in for two weeks. Traders said loadings of medium-heavy Forcados are delayed by 10-20 days, making buyers wary of the grade.
-- Traders said one cargo of Gabonese Rabi loading in the next 10 days that is as yet unsold, but sellers said the bearish effect of the still unplaced cargo is not extending to later cargoes.
-- End November/early December cargoes of Nigerian Bonny Light are said to be on offer at a delivered price of Dated Brent plus $1.45. Angolan Palanca was on offer for the same period at Dated plus $1.40 on a delivered basis, traders said.
MIDDLE EAST - SAUDI, KUWAIT, IRAQ
-- Traders said sour crudes remained under pressure after a U.S. refiner, unable to run the oil at its own damaged plant, was again seen selling foreign sours in the Gulf. The refiner was force to make alternate arrangements for Iraqi, Saudi and Kuwaiti grades, which have kept up the downward pressure on sour crude in the U.S.
-- Basrah Light is on offer at $2.25/2.30 under WTI in the U.S. Gulf, traders said.
ASIAN - BRUNEI LIGHT, CHAMPION, MINAS
-- A U.S. refiner is offering early December barrels of Brunei Light at a delivered price of Dated Brent plus $1.70 and another light sweet Brunei grade, Champion at $1.50 over Dated.
Traders also said that a Swiss trader is offering Indonesian Minas arriving in early November into the Gulf. --
10/21 18:23 U.S. spot products-Harbor mogas up, Gulf down
NEW YORK, Oct 21 - New York Harbor gasoline rose nearly a penny on Wednesday as players scrambled to find prompt barrels, while U.S. Gulf gasoline differentials continued to slip on news of a large Gulf refinery returning from maintenance earlier in the week, traders said.
Exxon Corp <XON.N> restarted its crude unit and flexicoker at its 427,000 barrel per day refinery in Baytown, Texas on October 20, according to a company statement released Wednesday. Meanwhile on the markets reaction to weekly stock data, only low sulphur diesel rose in the Gulf and Midco hubs despite data that was generally bullish, traders said.
The news for heating oil and low sulphur diesel was bullish with the Energy Information Administration (EIA), the statistics branch of the U.S. Department of Energy, showing a draw of 1.9 million barrels and the API showing a draw of 2.4 million barrels.
The API data for jet-kerosene was also bullish with another relatively large 900,000 draw to 43 million barrels, or 4.4 million lower than last year. The EIA showed a 1.1 million barrel draw.
API gasoline stocks however rose 400,000 barrels to 199 million, 1.6 million higher year-on-year. EIA gasoline stocks rose 1.9 million barrels.
Gasoline cash differentials were firm in the Harbor despite the data, while gasoline November futures continued to ignored the stock data to close 1.03 cents higher at 43.98 cents per gallon.
November heating oil was supported by the data, trading up 1.42 cents per gallon to 39.17 cents at the close while December crude closed 56 cents per barrel higher at $14.08.
GULF COAST
News of Exxon Baytown's refinery coming back on Tuesday, and a Gulf build in Padd 3 stocks, made gasoline deteriorate further Wednesday afternoon, traders said.
Meanwhile, low sulphur diesel held onto slight gains amid thin talk, players said.
Padd 3 was the largest build in the API gasoline stocks, rising 1.4 million barrels, but still 1.6 million lower year-on-year.
Prompt back 30 cycle M4 gasoline slipped a quarter penny to 4.25/4.00 cents under the print, with trade reported at 4.25 cents.
Prompt heating oil kept its half-cent loss from the morning and was pegged at a 1.50/1.35 cent discount. Low sulphur diesel in comparison was steady yet firm at a 2.00/2.25 cents premium.
Back 30 cycle of jet fuel which schedules later Wednesday got killed as players dumped barrels ahead of the deadline. Jet 54-grade fell nearly a penny at 2.40/2.60 over the screen, and traded at 2.50 cents premium.
Talk on the reformulated and premium grades was thin with the RFG A-grade pegged steady 2.00/1.85 cent regrade to the M-grade, D-grade premium RFGs around 2.25 cents over the print and premium conventional V-grades at 1.50 over the print.
NEW YORK HARBOR
Conventional gasoline differentials ended nearly a penny higher for prompt supplies while reformulated grades were around a half a penny firmer despite a build reported by the APIs.
"The stock build does not matter because of logistic problems of getting prompt supplies," a source said.
