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12/08 15:43 World oil weakens despite Saudi call for action
12/08 16:38 NYMEX crude, products end down in late selloff
12/08 16:41 U.S. cash crude slides without help from producers
12/08 17:41 U.S. Cash Products-NYH heat rallies by over a cent
12/08 18:46 U.S. foreign crudes mostly quiet, as futures weak
12/08 15:43 World oil weakens despite Saudi call for action
LONDON, Dec 8 - World oil prices ended weaker on Tuesday after dealers took a pessimistic view of moves among OPEC producers to support a depressed world market.
London January futures last traded 14 cents a barrel weaker at $10.12, not far from a $9.90 low on Monday that had represented a new trough this year for prices which on average are running lower than at any time since 1976.
Saudi Arabia's Crown Prince Abdullah, in a speech to Gulf Arab leaders reported late on Monday, said they should not shrink from taking further measures to shore up oil prices.
"Although we have taken serious measures...we should not hestitate in taking any other measure dictated by (our) interest if the previous ones did not lead to the desired results," he said.
The summit of the Gulf Cooperation Council also includes OPEC oil producers the United Arab Emirates, Kuwait and Qatar plus Oman and Bahrain.
The heir to the Saudi throne in previous public statements has stressed the line that Riyadh wants to see full compliance from fellow oil producers with this year's package of output cuts before it considers more action.
GCC officials said that the summit itself, which finishes on Wednesday, was likely only to recommend an extension of existing output cuts on condition others joined the effort. Larger supply curbs would only be considered with full compliance by other producers with existing limits, said a senior GCC official on Tuesday.
Dealers said that while the crown prince's comments might help ease the way for further talks between oil producers, there still appeared some way to go before more oil supply curbs were agreed.
"I would agree that this is a step forward but whether it leads to more action on the oil market is not yet clear," said Peter Gignoux at Salomon Smith Barney.
The market also shrugged off news that Mexican energy minister Luis Tellez would probably visit the Venezuelan capital, Caracas, this week to talk to Venezuelan President-elect Hugo Chavez about oil issues.
Tellez announced last Friday a tour of oil-producing countries to discuss measures to face up to this year's oil price crash.
Since his election Sunday, Chavez has promised to comply with production cuts agreed to earlier this year by members of the Organization of Petroleum Exporting Countries.
An OPEC meeting two weeks ago ended in acrimony without agreement to extend the group's 2.6 million barrels a day of supply cuts beyond mid-1999. Instead, OPEC called another meeting for March.
Monday's slide into single-digit oil prices came amid evidence that output discipline among OPEC members is disintegrating.
OPEC output in November was estimated in a Reuters survey up 270,000 barrels a day at 27.43 million, meeting only 65 percent of the targeted package of output cuts agreed earlier this year in a bid to prop up the market.
The International Energy Agency on Tuesday said it estimated November OPEC output had risen to 27.34 million bpd.
The IEA, in a monthly report, said oil markets had been hit hard in recent months by an unexpected slowdown in demand among the world's leading industrialised nations.
"Growth in world oil demand appears to have stalled in September and October," the IEA said.
Weakening oil consumption patterns in Asia have spurred this year's price slump. But the Paris-based agency said the latest demand weakness was spread across most member nations of the Organisation for Economic Cooperation and Development.
12/08 16:38 NYMEX crude, products end down in late selloff
NEW YORK, Dec 8 - A wave of selling sent crude oil futures on the New York Mercantile Exchange (NYMEX) tumbling late Tuesday as Gulf Arab states appeared to be favoring an extension of output cuts instead of proposing another round of cuts, traders said.
"The market was left sorting out what to make of the day's news from the Gulf and in the end, players were again disappointed," said a NYMEX trader.
The contract had shot up as high as $11.83 early on news late Monday that Saudi Arabia had called on producers to take additional steps to support sliding oil prices.
But early gains of more than 30 cents on the day evaporated in the afternoon after officials denied a newswire report that the six-member Gulf Cooperation Council had reached an understanding for an unspecified output cut in March.
By 1455 EST/1955 GMT, crude for January delivery was down 17 cents at $11.30 a barrel. At the closing minute, the contract traded at $11.27, down 20 cents and then settled higher at $11.30, paring losses to 17 cents.
