CRUDE OIL PRICING & RELATED / PART 3 - International In Scope
11/07 01:03 US Crude Outlook -Iraq gives boost despite imports
NEW YORK, Nov 2 - U.S. crude oil traders were cautiously optimistic about oil prices on Monday, after crude futures began the week on a high note, supported the growing tension between Iraq and the international community.
"I think we've been making a bottom in crude," said Warren Tashnek, of FIMAT USA Futures. "Obviously, the Iraqi news is helping the market," he continued, but added that he was bullish about crude prices even before Iraq's Parliament decided to halt cooperation with arms inspectors.
On Monday, Iraq's Parliament voted to halt cooperation with U.N. inspectors until the U.N. Security Council reviews lifting the sanctions imposed on Iraq after the Gulf War.
U.S. President Bill Clinton demanded that Iraq allow United Nations weapons inspectors to finish their work, and warned that all options were open until the inspectors returned to their duties.
Front-month crude oil futures gained up to 32 cents on the news, touching an intraday high of $14.74 a barrel. But the December contract ran into stiff resistance at those levels, and retreated into negative territory later in the day, settling at $14.36 a barrel, down six cents.
"It's going to take a while to improve these fundamentals," Tashnek said.
Although the futures market permits some optimism, cash traders point to less supportive fundamentals, both domestically and on the foreign side.
Imported crude continues to be amply offered into U.S. markets, as traders point to several players offering North Sea Brent into the Gulf Coast.
"There is a ton of foreign crude coming this way. The arbitrage is so wide open, it looks like the Grand Canyon," said one cash trader for a major oil company. The arbitrage, which settled at $1.29 on Monday, and is made even more attractive by the relatively cheap price of prompt, or Dated Brent around $1.04 under December Brent.
Light Louisiana Sweet, the main domestic sweet crude, will likely face the sharpest threat from foreign supplies, traders said. LLS weakened by 25 cents to trade at nearly a 40-cent discount to WTI/Cushing last week as a result, then lost several more cents in listless trade on Monday.
In addition to one U.S. refiner's several large vessels carrying Brent, traders were talking about several smaller vessels being fixed by other players. Brent was on offer at around 90 cents under January West Texas Intermediate, Gulf Coast traders said.
Colombia's main sweet, Cusiana, is also weaker, and is valued around $1.55-1.50 under WTI, although details about state oil company Ecopetrol's latest tenders were not available on Monday. Differentials for Cusiana have widened by almost 30 cents since last month.
Cash traders note that sour crudes are also under pressure, especially after last week's news that Chevron's 295,000 barrel per day (bpd) Pascagoula, Miss., refinery will only become fullyoperational at the end of the year. The refinery, which was damaged when Hurricane Georges hit the Gulf Coast in September, runs mostly sour crude, and its problems have eaten into U.S. demand for sour crude.
Venezuela's Mesa/Furrial reportedly traded at $2.65 under WTI last week, having slipped by more than 30 cents in two weeks.
Similarly, Ecuador's sour crude, Oriente is said to be on offer at $2.60 off WTI into the U.S. Gulf, although there is some talk that buyers are as far away as minus $2.80.
The main domestic sour grade, West Texas Sour/Midland has also weakened, and was talked around $1.70 under U.S. benchmark WTI. Last week, WTS was trading around minus $1.48, after Mexico's state oil company Petroleos Mexicanos briefly suspended830,0000 barrels per day of its offshore crude production last week as a precaution against Hurricane Mitch. But the storm has lost much of its strength since then, and traders don't expect any further interruptions to sour crude imports from Mexico.
11/07 01:03 US Products Outlook-Imports, restarts pound prods
NEW YORK, Nov 2 - Bearish pressure from imports and from last week's return of two U.S. refineries from fall turnarounds should dominate oil products this week, traders said.
"You think gasoline is cheap here? The price is desperately cheap in Asia and Europe," said one Gulf trader about the situation cracking open the arbitrage window in the New York Harbor.
While traders said at least 12 cargoes of gasoline were in the water on their way to the New York Harbor, one Gulf trader said six cargoes were fixed to ports all over the U.S. on Monday alone.
Those six included cargoes from Europe, where the Rhine River, a major route to the Rotterdam refining hub, is flooded and partially closed to barges, and a cargo from St. Croix in the U.S. Virgin Islands.
Also adding pressure on products is the fact the scheduled maintenance season is over, with no more major turnarounds on the slate until the spring.
Last week Sun Co. <SUN.N> restarted its 177,000 barrel-per-day (bpd) crude distillation unit at its Philadelphia refinery which was just part of around 430,000 bpd of production to return from maintenance shutdowns that week.
