OIL AND NATURAL GAS PRICING SCENE - PART 2 FRIDAY AM 10/23/98
NYMEX Hub natural gas ends mixed, fronts off with cash
NEW YORK, Oct 22 - NYMEX Hub natgas ended mixed Thursday in a
lackluster session, with Wednesday's bearish weekly inventory report and milder U.S. weather forecasts undermining cash and front month futures, sources said.
November eased 0.4 cent to close at $2.176 per million British thermal units after trading today in a narrow range between $2.13 and $2.18. December settled 2.1 cents lower at $2.434. Other deferreds ended mixed, with most 1999 and 2000 contracts finishing up slightly.
''Cash is at a 20-cent discount to the screen and should stay weak. We've got nice weather forecast through expiration (of November on Wednesday),'' said one Midwest trader, adding concerns milder weekend weather would further erode the cash pressured the board early, but storm jitters brought it back later.
Despite yesterday's bearish weekly stock build of 58 bcf and milder weekend weather forecasts, traders said concerns today about Tropical Depression 13 helped temper the bears.
At 1100 EDT, Tropical depression #13 was 420 miles south-southwest of Kingston, Jamaica, with maximum sustained winds of 35 mph. TD 13 later today is expected to become Tropical Storm Mitch and move west-northwest, the National Hurricane Center said.
WSC expects East Coast temperatures to drop to as much as 15 degrees F below normal Thursday and Friday before moderating to normal or slightly above normal by Sunday and Monday.
Below normal readings in the Midwest also are expected to warm to several degrees above normal by the weekend. Texas will see readings dip to five to 10 degrees below normal Thursday, then climb to three to six degrees above Sunday and Monday. The Southwest will range from normal to several degrees below for the period.
While the technical picture improved early this week when November closed above the $2.16-2.18 gap, chart traders said yesterday's reversal to the downside followed by today's lower settle should make the bulls cautious.
Interim support was now seen at $2.13, with major support still pegged at $2.03. More buying was expected at $2.015 and then in the mid-$1.90s. Resistance was still in the $2.25 area, with more selling likely at $2.40 and then at last month's highs in the $2.53-2.57 area.
In the cash Thursday, Gulf Coast swing quotes slipped seven cents to the low-to-mid $1.90s. Midwest pipes were more than a dime lower in the low-to-mid $1.80s. In the West, El Paso Permian lost almost 10 cents to the high-$1.80s.
Gas at the Chicago city gate tumbled 15 cents to the low-$2s, while New York slumped about a dime to the high-teens to $2.20 area.
The NYMEX 12-month Henry Hub strip eased 0.1 cent to $2.278. NYMEX total estimated Hub volumes were not available at 1635 EDT, but 39,016 contracts changed hands as of 1500 EDT versus Wednesday's revised tally of 65,118.
NYMEX November natural gas futures expire Wednesday, Oct 28.
US spot natural gas prices retreat ahead of warmer air
NEW YORK, Oct 22 - U.S. spot natural gas prices were on the retreat on Thursday as warmer weather moved eastward across the U.S., thereby dampening heating demand, industry sources said.
''Prices are now down below index. It's warming up, and utilities are starting to turn back some gas,'' one Midwest trader said.
Swing gas prices at Henry Hub fell eight cents to $1.93-1.97 per mmBtu, sources said, carrying about a 20-cent discount to November futures, which are set to expire next Wednesday.
In the Midcontinent, prices slipped 12 cents to the low- to mid-$1.80s, while Chicago city-gate prices were quoted mostly at $2.00-2.04.
A high of 64 degrees is forecast for Chicago on Friday, with even warmer weather expected to cover the area over the weekend.
In west Texas, El Paso Permian and Waha gas traded at $1.87-1.92, while the San Juan market was seen at $1.83-1.89.
The five-day outage on the San Juan lateral is scheduled to begin Monday, affecting about 625 million cubic feet per day (mmcfd) of gas out of a total of 800 mmcfd. The San Juan lateral runs from Ignacio, Colo., to Blanco, N.M.
On the East Coast, New York city gate prices were quoted more than five cents lower around $2.20-2.21, while Appalachian deals were reported done at $2.10-2.14.
On Saturday, Florida Gas Transmission (FGT) will begin work on its 30-inch mainline at compressor station 15 in Perry, Fla.
The outage, impacting about 150 mmcfd of supply downstream of station 15, is expected to last about two days, according to FGT.
10/23 04:23 US Crude Outlook - Oversupply turns market bearish
NEW YORK - 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.
10/23 04:24 U.S. Product Outlook-firm on extended outages
NEW YORK - 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.
London Brent Futures Called To Open Flat to 3 Cents Up
London-Oct. 23 05:00 EST -FWN--Energy traders here look for December Brent crude oil futures to open around unchanged to 3 cents higher than Thursday's close.
In London Thursday, December Brent closed down 9 cents at $12.76, after trading between $12.64 and $12.95.
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