Refined products, moving along with crude, also wiped out earlier gains.
January heating oil settled at 32.52 cents a gallon, down 0.22 cent. It moved between 32.40/33.70 cents. January gasoline ended at 34.71 cents a gallon, off 0.08 cent. It rose early to 35.70 cents. In the afternoon, it fell to its session low of 34.50 cents.
Saudi Arabian Crown Prince Abdullah on Monday urged member states of the Gulf Cooperation Council to take more action to help support oil prices, which in real, inflation-adjusted terms are at their lowest levels in 25 years.
Later on Tuesday, a senior Gulf official said the six GCC members -- Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Oman and Bahrain -- were expected to recommend extending current oil-output cuts to the end of 1999 on condition that other producers follow suit.
Asked if the Gulf Arab states had reached an agreement on any new measures, the official told Reuters: "No cuts. But the agreement is on sticking to quotas right now until the end of 1999.
"Then we can discuss further cuts if we see other OPEC members sticking to their agreement," he said, adding that discussions would take place in March. OPEC holds its spring conference at its headquarters in Vienna in March.
The news came after GCC officials denied an earlier newswire report that the group had already agreed to further output cuts after March.
OPEC and non-OPEC producers agreed earlier this year to withdraw 3.1 million barrels per day (bpd) from the world market in a step calculated to raise flagging oil prices. Of this, OPEC countries agreed to contribute 2.6 million bpd.
The cuts have proven ineffective in lifting prices as some producers have not fully complied with their output cut commitments and the continuing supply overhang has severely pressured global oil prices.
In addition, demand from financially troubled countries in Asia has remained depressed while telltale signs of slackening demand are now beginning to show among industrialized countries belonging to the Organization of Economic Cooperation and Development (OECD).
Meanwhile, in another bearish development, traders and analysts forecast a stock build of 1.3 million barrels in U.S. crude for the week ended Dec. 4.
In a poll ahead of the weekly inventory data from the American Petroleum Institute (API) due out later in the day, the forecasters told Reuters they also saw an increase in distillate stocks, which include heating oil and diesel, of 1.1 million barrels, and a rise in gasoline inventories of 1.95 million barrels.
12/08 16:41 U.S. cash crude slides without help from producers
NEW YORK, Dec 8 - U.S. cash crude prices were caught in a futures market sell off Tuesday, finishing lower despite Saudi Arabia's call on producers to take measures to arrest the long slide in oil prices.
U.S. crude traders said benchmark West Texas Intermediate/Cushing finished the day between $11.30 and $11.35 a barrel after the market jumped to about $11.75 a barrel earlier in the session.
The early advance in both the cash and futures markets came in response to comments late Monday by Saudi Arabia's Crown Prince Abdullah, who said producers should not hesitate to take further steps to shore up oil prices.
But traders appeared to lose faith in producers later in the session, sparking the heavy sell-off.
"I'm not surprised that they've started jawboning the market," one trader said, but said he was unconvinced that OPEC was prepared to take action anytime soon.
The New York Mercantile Exchange January settled down 17 cents at $11.30, still within shouting distance of 12-year lows.
"The market is still very bearish," said one cash crude trader, who expected a small build in crude stocks in the American Petroleum Institute report, due to be released later Tuesday.
Meanwhile, that trader and others said that differentials for most cash crude grades held to a fairly narrow range Tuesday despite the volatility of WTI/Cushing.
Light Louisiana Sweet/St. James, which has been boosted by recent signs that the arbitrage to bring competing crude over from Europe has closed, changed hands at three and five cents under the benchmark early Tuesday. By the close of trade, however, it was bid closer to seven or eight cents below the benchmark.
Its sister grade, Heavy Louisiana Sweet/Empire, was done at 17 and 15 cents under WTI/Cushing, traders said.
Otherwise, West Texas Sour/Midland was discussed between minus $1.37 and $1.33 a barrel, and West Texas Intermediate/Midland was talked between 35 and 30 cents under WTI/Cushing.
Offshore Eugene Island was discussed at $1.25/1.15 under the benchmark. And WTI/Cushing postings-plus was done at $2.18, $2.20, and $2.21 a barrel, traders said.
