MARKET WRAP -2 / Crude Oil & Natural Gas Current Scenario-News
Column Content Index
12/14 17:53 North Sea Brent up 8 cents in aftermarket
12/14 18:30 US Prods Outlook-The cold won't unleash bulls yet
12/14 20:22 ACCESS crude oil prices nearly unchanged on Monday
12/14 20:38 U.S. West Coast ANS pure prices firm, diffs flat
12/14 20:55 U.S. DOE may buy only $100 million in oil for nation's reserve
12/15 04:21 Oman urges oil states to keep quotas, boost prices
12/15 04:37 Iran wants quota row end before any oil cuts
12/15 05:50 US Prods Outlook-The cold won't unleash bulls yet
12/15 08:57 World oil market flat, sceptical of Madrid meeting
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12/14 17:53 North Sea Brent up 8 cents in aftermarket
NEW YORK, Dec 14 - January North Sea Brent was up eight cents in late trading on Monday and February Brent was up eight cents.
January Brent was valued at $10.24 a barrel, up from its close at $10.16 earlier Monday on the International Petroleum Exchange.
February Brent was valued at $10.47 a barrel in the U.S., up from its IPE close at $10.40, traders said. (corrects direction of price-change relationship between U.S. aftermarket and IPE close)
Four January cash Brent partial 100-lot cargoes were done at $10.20, $10.25, $10.30 and $10.30 per barrel. A full 500-lot cargo was done at $10.22 per barrel.
Four 100-lot February partial cargoes were done and one 200-lot cargo was done. All of the February deals were done at $10.47 per barrel.
The Brent January-February spread traded once at minus 29 cents.
12/14 18:30 US Prods Outlook-The cold won't unleash bulls yet
NEW YORK, Dec 14 - Cooler weather finally arrived to the top-consuming New York Harbor hub, and colder temperatures were expected in the Midwest, but traders and analysts on Monday said heating oil spikes were unlikely to poke holes through the overhang this week.
While heating oil, crude and gasoline futures gained Monday on news of a planned meeting among oil ministers from Mexico, Venezuela and Saudi Arabia in Madrid on Thursday, products trading was light as buyers were wary of the gains.
Players were more concerned about the temperatures. Weather Services Corporation forecast Monday that temperatures on Tuesday and Wednesday would be four to eight degrees Fahrenheit above normal and two and six degrees above normal through Saturday.
"The big block of cooler than normal air working its way across the U.S. may at least hold bearish sentiment in check," said one analyst.
While better crude oil prices and cooler temperatures may help heat, "stocks may also rise for the next couple of weeks before heating demand typically exceeds production," he said.
Another Gulf trader said, "The market has already built into it heating oil stock gains, so heat probably won't sink either."
Sentiment was bearish on the distillates, with a number of Northeast distillate tanks being freed up, and even a dirty crude tank being converted for gasoline storage, traders said.
On gasoline, traders in all the markets said they were split on the direction of gasoline prices.
On the Gulf Coast "the market is making the same kind of seasonal bottom that heating oil makes in June or July," said an analyst. "The market doesn't move higher because stocks are about to trend down, but rather because the market can't possibly get any further out of favor."
In the New York Harbor, the arbitrage for European cargoes was closed although one European refiner on Monday was trying to sell a U.K. conventional grade cargo into the Harbor, traders said.
"With both arbs closed - from Europe and the Gulf, we should see things get better only in a week and a half's time," said another gasoline trader.
"Conventional gasoline on the Gulf has been relatively tight -- the Gulf Coast differential will have to give up to allow the arb to open to the Harbor or New York Harbor will have to go up," said a Harbor trader.
The Gulf Coast gasoline market was supported, at least at the highest prices since mid November, despite the American Petroleum Institute's (API) record output data last week, as traders were putting the low RVP summer grade gasoline into storage since values for April supplies were around 6.0 cents per gallon higher than the January NYMEX.
"It's a function of the price of butane versus the price of gasoline," said one Gulf Coast trader. "We've done a lot of the summer grade today, players will carry it and sell it to the Gulf," he said.
Gasoline supplies on the API weekly stock report rose more than expected on for the week ending December 4, because of strong refinery production.
Crack spreads firmed slightly on Monday closing at -0.52 cents and compared to -0.73 cents for the last 15 days and -0.68 cent for November.
