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Correction: In the World Crude Report (3rd update) Americas section please read ...WTI OCT 68.82 -0.52... instead of ...WTI OCT 68.82 -3.21.... In the North Sea section please read ...DTD BFOE 66.59 -1.97... instead of ...DTD BFOE 66.59 -2.30... and ...BFOE OCT 67.32 -1.94... instead of ...BFOE OCT 67.32 -2.19...
In the CIS section please read ...URALS NWE SEP 66.39 -1.87... instead of ...URALS NWE SEP 66.39 -2.00.... A corrected report now follows.
Forward Trading (Spot assessed buy/sell price ranges and spreads)
Spreads – Positive numbers favour inner months, negative numbers outer months. All times quoted are local time.
BFOE = Brent/Forties/Oseberg/Ekofisk.
| | Month | High | Low | Open | Wtd.Avg. | Settle | Change |
| ICE | Oct | 68.00 | 66.66 | 67.68 | 67.30 | 67.44 | -0.25 |
| BRENT | Nov | 68.82 | 67.48 | 69.51 | 68.16 | 68.37 | -0.13 |
| | Dec | 69.59 | 68.29 | 68.66 | 68.93 | 69.16 | -0.13 |
| NYMEX | Oct | 69.51 | 68.02 | 68.90 | N/A | 68.86 | -0.43 |
| WTI | Nov | 69.94 | 68.51 | 69.35 | N/A | 69.37 | -0.35 |
| | Dec | 70.37 | 69.05 | 69.80 | N/A | 69.86 | -0.34 |
OVERVIEW
***ASIAN MARKETS*** Crude futures weakened on Monday afternoon in Asia, following on from falls of over 2.00 at the close of last week. Prices were undermined by a strengthening in the US dollar and global equity market falls. Business in the Arab Gulf market was focussed on talk in Oman and Qatari crude. Meanwhile, in the Asia Pacific market, interest was mostly centred on Indian tender related business.
***EUROPEAN MORNING*** Oct ICE Futures Brent settled at 67.69 on Friday and opened at 67.68. During the early hours, it dropped to trade around 67.00. When activity picked up, it resumed the downward direction and reached a low of 66.66 (minus 1.03). It then recovered to around 67.35 before coming back down to 67.00. For a while during midmorning, it traded within a range either side of 67.15. Towards midday, Oct Brent found support and ahead of lunch was trading around 67.35. The outer months posted similar losses. On the Globex electronic platform, WTI was weaker than its counterpart.
***EUROPEAN AFTERNOON*** Oct Brent continued to gain ground over lunch to be trading around 67.65 as the US markets opened. Oct WTI was trading around 69.00 when the focus switched to the US benchmark, but it quickly started to lose ground, plunging to around 68.25 before some support appeared. It quickly bounced back, breaking above 69.00 again and setting a new high of 69.51 (plus 22 cents) before stalling. It quickly gave back the gains, slumping back into negative territory to around 68.55 before the brakes were applied. It then rallied again to move back above 69.00, getting up to around 69.40 before running out of momentum and dropping back below 69.00 again. Oct Brent followed suit to hit a new high of 68.00 (plus 31 cents) before also falling back into negative territory.
The partials market was bolstered by a couple of pre-expiry spread trades, while the CfDs also saw decent activity.
