MARKET WRAP -6 / Crude Oil
Column Content Index
12/10 17:19 North Sea Brent gains one cent in late U.S. trade
12/10 17:19 U.S. Cash Prods- USG, Midco diffs up on soft NYMEX
12/10 18:11 US foreign crude - Bonny slips, Vasconia at -$2.87
12/10 20:13 ACCESS crude oil prices rise on technicals Thurs.
12/10 20:21 U.S West Coast pure ANS falls, but diffs steady
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12/10 17:19 North Sea Brent gains one cent in late U.S. trade
NEW YORK, Dec 10 - North Sea Brent notched up a cent late Thursday in the U.S., traders said.
January Brent was valued at $9.64 a barrel, up from its close at $9.63 earlier Thursday on the International Petroleum Exchange.
While no full cargoes of January cash Brent traded in Thursday's aftermarket, traders said 2,200 lots of January cash Brent partial cargoes were traded, all sold at $9.64.
The Brent January-February spread traded three times at minus 28 cents, while the Brent February-March spread sold at minus 29 cents in Thursday's aftermarket, traders said.
12/10 17:19 U.S. Cash Prods- USG, Midco diffs up on soft NYMEX
NEW YORK, Dec 10 - The sharp drop on oil futures spurred some bargain buying, but as sellers held off, oil product cash differentials on the Gulf Coast and Midcontinent firmed, traders said Thursday afternoon.
"With the basis so low, buyers have come out," a trader said.
Only New York Harbor heating oil differentials moved in the opposite direction, while the rest of the hub's products held losses or were steady, under pressure from tank top surplus.
NYMEX crude oil futures ended below 12-year lows late Thursday with Jan. crude settling at $10.72 per barrel, down 44 cents. In the morning trade, the contract fell below the November 30, 12-year low of $10.82.
But cracks widened as the products fell at a slower rate -- January heating oil settled down 0.82 cent at 31.35 cent per gallon and front month gasoline fell 0.49 cent to 34.00 cents a gallon.
GULF COAST
Differentials held onto or edged up on their previous day's gains as sellers stayed out of the market in the thin scheduling day, traders said.
"The flat price is so cheap but there are no sellers," a trader said.
Only premium conventional V-grade gasoline was due to schedule, and since refiners have stopped producing the grade amid bad economics, its regrade over the M-grade has nearly doubled to 3.00/3.25 cents.
Conventional regular M5 gasoline was last bid at a 5.00 cents discount, and the conventional RFG A-grade pegged around 2.50 cents under the screen.
No distillates were due to schedule and prompt heating oil was pegged within range at a 3.253.00 cents discount, and low sulphur diesel traded which traded earlier at a 2.20-2.10 cents discount. was last pegged at 2.00/1.90 cents.
Jet fuel 54-grade ended around 0.50 cent firmer at 1.40/1.50 cents below the NYMEX and the 55-grade around a penny discount.
NEW YORK HARBOR
Heating oil differentials continued to sink Thursday afternoon on the glut of product in the hub, following the Colonial Pipeline's decision earlier in the week to reopen the prompt distillates line.
Heat was pegged at 1.60/1.40 cents to the screen, about 0.30 cent weaker.
The rest of the market held losses in thin trade, traders said.
Conventional M-grade gasoline was steady 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.
Jet fuel differentials held losses from Wednesday as barrels drawn to the the Harbor from the Gulf over the last few weeks have swamped the hub, traders said.
Jet 54-grade was pegged at flat to the January heating oil screen to 0.50 cent over.
Reformulated regular gasoline held penny gains on fewer cargoes coming to the hub, traders said.
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.
MIDCONTINENT
Cash differentials rose sharply by around 0.75 cent amid the drop on the NYMEX which brought out fresh demand, traders said.
Chicago gasoline was firmer at around 4.10 cents under the print while low sulphur diesel differentials rose around to 0.25 cent under the print.
Gasoline in the Group traded up to 4.00 cents discount, premium was pegged at a 2.65 cents regrade and low sulphur diesel were bigger at flat to the screen.
12/10 18:11 US foreign crude - Bonny slips, Vasconia at -$2.87
NEW YORK, Dec 10 - Differentials for West African grades were notionally weaker on Thursday, and traders said the weakness could continue over the next few weeks, as demand from U.S. refineries remains relatively thin.
On the futures side, volatility continued to reign on Thursday, exacerbated by growing tension between Iraq and the United Nations. The front-month January contract on the New York Mercantile Exchange settled just above its intraday low, at $10.72 a barrel. January NYMEX crude's jumped sharply high earlier Thursday on rumors of U.S. troop movements, but slipped back lower after it became known that the moves were routine.