12/08 17:41 U.S. Cash Products-NYH heat rallies by over a cent
NEW YORK, Dec 8 - Heating oil cash differentials in the northeast rallied by over a penny per gallon by late Tuesday as a big regional refiner continued to raise its selling posted price, traders said.
"Everyone bought the cheap stuff last week, so there's a big refiner that realizes there's a lot of shorts out there," said a Harbor trader.
Some sources said the move could be on the back of the colder weather forecasts but traders generally said much colder weather needs to be sustained before a price rally was warranted.
"As far as the weather is concerned, it has to get cold and stay cold. There is not enough of a weather situation to make a difference...we have to get into a deep winter," said a distillate trader.
The warm weather boosted distillates stocks even more than expected. U.S. distillates stocks rose by 2.48 million barrels, according to the weekly American Petroleum Institute inventory report for the week ending Dec. 4.
Gasoline builds were on level with Reuters' forecast poll, with a modest rise of 1.89 million barrels amid an an increase in Gulf Coast production amid ChevronCorp.'s restart its hurricane-hit 295,000 barrels per day (bpd) refinery in Pascagoula, Miss., at the end of November.
Crude oil stocks, however, slipped by 2.87 million barrels oppossed to a forcast of a build of 1.3 million barrels.
On the Gulf Coast, distillate differentials ended up to half a cent per gallon firmer on Tuesday on the Colonial Pipeline taking the prompt distillate line off allocation, traders said.
Scheduling on Gulf Coast diesel pressured down differentials while the conventional gasoline ended firmer amid volatile scheduling trade.
Premium gasoline grades in the refining hub also saw a substantial half a cent rise as refiners have stopped making the grade amid low regrade to the conventional grade.
On the NYMEX, oil futures made gains as Saudi Arabia's call on producers to take more measures to support ailing oil prices continued to underpin the market, traders said.
Jan. crude was at $11.54 a barrel, up seven cents, heating oil gained 0.41 cent at 33.15 cents a gallon, and gasoline rose 0.51 cent at 35.35 cents a gallon.
GULF COAST
Gasoline differentials ended the day 0.20 cent firmer after see-sawing ahead of scheduling while some last minute selling of low sulphur diesel before its deadline pushed levels down.
Conventional regular M5 gasoline traded through the day at a discount of 5.85 cents, 6.10 cents then rebounded to end with bids at 5.75 cents.
But there was more activity on the anys which were around 0.10 cent in contango.
Premium conventional V4 also ended around half a cent up as "refiners have quit making it" a trader said.
From a regrade to M-grade of 1.75 on Monday, the grade traded at a 2.25 premium. But levels will have to be over 3.00 cents before refining economics pay off.
On the distillates, heat and jet fuel firmed on the reopening of the Colonial's distillate line.
Trade was largely focused on the jet fuel which inched up 0.15-0.20 points to trade at 2.50 cents below the NYMEX on the 54-grade's back 35 cycle, with offers at 2.20. Anys were pegged at a slightly better discount of 2.30/2.10 cents while front ratable Jan were done at discounts of 0.50 and 0.60 cent. Q1 also traded at a premium of 0.35 cent.
The prompt 55-grade was pegged around the 1.50 cent discount.
Prompt heating oil traded over a quarter cent firmer at a 3.50, and 3.55 cents discount.
But the scheduling front 35 cycle low sulphur diesel which traded up to 20 point earlier in the day, slipped back down to 2.50. a shade weaker interday.
NEW YORK HARBOR
Heating oil gained more than a penny as Sunoco raised its posting price for heat several times during the day, traders said.
Traders said the postings raise signalled that the refiner is aware of several short positions in the market after cheap product had been gobbled up in the hub last week.
Reformulated regular gasoline also gained more than a penny per gallon after Monday's 0.25 cent gains, on fewer cargoes coming to the hub, traders said.
"Gasolines are going to go back down," said one trader, "there are cargoes in the waiting."
Prompt reformulated regular A5 grade gasoline was pegged at 1.50/1.25 discount to the screen. Premium reformulated D-grade was also bullish, pegged at 1.00/0.75 cent under the screen. Conventional M-grade gasoline gained slightly pegged at 5.00/4.75 discount to the screen.
Regular premium V-grade was also steady, pegged at 4.30/3.85 cents discount.