***”WINDOW” TRADES and WEIGHTED AVERAGE***
| GRADE | MONTH | SELLER | BUYER | VOLUME | PRICE |
| | | | | | |
| BFOE | Oct-Nov | BP | Total | 600 | -0.84 |
| | | BP | Total | 600 | -0.85 |
| | | | | | |
| | | | Total Volume | 1200 | |
| | | | | Weighted Average | -0.85 |
| | | | | | |
| BFOE | Nov | Mercuria | Sempra | 100 | 67.85 |
| | | Mercuria | ConPhil | 100 | 67.85 |
| | | Mercuria | Total | 100 | 67.85 |
| | | Mercuria | Total | 100 | 67.85 |
| | | | | | |
| | | | Total Volume | 400 | |
| | | | | Weighted Average | 67.85 |
| | | | | | |
| BFOE | Dec | Shell | ConPhil | 100 | 68.75 |
| | | | | | |
| | | | Total Volume | 100 | |
| | | | | Weighted Average | 68.75 |
| | | | | | |
ICE Brent One Minute Markers
| October | 67.27 |
| November | 68.11 |
| December | 68.85 |
***PHYSICAL MARKETS*** The North Sea market saw Forties trade at a fairly steady level, while a few more Norwegian cargoes were placed, albeit at slightly weaker levels. The West African market received a boost on news that an Indian tender at the end of last week had taken a VLCC after all. The Urals markets saw a firmer trade ex the Baltic, while a bid for a Black Sea cargo was also firmer.
***U.S. AFTERNOON*** Having established the session’s high/low range, crude prices consolidated in negative territory but off intra-day lows as the stock market showed modest gains and the dollar slipped versus the euro. October WTI settled at 68.86 (minus 43 cents); experiencing a slight widening of the contango. Same month Brent closed at 67.44 (minus 25 cents). The negative trans-Atlantic arb narrowed into a plus 1.43 value.
***HOUSTON CLOSE*** Following the NYMEX close, bid/offers for October cash WTI straddled the 68.86 settlement but no deals were confirmed. During electronic trading, initially the value for October did not move much; with the value retreating towards 68.71 before consolidating either side of 68.80 but then sold down towards 68.61 on sentiment that the market is now in search of a near term bottom due to seasonal factors.
The initial forecast for the weekly supply statistics calls for a substantial drawdown in crude stocks and a build in both distillate and gasoline inventories.
NOTE: For full details on the criteria ICIS pricing uses in making its price assessments visit www.icispricing.com and click on "Methodology".
ARABIAN GULF
COMMENTS
Business started to pick up in the Arab Gulf market. There were reports of offers of November Qatar Marine at a stronger levels around Official plus 20 cents, with rumours of possible trades at close to the offer price. There were also reports of recent November Oman trades at around Dubai quotes plus 20-30 cents.
November Oman was assessed a cent or so softer at around Dubai quotes plus 10-15 cents, based on Monday’s DME settlement price. However, November Oman values in the over the counter (OTC) market were reported to be at a premium to the aforementioned level.
Elsewhere, Qatar was reported to have yet to finalise the programme for November Al Shaheen.
Talk was thin for light sour grades such as November Murban with valuations remaining at around Official plus 5 cents.
Iraq set its Official prices for October Basrah Light, with a substantial cut in prices to US customers. Prices for buyers in Europe were left unchanged, while there were increases for customers in Asia.
ASIA: Average Oman/Dubai minus 20 cents, up 60 cents
EUROPE: Dated BFOE minus 80 cents, unchanged
US: Second month WTI minus 3.50, down 1.50
The November DME Oman futures contract settled at 67.59, down 2.15 on last Friday. The November ICE Middle East Sour Crude marker was set at 67.42, down 2.41.
The October Brent-Dubai EFS was quoted at minus 12 cents, down around 27 cents on day. The November Brent-Dubai EFS was assessed at plus 48 cents, also down around 27 cents.
NORTH SEA
COMMENTS
There were cargoes of Brent (B1002) and Forties (F1007) eligible for 21-day declaration, but only the Forties was given a chance of appearing in public. In the end, nothing was seen in public.
In open market trading, Phibro offered a 26-28 September FORTIES, starting at Dtd less 10 cents and working down to Dtd less 40 cents, at which point Litasco lifted the cargo.
Total offered a 24-26 September Forties, starting at Dtd less 20 cents and working down to Dtd less 35 cents without attracting any buying interest.
Total also offered a 29 September-1 October Forties, starting at Dtd less 10 cents and working down to Dtd less 20 cents, but again with no success.