But one analyst was concerned "that refinery output has been overstated the last couple of weeks and there could be a surprise adjustment at some point."
12/14 20:22 ACCESS crude oil prices nearly unchanged on Monday
LOS ANGELES, Dec 14 - U.S. crude oil futures prices were nearly unchanged during Monday's ACCESS session, following sharp gains on the New York Mercantile Exchange (NYMEX) earlier.
Volume turned light on ACCESS, amid a dearth of news, traders said. "It's basically unchanged," one dealer said. "There's not much going on."
By 1715 PST the January crude oil futures contract eased two cents a barrel to $11.27, amid trade volume of 825 lots.
About 520 lots changed hands for the January contract.
The January heating oil contract, meanwhile, eased 0.01 cent a gallon to 32.70 cents on ACCESS, after closing 1.21 cent higher on NYMEX.
Total volume reached 168 lots by 1715 PST.
The January unleaded gasoline contract fell 0.07 cent a gallon on ACCESS, trading at 35.42 cents, with 145 lots changing hands in January and 196 lots for all months.
Unleaded gasoline on NYMEX settled 35.49 cents higher.
12/14 20:38 U.S. West Coast ANS pure prices firm, diffs flat
LOS ANGELES, Dec 14 - Outright prices for U.S. West Coast light crudes rose Monday with broadly higher markets, while differentials held steady in quiet trade, dealers 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 after an explosion 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 made slight gains to end around $9.12/9.28 a barrel on Monday, compared with $8.67/8.84.
Outright prices for California heavy grades were flat on Monday after slight declines prompted by lower postings on Friday.
Pure Kern River prices held at $6.35/6.45 a barrel, while Wilmington oil fell to $7.09/7.19.
12/14 20:55 U.S. DOE may buy only $100 million in oil for nation's reserve
WASHINGTON, Dec 14 - The U.S. Department of Energy is considering the purchase of only about $100 million in oil next year for the nation's Strategic Petroleum Reserve, not up to $1 billion in new crude oil purchases, as was reported by The Wall Street Journal, a senior DOE official said on Monday.
"A billion (dollars) is too much for our (DOE) budget," the official said, who added that $100 million in additional SPR purchases was in "the right ballpark."
With $100 million to spend, about 9.1 million barrels of crude oil could be bought for the reserve at the current market price of around $11 a barrel.
The SPR, consisting of a series of underground salt caverns in Louisiana and Texas, now holds 564 million barrels of oil - leaving 117 million barrels of spare capacity.
The reserve was created by Congress in 1973, after the Arab oil embargo to meet the nation's short-term energy needs in case of emergency.
The idea of buying of oil for the nation's emergency petroleum reserve is being reviewed by a working group of DOE employees, which was established earlier this month by U.S. Energy Secretary Bill Richardson to look at issues affecting the U.S. oil and natural gas industries.
The working group is looking at three ways to put oil in the reserve: ask Congress for the money, use royalties from offshore leases to buy the crude, or take oil from energy companies as royalty payments instead of cash.
Interfering with cash royalty payments would take money away from several trust funds shared with the states, which could prove more difficult than getting a direct appropriation from Congress, the official said.
The group soon will make its recommendation to Richardson for the Clinton administration to consider in the new federal budget, which will be released in early February.
The working group is also considering a relief package for operators of low-volume producing oil and natural gas wells, who have been hurt by declining energy prices, the DOE official said.
One idea being looked at is to provide well operators with a tax credit on the oil and natural gas they produce when energy prices drop to a certain level. The group also is looking at whether environmental regulations should be eased for producers, the official said.
12/15 04:21 Oman urges oil states to keep quotas, boost prices
MUSCAT, Dec 15 - Oman's oil minister Mohammad bin Hamad bin Seif al-Ramhi on Tuesday urged oil exporters to abide by output quotas and said Muscat was ready to work with OPEC to shore up prices, the official Omani News Agency (ONA) reported.
ONA said Ramhi warned that the slide in oil prices "will cause many hardships to produers", adding that development and economic projects would be affected.
The minister "appealed to oil exporters to abide by output quotas to stop the sharp deterioration in oil prices on the world markets", ONA said.
"He asserted that the Sultanate was ready to cooperate with OPEC to find solutions for this problem as soon as possible," it added.
Oman is an independent oil producer with output of about 900,000 barrels per day (bpd) of crude.
