Copyright © 2010 Reed Business Information Limited. ICIS Pricing is a member of the Reed Elsevier plc group.
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.
NOTE: for full details on the criteria ICIS pricing uses in making these price assessments visit www.icispricing.com and click on “methodology”.
EXCHANGE SUMMARY
| | Month | High | Low | Open | Wtd. Avg. | Settle | Change |
| ICE | Sep | 113.73 | 107.00 | 113.50 | 110.71 | 107.25 | -5.98 |
| BRENT | Oct | 113.55 | 106.90 | 113.34 | 110.72 | 107.16 | -5.91 |
| | Nov | 113.53 | 107.00 | 113.28 | 110.58 | 107.21 | -5.85 |
| NYMEX | Sep | 92.59 | 86.04 | 91.12 | N/A | 86.63 | -5.30 |
| WTI | Oct | 92.95 | 86.47 | 91.49 | N/A | 87.04 | -5.29 |
| | Nov | 93.27 | 86.94 | 91.95 | N/A | 87.49 | -5.29 |
FUTURES MARKETS
Prices opened the day in moderately positive territory, but lost ground during the early hours before rallying in tandem with firm Asian stock markets. However, once Europe opened for business prices went into steep decline on the back of a firmer US Dollar and ongoing concerns over the state of the US economy, which could cause a drop in energy demand. The markets were already posting 3-digit losses by the time the US markets opened and they fell further when US jobless claims data proved to be inconclusive. A larger-than-expected build on US Natural Gas stocks added further downward impetus. Penetration of key technical barriers then triggered a massive sell-off across the energy complex, while similar length liquidation in the equities markets and a firmer US Dollar added to the downward momentum. Crude prices tumbled dollar after dollar, but a little last minute profit taking hauled them off the lows.
POST EXCHANGE CLOSING
There was an attempt at bottom picking in the cash market following the weak NYMEX close, with bids for September WTI raising their bids to 86.77 (Print plus 14 cents) but sellers pulled back. During electronic trading, however, the stock market maintained the free-fall and crude prices worked lower. WTI worked down towards 86.24, with the earlier floor low managing to hold. Light buying re-entered the market and the value for the front month rose towards 86.50, still holding below the settlement.
Despite the deeply oversold conditions, the market’s bias remains to the downside and in search of a bottom, although some pre-weekend short covering could be expected.
PHYSICAL MARKETS
ASIA PACIFIC: Traders awaited the release of Indonesia’s spot tender for October arrival sweet crude
ARAB GULF: Qatar issued both spot and term condensate tenders.
NORTH SEA: Forties traded lower again despite further delays to both Forties and Ekofisk loading programmes.
URALS: Firmer bid for Black Sea cargo, no public talk on Baltic cargoes.
WEST AFRICA: Differentials holding firm, results of first Indian purchase tender for October awaited.
AMERICAS: Despite oversold conditions, the market now in search of a bottom.
SUBSCRIBER NOTE
COMMENTS
The Asia Pacific market was quiet on Thursday with traders awaiting the release of the monthly sweet crude purchase tender from Indonesia. The new purchase tender for October arrival barrels is expected to be issued in the coming days. In its previous tender for September arrival barrels, Petral, the trading arm of Pertamina, the Indonesian state oil company, bought 600,000 bbl of Champion from Itochu at Dated Brent (Dtd) plus 6.00 C&F and 950,000 bbl of Saharan Blend from Concord at Dtd plus 4.50 C&F.
Traders also awaited news on the ongoing negotiations between PV Oil and term customers for the tender offering 200,000 bbl per month of Rang Dong for loading October 2011 to March 2012. Initial bids were submitted on 29 July and will have validity until 12 August. Previously, PV Oil awarded the April-September 2011 Rang Dong term tender at Minas formula plus 3.88. Spot September Rang Dong cargoes recently traded at around Minas formula plus 5.00.
As regards remaining September cargoes, Woodside was still holding a cargo of September Stybarrow. Meanwhile, BP has rolled the last September North West Shelf condensate cargo over into October.
In open market trading, October Dubai partials were bid at 107.15 by Phibro, while offered at 107.20 by Unipec and SK Energy. October Oman partials were offered at 107.80 by Unipec.
The October DME Oman futures contract settled at 107.50, down 2.36 on the previous session. The October ICE Middle East Sour Crude marker was set at 107.76, down 2.69.
The September Brent-Dubai EFS was quoted at plus 5.50, down around 25 cents on the previous session. The October Brent-Dubai EFS was assessed at plus 5.10, down around 15 cents.