Total also offered 24 September-6 October Forties via STS at Scapa Flow, starting at Dtd plus 25 cents and lowering this to just Dtd plus 20 cents, but again drew a blank.
Elsewhere, the StatoilHydro marketing team confirmed that the 27 September DRAUGEN, which had been offered at Dtd plus 20 cents, had indeed been sold on Friday (WCR 11 September). The 4 October OSEBERG, which had been offered at Dtd plus 1.05, was also sold fairly late in the day.
A couple of new cargoes were shown on Monday, while asking levels had been trimmed a little.
The new list of cargoes on offer read:
29 September Gullfaks at Dtd plus 1.20
3 October Gullfaks at Dtd plus 1.25
6 October Statfjord at Dtd plus 70 cents
7 October Oseberg at Dtd plus 1.00
8 October Njord at Dtd plus 1.70 CIF basis Rotterdam.
The STATFJORD, OSEBERG and NJORD were all sold, but strangely the cargoes of Gullfaks were attracting little buying interest.
Dated to Paper – Assessments at 16:30 hours London
| Period | Bid/Offer | Deals Done |
| | | |
| 14-18 Sep: | | Nov -1.35 (x100), -1.40 (x100) |
| 21-25 Sep: | Nov -1.34/-1.24 | |
| 28 Sep-2 Oct: | Nov -1.17/-1.13 | Nov -1.10 (x100), -1.15 (x100, x100). Dec -1.87 (x100) Rolled to 26-30 Oct at -70 (x200) cents |
| 30 Sep-6 Oct: | | Nov -96 (x100), -1.00 (x100) |
| 5-9 Oct: | Nov -0.98/-0.94 | Nov -98 (x100), -96 (x100, x100), -95 (x500, x100, x100) cents |
| 6-12 Oct: | | Rolled to 1-30 Oct at -18 (x200) cents |
| 12-16 Oct: | Nov -0.82/-0.72 | |
| 19-23 Oct: | Nov -0.63/-0.53 | |
| 26-30 Oct: | Nov -0.44/-0.34 | Dec -1.17 (x100, x100) |
Dated to Front-line ICE Brent – Assessments at 16:30 hours London
| Period | Bid/Offer | Deals Done |
| | | |
| Bal Sep: | -1.40/-1.30 | |
| Oct: | -1.16/-1.06 | |
| Nov: | -1.17/-1.07 | |
| Q4’09: | -1.12/-1.04 | |
| Q1’10: | -1.00/-0.92 | |
| Q2’10: | -0.91/-0.83 | |
| 2010: | -0.82/-0.76 | |
| 2011: | -0.56/-0.50 | |
DEALS DONE: (Unless otherwise noted, prices were undisclosed)
FORTIES: 26-28 September at Dtd less 40 cents.
OSEBERG: 7 October. STATFJORD: 6 October. NJORD: 8 October.
From Friday: OSEBERG: 4 October.
THE ICIS BFOE TRADING MATRIX (TO 11 Sep 2009)
| | Sep 2009 | Oct 2009 | Nov 2009 | Dec 2009 | Jan 2010 |
| Month | Price | Pct | Price | Pct | Price | Pct | Price | Pct | Price | Pct |
Feb | --- | - | --- | - | --- | - | --- | - | --- | - |
| Mar | --- | - | --- | - | --- | - | --- | - | --- | - |
| Apr | --- | - | --- | - | --- | - | --- | - | --- | - |
| May | --- | - | --- | - | --- | - | --- | - | --- | - |
| Jun | --- | - | --- | - | --- | - | --- | - | --- | - |
| Jul | --- | - | --- | - | --- | - | --- | - | --- | - |
| Aug | --- | - | --- | - | --- | - | --- | - | --- | - |
| Sep | --- | - | --- | - | --- | - | --- | - | --- | - |
| O/ALL | --- | - | --- | - | --- | - | --- | - | --- | - |
| Deals | | - | | - | | - | | - | | - |
WEST AFRICA
COMMENTS
Contrary to initial reports (WCR 11 September), last week’s purchase tender by Indian refiner, Bharat Petroleum Corp (BPCL), was now reported to have taken cargoes of November loading QUA IBOE and NEMBA in addition to a cargo of Algerian Saharan Blend. The VLCC combination was sold by a trader with the Qua Iboe reported at around Dtd plus 1.50/1.60. No price details were forthcoming on the Nemba.