Ramhi said Oman was committed to production cuts it pledged earlier this year. Oman has agreed to shave 50,000 bpd from its production, in coordination with the Organisation of Petroleum Exporting Countries and other producers.
World oil prices are hovering at around $10 a barrel, their lowest level since 1976 on an average annual basis.
12/15 04:37 Iran wants quota row end before any oil cuts
DUBAI, Dec 15 - Iran wants the troubled OPEC cartel to resolve the heated issue of oil output quotas assigned after the 1990-1991 Gulf crisis before it considers joining any new production cut moves, an Iranian oil source said Tuesday.
"The issue of Iraqi supplies and the quotas should be on the table before any new output cut decisions are taken. Iran wants this on the table," the source, who requested anonymity, told Reuters by telephone from Tehran. "This has to be on the agenda of any meetings to consider new output cuts," he added.
The remarks on Iran's stand come at a critical time for the Organisation of the Petroleum Exporting Countries, a once powerful cartel now under siege from an oil price crash and squabbling by members over compliance with production cut pledges.
Ministers from Saudi Arabia, Venezuela and non-OPEC Mexico -- architects of global production cuts this year -- will meet in Madrid on Thursday hoping to shape a strategy to shore up prices.
But the key to any new moves inside OPEC depends on harmony between three key players with differeing agendas -- Saudi Arabia, Venezuela and Iran.
Iran wants OPEC kingpin Saudi Arabia to reverse some of the production gains it made in the wake of the 1990-1991 Gulf War, a sticking point in negotiations.
OPEC producers boosted production during the Gulf War to make up for lost production from Iraq, which was hit with a United Nations embargo when it invaded Kuwait. However, Saudi Arabia, which had the greatest surplus capacity, made up most of the supply gap.
"The countries that gained the most from Iraq's absence after the Gulf War should cut more than the others," said the Iranian oil source.
Tehran has said it was ready to take any new action to help the world oil market.
Saudi Arabia, for its part, is concerned that Iran and Venezuela have reneged on supply restraint pledges and is hesitant to put its weight behind more cuts without first securing full compliance.
Saudi Arabia and Iran, traditional Gulf rivals who have improved ties, recently stepped up contacts to align their views on ways of improving oil prices.
Two rounds of OPEC and non-OPEC production cuts have failed to rescue prices, which are at their lowest level since 1976 on an annual average basis.
The Iranian oil source said the Islamic Republic would stick to its own baseline production quota and would hold its position firmly even if oil producers agreed to a new round of output cuts.
"Iran will maintain its position, which is clear," the source added. "This will not change."
Iran wants OPEC to use 3.942 million barrels per day (bpd) as the basis for its own 305,000 bpd reduction and not the 3.623 million bpd judged by secondary media sources.
Asked if Iran would back holding an emergency OPEC meeting before the cartel's next scheduled session in March, the Iranian oil source said: "Before any meetings are held, issues have to be resolved.
Battered oil markets gained ground on Monday after Venezuela said it was considering fresh supply cuts and Saudi Arabia called again for action to support prices.
Benchmark Brent tip-toed into double figures to end 34 cents firmer at $10.16 a barrel, half a dollar above a fresh 12-year low struck on Thursday.
12/15 05:50 US Prods Outlook-The cold won't unleash bulls yet
NEW YORK, Dec 14 - Cooler weather finally arrived to the top-consuming New York Harbor hub, and colder temperatures were expected in the Midwest, but traders and analysts on Monday said heating oil spikes were unlikely to poke holes through the overhang this week.
While heating oil, crude and gasoline futures gained Monday on news of a planned meeting among oil ministers from Mexico, Venezuela and Saudi Arabia in Madrid on Thursday, products trading was light as buyers were wary of the gains.
Players were more concerned about the temperatures. Weather Services Corporation forecast Monday that temperatures on Tuesday and Wednesday would be four to eight degrees Fahrenheit above normal and two and six degrees above normal through Saturday.
"The big block of cooler than normal air working its way across the U.S. may at least hold bearish sentiment in check," said one analyst.
While better crude oil prices and cooler temperatures may help heat, "stocks may also rise for the next couple of weeks before heating demand typically exceeds production," he said.
Another Gulf trader said, "The market has already built into it heating oil stock gains, so heat probably won't sink either."
Sentiment was bearish on the distillates, with a number of Northeast distillate tanks being freed up, and even a dirty crude tank being converted for gasoline storage, traders said.