COMMENTS
The Official prices from Saudi Arabia for September, which were released on Wednesday, were viewed as competitive, particularly for medium and heavy grades. However, increases in differentials against Oman/Dubai quotes for lighter grades, such as Berri (Arab Extra Light), narrowed the spread against Murban and were expected to buoy buying interest for light sour Abu Dhabi barrels.
Cuts to values for medium and heavy Saudi grades were expected to place further pressure on spot cargoes of grades such as Oman. Oman and Dubai values have already been adversely impacted by the unscheduled shutdown of the 540,000 bbl/day Mailiao refinery in Taiwan operated by Formosa Petrochemical Corp (FPCC). FPCC was reported to have recently unloaded a VLCC of Oman crude and placed the barrels into storage in Taiwan.
Tasweeq, the state owned Qatari oil marketer, issued both spot and term tenders offering Deodorised Field Condensate (DFC) and Qatari Low Sulphur Condensate (LSC).
The spot tender offering is for four 500,000 bbl cargoes of Deodorised Field Condensate (DFC) and Qatari Low Sulphur Condensate (LSC) for October loading. The cargoes are for loading 1-8 October, 8-15 October, 15-22 October and 22-31 October. The tender will close on 22 August with validity until 25 August.
The term tender offered either one or two 500,000 bbl cargoes per month of DFC and LSC for loading 1 October 2011 to 30 September 2012. The spot term tenders will also close on 22 August and have validity until 25 August.
October Oman was assessed 8 cents lower at Dubai quotes minus 39 cents, based on Thursday’s DME settlement price.
In open market trading, October Dubai partials were bid at 107.15 by Phibro, while offered at 107.20 by Unipec and SK Energy. October Oman partials were offered at 107.80 by Unipec, but there was no bid.
The October DME Oman futures contract settled at 107.50, down 2.36 on the previous session. The October ICE Middle East Sour Crude marker was set at 107.76, down 2.69.
The September Brent-Dubai EFS was quoted at plus 5.50, down around 25 cents on the previous session. The October Brent-Dubai EFS was assessed at plus 5.10, down around 15 cents.
BFOE = Brent/Forties/Oseberg/Ekofisk.
STATFJORD, ASGARD, GULLFAKS = CIF basis Rotterdam
COMMENTS
Forties Pipeline System operator, BP, said that production was still scheduled to re-commence on Friday afternoon following the removal of a World War Two mine that was recently found near the pipeline. BP had taken the opportunity to carry out some maintenance work during the closure, which started on Monday, but these were said to be all on schedule.
Meanwhile, the ongoing production shortfall from the Buzzard field has resulted in the deferral of yet another cargo of Forties. Nexen equity cargo F0815, originally scheduled to load 27-29 August, was said to have been slipped back three days. This is the fifth cargo in the August programme to have been delayed from its original dates.
A revised loading programme for August Ekofisk has been issued showing delays to cargoes loading between 17 August and 26 August of up to five days. Three cargoes had already been dropped from the programme (WCR 3 August) due to production problems.
There was just a single cargo of Forties (F0813) eligible for 21-day declaration and it was put into circulation to be kept by Shell.
In open market trading, Shell offered a 17-19 August Forties, starting at Oct BFOE less 10 cents and working down to Oct less 55 cents, but without attracting any buying interest.
Shell also offered a 21-23 August Forties, starting at Dtd plus 10 cents and working down to Dtd less 15 cents with an equal lack of success.
BP made a bid for a 23-27 August Forties at Dtd less 25 cents and did not raise its level from that.
Elsewhere, the Statoil marketing team said that on Wednesday it had sold a cargo of GULLFAKS that had been on offer at Dtd plus 4.30, but had achieved a little less than that. Cargoes of Ekofisk, Gullfaks and Oseberg were still available for loading late August.
The partials market managed average volume, while the CfDs were again fairly active.