Tenders from two other Indian refiners, the Indian Oil Corporation (IOC) and Hindustan Petroleum Corp (HPCL), close later in the week.
The 9-10 October NEMBA which had originally been reported placed into an IOC tender was suggested to have gone to a US company but this could not be confirmed.
The Angolan loading programmes for November were expected to start emerging on Tuesday.
MEDITERRANEAN
COMMENTS
Iraq has set its October Official prices for Kirkuk crude ex the Turkish export terminal of Ceyhan, with a price cut for customers in the USA, while the price to European customers was unchanged.
The new prices are as follows:
EUROPE: Dated BFOE minus 0.45, unchanged.
US: Front-month WTI minus 1.60, down 1.60.
Reports circulated that a large US refiner had recently picked up a cargo of October ZARZAITINE from the Tunisian State marketer at around Dtd plus 20 cents but his could not be confirmed.
C.I.S. EXPORTS
COMMENTS
In open market trading, Gunvor offered a 24-28 September 100,000 tonnes cargo of Urals ex Primorsk, Gdansk or Murmansk, starting at Dtd less 10 cents CIF basis Rotterdam and working down to Dtd less 30 cents, at which point Shell took the cargo.
Shell had been bidding for 24-28 September 100,000 tonnes cargo of Urals ex Primorsk or Gdansk, starting at Dtd less 60 cents CIF basis Rotterdam and it continued to bid over after the deal, working up to Dtd less 25 cents, but not attracting any further offers.
BP offered a later 2-6 October 100,000 tonnes cargo of Urals ex Primorsk, starting at Dtd less 5 cents CIF basis Rotterdam and working down to Dtd less 25 cents without attracting any buying interest.
In the south, BP made a bid for a 5-9 October 80,000 tonnes cargo of Urals ex Novorossiysk or Yuzhny, starting at Dtd less 80 cents CIF basis Augusta and working up to Dtd less 55 cents without attracting any offers.
Meanwhile, Russian producer, Rosneft, was reported to have awarded its latest 6-month Urals sales tenders to Total and Gunvor. Total was awarded 4.8 million tonnes of Urals ex the Baltic load port of Primorsk, with Gunvor awarded 1.8 million tonnes.
Total was also awarded 2.52 million tonnes of Urals ex the main Black Sea terminal of Novorossiysk, to be loaded in one million bbl cargoes. Gunvor was awarded 1.92 million tonnes, but to be loaded in 80,000 tonnes cargoes ex Novorossiysk or Yuzhny.
AMERICAS
COMMENTS
***CASH***
It was an extremely quiet start to the week in both foreign delivered as well as domestic activity.
A few foreign cargo offers made the rounds but no deals were reported.
Overall volume on domestic trades were unimpressive.
LLS traded between WTI plus 75 and 70 cents. MIDLAND SWEET was reported done at 27 cents discount to Cushing. Thunder Horse barrels changed hands at WTI less 2.00.
WTS traded between 2.15 and 2.10 discount to WTI. MARS started at WTI less 3.55 and sold down to 3.75 discount. Poseidon was reported sold at 3.60 discount. SGC traded at WTI less 3.75.
With the Sep-Oct contango bouncing around CMAs were sold between minus 65 and minus 57 cents.
No cash WTI activity was noted following the NYMEC close; with bid/offers for October crude straddling the 68.86 settlement but no deals were recorded. During electronic trading, the value for the front month slipped towards 68.61 on sentiment that seasonal factors will hold prices down.
