CRUDE OIL PRICING & RELATED / PART 4 - International In Scope
11/11 01:32 US Crude Outlook - Imports soar, bears in control
NEW YORK, Nov 9 - The U.S. crude market could be set for another bruising this week, as a stream of imports heading for an already saturated market looks likely to keep oil prices the defensive, traders said Monday.
Even rising tensions between Iraq and the United Nations appeared to take a back seat to worries about oversupply on Monday, as the front-month futures contract settled down almost 50 cents a barrel.
By the close of trade, the New York Mercantile Exchange contract stood at just $13.38 a barrel, the sixth consecutive session that the contract has finished lower.
"I think the flat price is going to test $13 pretty quickly," one cash crude trader said Monday. "There's just too much oil around." U.S. crude stocks have climbed steadily higher over the last month, and at 344 million barrels, stand some 31 million barrels above last year, according to the latest American Petroleum Institute (API) figures.
This week's API report could show another sharp rise in stocks, given the stream of imports heading into the U.S. Gulf Coast, traders said.
The explosion in imports includes crude cargoes steaming over from the North Sea and West Africa, attracted by the relatively wide spread between world benchmarks West Texas Intermediate/Cushing and North Sea Brent. By the close of trade Monday, WTI stood at a $1.48 a barrel premium to Brent, easily enough to make incremental shipments from Europe to the U.S. profitable.
On the Gulf Coast, December Brent is being offered at $1.05 a barrel under January WTI/Cushing prices, compared with offers at a 90-cent discount last week.
Colombia's Cusiana is also well supplied, after more than 2.5 million barrels of the light sweet crude was sold to U.S. companies last week. The four cargoes, scheduled to load between Dec. 8-22, were sold between $1.49 and $1.64 under WTI/Cushing by state oil company Ecopetrol. In the previous Ecopetrol sale, three early December loading cargoes were done at around minus $1.60-1.55 a barrel.
As competition to supply both sweet and sour crude intensifies, Saudi Arabia and Mexico have announced sharp cuts to their official selling prices over the last couple of days.
For the Americas, Pemex lowered its price on Maya heavy crude oil by 30 cents per barrel, while cutting its price on extra light Olmeca by 10 cents and Isthmus by 20 cents for December. The cuts, one trader said, came as yet another sign that "the market is looking bad."
Crude traders said the Saudi price cuts were no less steep, reporting a 25-cent decline in Arab Light and Arab Heavy prices, and a 35-cent drop in Arab Medium prices. They added that the Berri Extra Light price was cut 20 cents to $2.60 under WTI/Cushing.
Oversupply is also taking its toll on U.S. crude prices, particularly Light Louisiana Sweet/St. James, the grade most sensitive to competition from imports.
LLS/St. James was valued at a relatively cheap 45-40 cents under benchmark West Texas Intermediate/Cushing on Monday. Heavy Louisiana Sweet/Empire, which is less liquid than LLS, appears similarly weak at 67-62 cents under WTI/Cushing.
Also, an international major is said to be offering Cusiana out of the Louisiana Offshore Oil Port (LOOP) at parity to LLS/St. James.
Sycrude Canada, meanwhile, said Monday that its synthetic oil production was nearing its 230,000 barrels per day capacity once again after it had been cut in about half last week by mechanical problems at an upgrading plant. The supply interruption had provided some short-term support to sweet crude prices, but a company spokesman said repairs had been completed over the weekend.
11/11 01:43 US Products Outlook-Imports, restarts pound products
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.
Headlines Only
11/10/98 6:51:46 PM EST - Api: U.s. Crude Stocks Fall 1,913,000 Barrels Latest Week
11/10/98 6:51:46 PM EST - Api: U.s. Motor Gasoline Stocks Rise 1,647,000 Barrels
11/10/98 6:51:46 PM EST - Api: U.s. Distillate Stocks Rise 332,000 Barrels
LONDON BRENT FUTURES CALLED TO OPEN 15 CENTS HIGHER
London-Nov. 11 04:53 EST - FWN--ENERGY TRADERS HERE LOOK FOR December Brent crude oil futures to open around 15 cents higher from Tuesday's close.
In London Tuesday, December Brent closed up 14 cents at $12.04, after trading between $11.87 and $12.20.
11/11 12:53 NYMEX crude off highs midday as Clinton warns Iraq
NEW YORK, Nov 11 - Crude oil futures on the New York Mercantile Exchange (NYMEX) remained buoyant at midday on Wednesday, but off their morning session highs, as President Bill Clinton warned Iraqi President Saddam Hussein to end his defiance of U.N. arms inspectors.
Clinton, in a Veterans Day speech at the Arlington National Cemetery near the U.S. capital said he hoped the Iraqi leader would allow unfettered access to U.N. arms inspectors.
"We must be prepared to act if he does not," he said.
The absence of any indication of immediate U.S. military action in Clinton's speech stymied the market's advance, a NYMEX floor trader said.
"But all of these things developing involving Iraq have firmed the market up," the trader added.
At 12:50 p.m. EST/1750 GMT, NYMEX December crude pared its gains and traded at $13.72, up 20 cents. Before Clinton's speech, front-month crude rose to $13.90 in the wake of U.S. military preparations involving the latest crisis over Iraq.
December heating oil also cut some of its early gains. It traded at 38.50 cents a gallon, up 0.74 cent, while gasoline eased to 41.40 cents, up 0.20 cent.
Earlier, U.N. Secretary-General Kofi Annan decided to cut short his trip to North Africa because of the Iraq crisis, a U.N. spokesman said.
While in a visit to Morocco on Wednesday, Annan issued an 11th-hour appeal to Iraq to cooperate with U.N. weapons inspectors.
In February, Annan defused the last major crisis between the U.N. and Iraq by negotiating an agreement that allowed U.N. weapons teams unfettered access to all suspected weapons sites.
A U.N. envoy in Iraq said Baghdad had told him it would not reverse its Oct. 31 decision to stop cooperation with U.N. weapons inspectors despite the threat of a U.S. military strike.
"They would not be able to desist from their decision unless the Security Council takes some action regarding sanctions," said the U.N. official, Prakash Shah, after talks with Iraqi Deputy Minister Tareq Aziz.
In the Middle East, the foreign ministers of Egypt and Saudi Arabia said Wednesday that Arab states would prefer a diplomatic solution to the latest crisis with Iraq over weapons inspections.
"In general, our stress is on a political and diplomatic solution," Egypt's Amr Moussa told reporters in Doha, the capital of Qatar, when asked about the Arab position toward possible U.S. military strikes against Iraq.
The United Nations' chief arms inspector, Richard Butler, has ordered the withdrawal of all 100 U.N. arms inspectors and another official has announced the departure of about 200 relief workers.
The U.S., meanwhile, has authorized the departure of non-essential embassy staff and dependents from Kuwait and Israel.
At the same time, the U.S. has ordered a second aircraft carrier, the Enterprise, to speed up its trip to the Middle East. The Enterprise is now expected to be in the Gulf on Nov. 23 instead of Nov. 26. The current battle group in the area, led by the carrier Eisenhower, has enough firepower to launch a missile and bombing attacks without waiting, according to military analysts.
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