***”WINDOW” TRADES and WEIGHTED AVERAGE***
| GRADE | MONTH | SELLER | BUYER | VOLUME | PRICE |
| | | | | | |
| BFOE | Sep | Total | ConocoPhillips | 100 | 110.79 |
| | | Arcadia | ConocoPhillips | 100 | 110.80 |
| | | Total | ConocoPhillips | 100 | 110.79 |
| | | | | | |
| | | | Total Volume | 300 | |
| | | | | Weighted Average | 110.79 |
| | | | | | |
| BFOE | Oct | Shell | Trafigura | 100 | 110.72 |
| | | ConocoPhillips | Trafigura | 100 | 110.73 |
| | | ConocoPhillips | Trafigura | 100 | 110.73 |
| | | | | | |
| | | | Total Volume | 300 | |
| | | | | Weighted Average | 110.73 |
| | | | | | |
Dated to Paper – Assessments at 16:30 hours London
| Period | Bid/Offer | Deals done |
| | | |
| 8-12 Aug: | Oct -0.30/-0.24 | Oct -0.20 (x150, x100, x100, x100, x50) |
| 10-12 Aug: | | Rolled to 17-19 Aug at flat (x100), -0.02 (x200) |
| 15-19 Aug: | Oct -0.28/-0.22 | Oct -0.23 (x100), -0.22 (x100), -0.20 (x100, x100, x100, x100, x100) |
| 22-26 Aug: | Oct -0.26/-0.22 | Oct -0.23 (x100), -0.24 (x100) |
| 30-02 Sep: | Oct -0.29/-0.19 | |
| 5-9 Sep: | Oct -0.29/-0.19 | |
| 12-16 Sep: | Oct -0.29/-0.19 | |
Dated to Front-line ICE Brent – Assessments at 16:30 hours London
| Period | Bid | Offer | Deals Done |
| | | | |
| Bal Aug: | -0.29 | -0.19 | |
| Sep: | -0.34 | -0.24 | |
| Oct: | -0.37 | -0.27 | |
| Q4’11: | -0.35 | -0.27 | |
| Q1’12: | -0.29 | -0.21 | |
| Q2’12: | -0.25 | -0.17 | |
| Q3’12: | -0.19 | -0.11 | |
| Cal 2012 | -0.22 | -0.16 | |
| Cal 2013 | -0.07 | -0.01 | |
| Cal 2014 | -0.03 | +0.03 | |
DEALS DONE: (Unless otherwise noted, prices were undisclosed)
From Wednesday: GULLFAKS: Late August.
COMMENTS
Urals loading in the Mediterranean region continued to strengthen against Dtd as several cargoes have been fixed to the North and Lukoil’s Bulgarian refinery restarted earlier in the week.
Reports were also heard that two 1m bbl cargoes of Urals have been fixed from Novorossiysk to the US. However, further details failed to emerge and this was not confirmed.
During the open market trading session, OMV bid for a 19-23 August 80,000 tonnes cargo of Urals ex Novorossiysk or Yuzhny, starting at Dtd less 1.90 CIF basis Augusta and working up to Dtd less 1.35, but no offers were heard.
On other grades, OMV was also heard to have bid for a 25-29 August cargo of CPC Blend at Dtd plus 0.85 CIF basis Augusta. Some traders said two cargoes of CPC Blend may have traded at up to Dtd plus 1.00 CIF basis Augusta earlier in the week, however, these deals have not been confirmed and some traders insisted that with poor naphtha margins deals around Dtd plus 1.00 seem uneconomical.
Statoil was heard to have offered an Azeri Light cargo at Dtd plus 4.25 CIF basis Augusta, however the grade was valued at lower premiums according to traders of around Dtd plus 4.15, albeit still 10 cents higher than valuations heard on Wednesday.
Kumkol was valued lower at around Dtd plus 2.50 CIF basis Augusta.
COMMENTS
Saudi Arabia has set its Official prices ex Sidi Kerir for September with increases to all grades.
| Fob Sidi Kerir | |
| Grade | vs. Brent Weighted Average |
| Berri | Plus 0.50 (up 0.95) |
| | |
| Arab Light | Minus 2.35 (up 0.25) |
| | |
| Arab Medium | Minus 4.35 (up 0.40) |
| | |
| Arab Heavy | Minus 6.85 (up 0.05) |
Algerian Saharan Blend was heard to have traded at Dtd plus 1.35 in the past few days. Traders said offers for the naphtha rich grade have now risen to around Dtd plus 1.50. Traders noted that the grade has been supported by cargoes moving to the US Gulf in recent weeks.
COMMENTS
The first tender by the Indian Oil Corporation (IOC) for the purchase of October loading sweet crudes closed on Thursday with the results due to be announced on Friday. In its previous tender for September crude, IOC bought just one VLCC combination of EA and Erha from Shell.
Angolan state marketer, Sonangol, was heard to have sold its 30 September-1 October GIRASSOL to ConocoPhillips, but no price details were forthcoming.