The forecast for the weekly Stats called for a substantial drawdown in crude stocks due to a decline in foreign imports but a build in distillate and gasoline inventories.
***LATIN AMERICA***
The recent PetroPeru crude purchase tender was filled with Oriente and Napo from a trader.
***U.S. CLOSE***
| CRUDE | MONTH | BUY | / | SELL | CRUDE | MONTH | BUY | / | SELL |
| WTI | OCT | -0.15 | | -0.01 | ANS WC | OCT | -0.90 | | -0.60 |
| CMAs | OCT | -0.67 | | -0.63 | MARS | OCT | -3.80 | | -3.60 |
| MIDLAND | OCT | -0.30 | | -0.27 | CUSIANA* | OCT | 1.30 | | 1.70 |
| LLS | OCT | 0.65 | | 0.75 | BASRAH** | OCT | -3.00 | | -2.60 |
| WTS | OCT | -2.20 | | -2.00 | | | | | |
| | | | | | | | | | | | |
***NOTE: WTI is valued against the NYMEX settlement. All grade differentials are assessed against cash WTI. **Cusiana and Basrah are assessed against the forward WTI month.
FUTURES
***NYMEX Light Sweet Settlement*** Oct 68.86 (Minus 43) Nov 69.37 (Minus 35) Dec 69.86 (Minus 34)
***ESTIMATED VOLUME*** 684,882
Crude prices were mixed overnight but maintained a slight downside bias following Friday’s steep sell-off . The US dollar strengthened initially and global stock markets fell, driving the October WTI contract through the previous low which also represented near term support. An intra-day low of 68.02 (Print less 1.27) was established before running out of steam. A portion of the losses were given back ahead of the opening bell and floor session started at 69.04 (minus 25 cents). An attempt to work higher as the dollar fell versus the euro and the stock market moved higher slightly lifted the front month to establish the session’s high at 69.51 (plus 22 cents). The rally attracted selling and the front month pulled back into negative territory where it bounced around within a narrow range. On Friday, the CME released an advisory warning notifying market participants of tighter enforcement of position limits on the exchanges in order to prevent speculation. A cautious market remained rangebound until the closing bell; with October WTI settling at 68.86 (minus 43 cents) while the Oct-Nov contango widening a few cents.
The market is now trading in the lower portion of the congestion range but there are no signals that it will continue to move lower and could start working back up. Technicals and fundamentals remain out of step; with abundant supplies and lack of buying interest in the fundamentals unable to force prices down as long as currency and equities lead the way in another direction.
TECHNICAL OUTLOOK: Tuesday 15 Sep 2009 (Oct WTI)
SUPPORT: **** 67.70/65.30 RESISTANCE: **** 70.40/73.30
ASIA PACIFIC
COMMENTS
Regional light sweets remained under pressure on Monday with valuations for the October Tapis-Brent EFS slipping into discount levels amid an overhang of October Malaysian barrels. The November Tapis-Brent EFS was notionally valued in a wide range between 3.00-5.00.
Initial programme details from an Australian equity producer, suggested that 5-6 cargoes of November North West Shelf condensate will be made available in the spot market along with 1-2 cargoes of November Laminaria and around 2 cargoes of November Cossack.
Bharat Petroleum Corp (BPCL) bought 3m bbl of November loading sweet crude via its recent tender, in line with purchases made in the previous month. Details remained sketchy, but BPCL was heard to have bought 1m bbl each of Qua Iboe and Nemba from one European trader, as well as a further 1m bbl of Saharan Blend from a second European trader.
The Oil and Natural Gas Corp (ONGC), the state-owned Indian equity producer, issued a tender offering a 600,000 bbl cargo of Sudanese Nile Blend for 1-25 November loading. The tender will close on 16 September and will have validity until the following day.
The November DME Oman futures contract settled at 67.59, down 2.15 on last Friday. The November ICE Middle East Sour Crude marker was set at 67.42, down 2.41.