The Sun turnaround came just Tosco's Bayway turnaround, and the two combined helped knock East Coast crude runs to their lowest level in five years.
The low level of crude runs caught some New York traders short last week after a small draw on gasoline brought about in part by short supplies of blending stocks. This week traders said prices should be beaten down.
"Gasoline has been unusually strong with a number of turnarounds in the northeast - i expect it will soften," said one New York trader with a major refining company.
"On the distillates, it is the same type of situation -- there will be a bit more pressure until the we see colder weather," he added.
Distillates in the northeast were supported last week as traders with storage took advantage of the contango in the market to buy the cheaper prompt supplies of the heating fuel, lifting outright prices by over a penny to around 38 cents per gallon.
Now Gulf traders say the additional storing of heating oil in the New York Habor leaves little room for Gulf gasoline to be sold to up North. In addition, adding further pressure, traders said that gasoline storage was high in the Midcontinent trading hub and the Caribbean.
"Nothing looks bullish here all week," said one Gulf trader.
In the Harbor, traders said jet fuel was the only thing looking up, still in short supply from refinery problems in the Gulf. "There is not a whole lot of jet around...there is a lot of demand but very low stocks," said a Northeast trader.
11/06 10:21 U.S. propane glut due to weak Asian demand
NEW YORK, Nov 6 - U.S. propane stocks reached a 17 year high in October as international propane suppliers dumped excess propane due to depressed Asian demand resulting from the region's economic slump, propane traders and analysts said Friday.
The Department of Energy's (DOE) Propane Report released earlier this week showed total U.S. total stocks were 76.6 million barrels for the week ending October 30. The biggest build was in the Midwest, which rose 0.7 million barrels to 33.3 million barrels.
The Asian economic crisis made deep cuts in Asian demand, said Dave Hinton, a propane tracker for the Department of Energy (DoE). The usual Asian suppliers, Venezuela, Algeria, Saudi Arabia and Nigeria, have dumped their excess barrels in the U.S. Gulf, since last spring, he said. "They added 49 million barrels since March, the largest build ever," he said.
Hinton said that last year's mild winter created a high stockpile for the start of building season. "We started out with 30 million barrels -- a very high basis," he said.
Europe also had a mild winter last year, which has added to the global glut, he said.
As a result of the glut, propane in the U.S. Gulf Thursday sold for 25.50 cents a gallon, about 12 cents less a gallon than last year at this time.
"The Gulf is a good dumping ground for cargoes because it has massive salt cavern storage," he said.
"All the excess world propane has ended up here," Hinton said.
In addition to the U.S. glut, Canada increased exports to the U.S. by about four percent this year, partially because it has nowhere to store its excess propane stocks, Hinton said.
U.S. weather that has been either too wet or too dry this fall for much crop drying with propane, has also pushed up stocks.
"There's been severe drought in the Southeast, where peanut farmers use propane," said one Houston liquefied petroleum gas trader. He said flooding in Texas has also decreased harvesting this year.
Looking to the rest of the winter, Marjorie Young, a propane consultant at The Pace Consultants Inc. in Houston said, "propane stocks are so high now that even if its a cold winter it may not help prices."
On the other hand, if propane prices stay low, it could force petrochemical producers to favor propane over other feedstocks like ethane. Normally, petrochemical producers favor ethane in the winter as heating demand usually drives propane's price up.
"But there may not be an uptick in propane prices at the beginning of winter this year, so the petrochemical producers may use propane, which could eventually push propane up," said Young.
11/07 03:12 Saudi heir renews call for oil output compliance
RIYADH, Nov 7 - Saudi Arabia's Crown Prince Abdullah renewed his call for compliance with oil output cuts to revive ailing oil prices in an interview published on Saturday.
"Although there is a desire on the part of some nations to avert the negative effects of some present-day non-compliance, the oil market reveals the need for all nations to have a common will -- especially those which agreed to cut their production," Prince Abdullah told the newspapers Saudi Gazette and Okaz.
"Carrying through this commitment would help alter the situation," he told the sister publications.
Oil producers from within the Organisation of Petroleum Exporting Countries and outside the cartel agreed in two separate deals earlier this year to cut about 3.1 million barrels per day from world markets.
But oil prices continue to hover around 10-year-lows. On Friday Benchmark Brent closed down 15 cents at $12.35 a barrel, nearly $7 below last year's average.
"We in the kingdom will continue our relevant efforts, so as to ensure the stability of the oil market and halt the price decline -- generated by psychological, economic or political factors," the crown prince of the world's biggest oil producer and exporter said.
|