Regular conventional M4 grades were traded up to a 0.50 cent discount on Buckeye Pipeline supplies, while regular reformulated A4 was at 1.00/1.25 cent premium.
Premium reformulated was pegged at a 3.60 cents over and conventional D4 at 2.25 cents.
The API said weekly reformulated grades in Padd 1 actually rose 1.5 million, which is around 1.5 million higher year-on-year while total gasoline stocks were down 622,000 barrels but still 2 million higher on a yearly basis.
On the distillates, Padd 1 contributed only marginally by 371,000 barrels to the hefty 2.4 million nationwide draw.
But heating oil held its firm tone amid storage demand with prompt supplies at a 0.75/0.80 cent discount while low sulphur diesel was pegged at a 2.50 cents premium.
Jet fuel was steady at a 5.25 cents premium on the 54-grade.
MIDCONTINENT
Group distillates rose with stock data, while gasoline differentials in both midwestern hubs were weaker on the back of Gulf differentials, traders said.
Diesel was firm as supplies were tight amid strong agricultural demand - Padd 2 distillate weekly stocks falling 1.9 million barrels or yearly by over 2 million.
Low sulphur in the Group rose about 0.20 cent to 3.50/3.75 cent over the screen.Chicago held onto its previous 0.75 cent gain and was steady at 3.50/3.75 cent over the screen and at Gasoline stocks also fell weekly by 400,000 barrels or 2.5 year-on-year, but differentials slipped.
Chicago regular gasoline extended its losses and slipped another quarter cent on to 4.00.3.75 cent under the screen, while Group slipped to trade at 2.75 cent under the screen.
Premium grades in the Group slipped a quarter to 5.35/5.50 cents over while Chicago were pegged at a 3.25/3.50 cent regrade.
10/21 20:04 U.S. West Coast crude discounts flat in slow trade
LOS ANGELES, Oct 21 - U.S. West Coast crude oil differentials were steady on Wednesday, though absolute prices jumped in response to large gains for NYMEX futures.
With differentials unchanged, pure Alaska North Slope (ANS) crude prices rose with a 56-cent gain in NYMEX December crude oil futures.
NYMEX prices were driven higher on heavy buying from Wall Street investments funds.
West Coast spot crude markets remained quiet, with refiners trying to push discounts higher for November ANS.
The last ANS deal was struck Oct. 9 at a discount of $1.025 a barrel off benchmark U.S. crude, West Texas Intermediate (WTI).
The notional price for West Coast ANS at the same discount climbed to $13.03/19 a barrel from $12.34/51.
The biggest ANS producer said his company had November cargoes available but declined to make a specific offer to refiners. Two refiners sought crude for November production of gasoline and products.
A major refiner, meanwhile, was said to offer a cargo of ANS due to problems with a crude processing unit at one of its California plants, traders said. The refiner is not a typical seller.
Another refinery which typically sells ANS was offering in the market, but no buyers stepped forward. The company offered to Northwest refiners but not to Los Angeles plants.
Bids, meanwhile, were heard as high as $2.00 a barrel under WTI.
"I want to get the diff moving," one buyer said. "I don't know why no one's done anything."
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 that day.
10/21 19:59 Crude oil futures edge up in U.S ACCESS trade
LOS ANGELES, Oct 21 - U.S. December crude oil futures prices added slightly to daytime gains in quiet after-hours trade Wednesday.
By 1630 PDT, December crude traded at $14.11 a barrel, a rise of three cents from its NYMEX close where it finished 56 cents a barrel higher on increased buying from Wall Street investment funds.
Dealers said the slight gains indicated the market was tight on supplies but that light activity showed speculators needed a rest after three days of volatile trade.
"People are taking a breather after the wild ride the last three days," one after-hours player said. "(API) stats were supportive last night and carried into today."
American Petroleum Institute (API) statistic showed Tuesday that U.S. oil inventories took a surprising fall of 290,000 barrels. Experts had forecasts an increase in supply.
Traders said the report sparked Wednesday's rally, which was fueled also by speculators buying up futures to lock in profits.
December crude volume reached 1,122 lots for all futures months and 952 lots for December on ACCESS.
November unleaded gasoline traded 44.09 cent a gallon on ACCESS, up 0.11 cent with 20 lots exchanged for all months and six in November.
November heating oil traded 42 lots total, with 22 changing hands in November. The contract price rose 0.07 cent a gallon to 39.24 cents. |