The 54-grade was pegged about 0.30 cent higher on the day at 0.75/1.00 cent premium, in thin trade.
The 55-grade was pegged steady at 1.50/2.00 cents premium.
Low sulphur diesel slipped a few points trading at 0.40 cent over.
MIDCONTINENT
Chicago differentials were firmer despite stagnant trade, while Group Three gasoline differentials ended a shade lower to steady following the early bearish trend in the Gulf, traders said.
"A lot of things got done yesterday and sellers are now just waiting to see what happens with inventories," a Chicago trader said.
Low sulphur diesel in Chicago ended over half a cent firmer at 1.00/0.75 cent discount compared to Monday's trade at a 1.25 cents. High sulphur also traded at 1.75 cent compared to 2.15 on Monday.
Gasoline in the hub traded at 5.00 cents discount but was last pegged steady at 5.00/4.75 cents.
In the Group, gasoline also traded at a discount of 5.00 cent but with bids recovered to 4.80 centswhile low sulphur was pegged a shade weaker at 0.60 cent under.
2/08 18:46 U.S. foreign crudes mostly quiet, as futures weak
NEW YORK, Dec 8 - The U.S. market for imported crudes was mostly steady on Tuesday, although details about past deals were still scarce, traders said.
Middle Eastern crude oil producers, meeting at the summit of the Gulf Cooperation Council (GCC), lamented the weak prices of crude oil late Monday and Tuesday, but officials do not expect the GCC to do more than recommend an extension of existing output cuts on the condition that others joined the effort. Crude oil futures in the United States found the stance inadequate to support prices, and the front-month January contract on the New York Mercantile Exchange settled 17 cents weaker at $11.30 a barrel.
LATAM - COLOMBIA, ECUADOR, CHILE -- Colombia's main sweet crude, Cusiana remained valued at $1.30-1.25 under West Texas Intermediate, where the state-owned oil company Ecopetrol awarded three January-loading cargoes last week.
-- Details of the last deal, and even talk about Colombia's medium-heavy Cano Limon. Traders were still in the dark about Ecopetrol's December 31-January 6 loading cargo of medium heavy Cano Limon, for which bids were due last week.
Cano was valued in a very wide range, between $2.80 and $2.45 under WTI, as many traders said they were hard pressed to put a price on the grade.
Loadings of the grade have been severely disrupted this year, with talk of delays of at least one week. Last week, the pipeline connecting the Cano Limon field to the Caribbean loading port of Covenas was shut after storage facilities at the port were filled, exacerbating lifting delays. Most disruptions to the pipeline have been from guerrilla bombings, however, which totaled a record 74 attacks this year.
-- Details were equally scarce about Ecopetrol's January 4-8 loading cargo of medium-heavy Vasconia, for which bids were due last Thursday. Vasconia was last heard done at a discount of $2.85 under WTI, when a December cargo was sold to a U.S. refiner.
-- Ecuador's sour crude Oriente remained valued around the $3.00 level below U.S. benchmark WTI, traders said. There is still little news from Ecuador about several term cargoes for Oriente that are scheduled to expire at the end of this year, traders said. Last week, the heads of state-owned Petroecuador and Ecuador's Energy Minister were traveling through the United States, trying to convince U.S. refineries to enter into contracts directly with Petroecuador, rather than relying on trading companies to supply them with Oriente. But it is still unclear if Petroecuador's new marketing strategy will work.
-- Traders also said they were waiting for news of Chilean state-owned oil company ENAP's buy-tender for a million barrels of crude, for delivery in mid-January. Bids were due last week. In the past, Chile has bought Ecuadorean Oriente, Nigerian Forcados and Malaysian Tapis to fill its buy-tender.
NORTH SEA, WEST AFRICAN
-- The January WTI-Brent arbitrage remained mostly steady on Tuesday, settling at $1.18 a barrel. But traders are still wary about the trans-Atlantic arbitrage, despite the relatively cheap prices of prompt, or Dated North Sea Brent, which was also steady, valued at 67 cents under January Brent.
"Lately, I think unless you have a big ship, it does not make sense," one trader said.
-- West African crudes are still being offered into the U.S. Gulf, traders said. Among others, Nigerian Forcados was being shown at February WTI minus 15 cents, traders said.
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