NORTH SEA, WEST AFRICAN
-- The January West Texas Intermediate-North Sea Brent arbitrage narrowed by about six cents on Thursday, settling at $1.09 a barrel. At these levels, the arb is not wide enough for U.S. markets to attract large volumes of North Sea crudes, traders said, even though prices of prompt, or Dated North Sea Brent remain relatively cheap at 64 cents under January Brent.
-- North Sea Brent was said to be on offer in U.S. markets for barrels arriving in late January at about 55 cents under WTI. But most players said it was unlikely that any Brent would actually move to the U.S. at these differentials, considered by most buyers as relatively expensive.
-- West African differentials are under growing pressure, and traders said Nigerian Bonny Light was especially weak in the U.S. Gulf. The grade was on offer at February WTI minus 50 cents, or $1.25 over Dated Brent on a delivered basis, which traders said was about 10 cents weaker than last week.
-- Nigerian Forcados was offered at 20 cents under February WTI, with one cargo of a VLCC scheduled to load 15-20 December still unsold.
-- A cargo of Nigerian Qua Iboe, which loaded this week, was heard sold at a wide discount of 15 cents under Dated Brent, but traders said this was not reflective of the market.
"That's very weak, but it was distressed," said one trader, pointing to the fact that the cargo was already on the water.
Qua is valued around a five cent premium to Dated Brent.
LATAM - COLOMBIA, VENEZUELA, ECUADOR, CHILE
-- Details were scarce on the latest of Ecopetrol's sell tenders for sweet Cusiana crude, although traders cited rumors that the four late-January cargoes were awarded around discounts of $1.45 under WTI. If the rumors are true, differentials for the latest tenders would be about 15-20 cents weaker than last week's tenders.
"I was a bit surprised myself," said one trader who had heard the market talk.
Bids on the cargoes were due on Wednesday, and traders had not expected much change from last week's discounts between $1.30-1.25 under West Texas Intermediate, where state-owned oil company Ecopetrol awarded three early January-loading cargoes last week.
-- Last week's tender for a January 4-8 loading cargo of medium-heavy Vasconia was said to have been awarded by Colombia's state-owned oil company Ecopetrol at a discount of $2.87 under WTI, little changed from the previous deal for a December cargo at minus $2.85.
Traders said Ecopetrol is tendering another cargo of Vasconia, this time loading January 9-13, with bids due this week.
-- Details of the last deal, and even talk about Colombia's medium-heavy Cano Limon was scarce in the U.S. market. 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 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.
-- Venezuela's sour crude, Mesa/Furrial remained valued around $2.80-2.70 under WTI, traders said.
-- 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.
IRAQI
-- Iraqi sour crude, Basrah Light was said to be on offer at around $2.50 under WTI on a
delivered basis, traders said.
12/10 20:13 ACCESS crude oil prices rise on technicals Thurs.
LOS ANGELES, Dec 10 - U.S. crude oil futures prices rose in moderately active ACCESS trade Thursday, driven up by short-covering ahead of the weekend, traders said.
"There's no news," one dealer said. "It's technical."
By 1700 PST on ACCESS, the January crude contract rose 11 cents a barrel to $10.83, compared with a NYMEX close of $10.72. Volume reached 1,269 lots for all futures months.
The January heating oil contract, meanwhile, eased 0.05 cent a gallon to 31.30 cents a gallon in ACCESS trade after closing 0.82 cent lower on NYMEX at 31.35. Total volume reached 259 lots by 1700 PDT.
The January unleaded gasoline contract rose 0.20 cent a gallon on ACCESS, trading at 34.20 cents, with 32 lots changing hands in January and 51 lots for all months.
12/10 20:21 U.S West Coast pure ANS falls, but diffs steady
LOS ANGELES, Dec 10 - Outright prices for U.S. West Coast spot crude oil fell Thursday while differentials stayed flat in a quiet market, traders said.
The last reported deal occurred December 3, when a cargo of benchmark Alaska North Slope (ANS) sold for $2.10 a barrel under January West Texas Intermediate (WTI).
ANS markets have been driven lower by steady production, falling refinery demand, and broadly lower oil markets, traders said. Few deals were expected soon, with traders trying to reduce inventories and producers wary of selling into a weak market.
Some buyers said West Coast demand for spot ANS would be thin for January, especially since a key buyer -- Equilon's Washington State refinery -- was unable to take its usual two to three cargoes of ANS following a explosion that cut plant capacity.
BP Oil, the leading seller of ANS, offered cargoes for $1.40 a barrel under WTI.
Outright prices for January ANS on the West Coast fell to $8.64/8.80 a barrel from $9.01/9.19.
Outright prices for California heavy grades eased Thursday after some refiners lowered postings to match the decline in WTI prices.
Pure Kern River prices eased to $6.50/6.60 a barrel, while Wilmington oil fell to $7.31/7.41
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