After its recent buying spree, in which it was thought to have taken up to 10 cargoes of various West African grades, ConocoPhillips was said to be re-offering a couple of cargoes of Qua Iboe for loading 5-6 September and 8-9 September.
COMMENTS
***CASH***
Adding to the list of foreign delivered cargos on offer into the US, two parcels of Urals are being reported moving trans-Atlantic. The negative Brent-WTI arb continues to narrow and the Gulf Coast domestic grades have re-aligned in value helping make foreign cargo economics more competitive.
The sell-off on the NYMEX spooked domestic market participants and the overall liquidity suffered, with several key grades not producing deal evidence.
LLS started the day trading at WTI plus 23.80 and sold down to plus 22.90 where late bids were seen.
MARS saw bids/offers within a wide range either side of 19.25 but no barrels were reported changing hands.
HLS was reported done between WTI plus 23.90 and 24.10.
WTS barrels were sold between WTI less 95 cents and minus 1.00.
ANS delivered into the USWC continue to trade actively, with another September cargo reported sold at WTI plus 20.50.
CMAs traded between minus 50 and minus 55 cents.
In forward activity, October LLS traded at WTI plus 21.50, with Cal ’12 barrels selling at 16.00 premium to Intermediate.
Following the NYMEX close, the oversold conditions attracted light buying in cash WTI, with bids for September barrels indicating 86.77 (Print plus 14 cents) but sellers did not stir.
During electronic trading, the slide continued in line with a plunging stock market and September crude dipped towards 86.24 but did not penetrate the earlier established floor low.
Eventually, more buying interest appeared on bottom picking ahead of Friday and the value for September climbed towards 86.53 and consolidated either side of that number, still below the 86.63 floor settlement.
***LATIN AMERICA***
Results of PetroPeru’s crude purchase tender for a 400,000 barrel cargo for delivery 2-6 October were not forthcoming.
***U.S. CLOSE***
| CRUDE | MONTH | BUY | / | SELL | CRUDE | MONTH | BUY | / | SELL |
| WTI | SEP | -0.39 | | 0.04 | MIDLAND | SEP | -0.47 | | -0.40 |
| CMAs | SEP | -0.58 | | -0.52 | WTS | SEP | -1.05 | | -0.95 |
| LLS | SEP | 22.90 | | 23.15 | BASRAH* | SEP | 17.60 | | 18.20 |
| MARS | SEP | 19.10 | | 19.25 | CASTILLA** | SEP | 7.00 | | 8.00 |
| THHORSE | SEP | 23.10 | | 23.75 | ORIENTE** | SEP | 8.00 | | 9.00 |
| ANSWC | SEP | 20.10 | | 20.60 | | | | | |
| | | | | | | | | | | |
***NOTE: WTI is assessed against the NYMEX settlement. All grade differentials are assessed against front month cash WTI. *Basrah, Castilla and Oriente are assessed against the second month **FOB Load Port
FUTURES
***NYMEX Light Sweet Settlement*** Sep 86.63 (Minus 5.30) Oct 87.04 (Minus 5.29) Nov 87.49 (Minus 5.29)
***ESTIMATED VOLUME*** 879,823
Once again, sentiment that Wednesday’s sell-off had been overdone attracted some overnight buying, lifting the September WTI contract to establish the session’s high at 92.59 (Print plus 66 cents) before running out of steam. Scaled down selling entered the market on the back of a firm dollar and jitters regarding slowing economic growth. Floor trading opened at 91.12 (minus 81 cents) and the sell-off gained momentum tracking further selling in the stock market. A feeding frenzy and a rout in the equities drove crude prices through the first intra-day support barrier, triggering sell stops. The losses were extended and no news were good enough to stop the bleeding. A second support barrier was penetrated adding to the losses as rallies were seen as selling opportunities. An intra-day low of 86.04 (Print less 5.89) was established before the selling was exhausted. A late bounce led front month WTI to settle at 86.63 (minus 5.30). The Sep-Oct contango held steady.
WTI has now broken out of congestion and the bias has switched to the downside, calling for rallies to be seen as selling opportunities. The market is also in oversold territory and in need of a correction but moves to the upside will be capped until more favorable economic data injects optimism into the market. There is a cluster of support in the 84.10-83.85 area which, if penetrated, would carry a measured downside target of 75.40. First line of resistance is now the session’s high of 92.59 but no signal of strength will emerge until there is a break and close above 95.68.
TECHNICAL OUTLOOK: Friday 5 Aug 2011 (Sep WTI)
SUPPORT: **** 89.43/ 86.61 RESISTANCE: **** 94.20/98.60