On gasoline, traders in all the markets said they were split on the direction of gasoline prices.
On the Gulf Coast "the market is making the same kind of seasonal bottom that heating oil makes in June or July," said an analyst. "The market doesn't move higher because stocks are about to trend down, but rather because the market can't possibly get any further out of favor."
In the New York Harbor, the arbitrage for European cargoes was closed although one European refiner on Monday was trying to sell a U.K. conventional grade cargo into the Harbor, traders said.
"With both arbs closed - from Europe and the Gulf, we should see things get better only in a week and a half's time," said another gasoline trader.
"Conventional gasoline on the Gulf has been relatively tight -- the Gulf Coast differential will have to give up to allow the arb to open to the Harbor or New York Harbor will have to go up," said a Harbor trader.
The Gulf Coast gasoline market was supported, at least at the highest prices since mid November, despite the American Petroleum Institute's (API) record output data last week, as traders were putting the low RVP summer grade gasoline into storage since values for April supplies were around 6.0 cents per gallon higher than the January NYMEX.
"It's a function of the price of butane versus the price of gasoline," said one Gulf Coast trader. "We've done a lot of the summer grade today, players will carry it and sell it to the Gulf," he said.
Gasoline supplies on the API weekly stock report rose more than expected on for the week ending December 4, because of strong refinery production.
Crack spreads firmed slightly on Monday closing at -0.52 cents and compared to -0.73 cents for the last 15 days and -0.68 cent for November.
But one analyst was concerned "that refinery output has been overstated the last couple of weeks and there could be a surprise adjustment at some point."
12/15 08:57 World Oil market flat, sceptical of Madrid meeting
LONDON, Dec 15 - Oil markets were treading water on Tuesday as dealers
awaited Thursday's gathering of three major producing countries in Madrid.
London futures for benchmark Brent traded unchanged at $10.13 a barrel and analysts said the market was discounting the likelihood of any new measures to support lowly prices at the meeting.
Saudi Arabia, Venezuela and non-OPEC Mexico have scheduled the talks at short notice in the wake of November's rancorous OPEC conference in a further effort to examine ways of reviving oil prices running on average this year at lows not seen since 1976.
The three producers were the architects earlier this year of 3.1 million barrels a day (bpd) of supply curbs among OPEC and non-OPEC exporters, too little to ease a towering glut of crude compounded by failing demand.
An adviser to Venezuelan President-elect Hugo Chavez said on Monday that the talks were unlikely to agree on new action in Madrid while Venezuela's government remained in transition.
Chavez, who won elections on December 6 but does not take office until February 2, agreed over the weekend to send his staff with the Venezuelan delegation for the Madrid talks.
''I don't think there will be any decision taken there,'' said one senior adviser to Chavez, asking not to be named. "They (Chavez oil advisers) are not going as formal representatives, but to participate, listen and give our opinion if asked for it; but it's still the responsiblity of the government.
''That's why we said this decision should be taken in the March meeting,'' he added, referring to the next official meeting of the Organisation of Petroleum Exporting Countries (OPEC) in Vienna.
''This is all unchartered territory,'' said Peter Bogin, associate director at Cambridge Energy Research in Paris. But it's difficult to see how Venezuela can commit to anything at this point in time," Bogin said.
Mexican sources said on Monday that their country would consider the possibility of further supply reductions. ''Everything is on the table, including more production cuts,'' said one government official.
The gathering will introduce the Saudis to the incoming Venezuelan government, ensuring cooperation between the trio of nations after the new Caracas administration assumes power in February.
''It's difficult to see Mexico offering more cuts, but prices are so low they just might,'' said Leo Drollas, deputy director at the Centre for Global Energy Studies.
So Saudi Arabia, hard hit by the fall in prices, stands alone in favouring further cuts, analysts said.
''Saudi Arabia is in a terrible state financially, and has decided to leave the compliance issue for the moment and go for further cuts,'' Drollas said.
Drollas said an extra one million bpd cut was needed to bring Brent prices up to average $14 a barrel by the third quarter in 1999, and $17 by the fourth quarter.
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Chart References
NYMEX LIGHT SWEET CRUDE OIL PRICE CHARTS
oilworld.com
IPE BRENT CRUDE OIL PRICE CHARTS
oilworld.com
OIL INDUSTRY COMBINED GRAPH CHARTS
oilworld.com
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