Global Markets articles from March 2003

Global Markets archives from March 2003

Shocks and surprises.
March 3, 2003... Oil is a weapon of mass disruption. An oil shock disrupts the entire global economy. It slashes corporate profits, erodes consumer purchasing power and undermines confidence. "Oil shocks and recessions go hand in hand," says Morgan Stanley...

War will damage oil facilities despite US pledge. (Iraq).
March 3, 2003... The US is firming up plans to protect Iraq's off facilities as it gears up for war. But short-term military priorities will inevitably outweigh concern for later rehabilitation. While the UN is edging towards a second Security Council...

War stockpiling boosts apparent demand. (China).
March 3, 2003... Chinese apparent demand--production plus net imports--soared to 5.8mn b/d in January as China's frenzied crude buying peaked. Apparent demand was 1mn b/d, or 21pc, higher than in January 2002. The rise was due largely to stockpiling of...

US gasoline bears brunt of crisis. (Oil shock).
March 3, 2003... The US gasoline market is rapidly heading into a crisis as tight supply and approaching summer demand threaten price spikes that could damage an already weak economy. The 8.8mn b/d gasoline market accounts for 45pc of US oil demand and...

Rising fuel costs bring economic shock. (Oil shock).
March 3, 2003... Rising fuel costs are squeezing corporate margins across the US economy. Airlines, already staggering to avoid bankruptcy as security fears persist, are taking the brunt of the pain. But high gasoline prices are undermining consumer confidence...

IPE to propose market reporting guidelines. (Market regulation).
March 3, 2003... The IPE is about to propose a set of criteria for information from reporting agencies that affects the settlement price for the IPE's Brent futures contract. The IPE and parts of the oil industry want to increase the transparency of the...

Controversy over price assessment methodology. (Price reporting).
March 3, 2003... Opposition to the use of Brent "strips", or forward values, to calculate crude assessments is hardening as oil companies and tax authorities line up against their use. From the beginning of this year, reporting agency Platts changed the...

UN would revamp oil-for-aid post-war.(Brief Article)
March 3, 2003... War in Iraq would disrupt the UN oil-for-aid scheme until the Security Council changes the rules to restart it. The UN or an independent Iraqi official, designated by the UN and US, would sign oil contracts. Iraqi state-run oil marketer Somo...

Opec will offset Iraqi disruption.(Brief Article)
March 3, 2003... Opec secretary-general Alvaro Silva last week said Opec is "confident we will manage any situation swiftly to avert a shortfall in supplies in the event of war" against Iraq. Opec president Abdullah al-Attiyah said: "If we feel there is a...

Jordan readies for loss of Iraqi supply.(Brief Article)
March 3, 2003... Jordan, reliant on supplies of Iraqi crude for a decade, is stockpiling ahead of war. It has loaded 3.07mn bl of Iraqi crude onto a VLCC and three smaller vessels moored off its Red Sea port of Aqaba. When full they will contain enough to...

Kuwait stockpiles gasoline.(Brief Article)
March 3, 2003... War fears have forced Kuwait's KPC into the market for prompt gasoline to build strategic stocks. Kuwait, a gasoline exporter until a 2000 fire at a key refinery, has been supplementing output from its 200,000 b/d Shuaiba refinery with...

US could use SPR quickly.(Brief Article)
March 3, 2003... Washington will "act quickly to use the SPR to fortify efforts by producers to offset any severe disruption", energy secretary Spencer Abraham told the Senate last week. The US will consult the IEA beforehand, but could act alone.

Platts backs down on Urals.(Brief Article)
March 3, 2003... Price reporting agency Platts will introduce a "new" Urals Mediterranean assessment from 3 March. The assessment, known as Urals (RCMB) is, in all but name, a reversion to Platts' old methodology, ditched at the start of the year. Argus and...

UK Oil Tax Office reviews methodology.(Brief Article)
March 3, 2003... The UK's Oil Taxation Office (OTO) is exploring the use of price assessments to set tax levels. This would broaden the OTO methodology in evaluating tax following a decline in physical Brent trade. Brent provides the basis for assessing tax...

Shell proposes trade of Oman partials.(Brief Article)
March 3, 2003... Shell has proposed the introduction of trade in partial Oman, in lots as small as 50,000 bl, during the Platts Singapore window for Mideast Gulf crude. Partials trade could strengthen Oman as a benchmark (AGM, 24 February, p3). But some...

MTBE price boosted by gas costs.(Brief Article)
March 3, 2003... US prices for gasoline additive MTBE hit $1.31/USG in New York last week. Strong winter demand has boosted natural gas prices to $8/mn Btu, making it unprofitable to extract butane to make MTBE. Prices for MTBE are above its blend value for...

South Korea responds to high prices.(Brief Article)
March 3, 2003... South Korea is to cut import tariffs this month by 2 percentage points to 3pc for crude and 5pc for products. In addition, the import surcharge--reduced to 8 won/l ($1.06/bl) from 14 won/l last month--may be cut to 4 won/l.

Venezuela output set to rise.(Brief Article)
March 3, 2003... Venezuela's PdV claims it has restored output to 2.026mn b/d, but sceptics say it is 1.5mn b/d. PdV puts crude exports at 1.5mn b/d. It has lifted force majeure on some eastern Venezuela crude exports, and oil firms are now satisfied with...

Nigeria shops for gasoline.(Brief Article)
March 3, 2003... Nigeria has tendered to buy 2.7mn t, or 90 cargoes, of gasoline for the second and third quarters after several deals fell through in January. Europe shipped high volumes of gasoline to Venezuela, diverting supplies from west Africa. The recent...

South Korean refiners to cut runs.(Illustration)
March 3, 2003... South Korean refiners to cut runs '000 b/d Mar Feb Jan Cap. SK 690 760 765 850 LG-Caltex 650 650 645 650 S-Oil 530 530 525 525 Hyundai 260 235 ...

WTI flirts with $40/bl. (Market overview).(Illustration)
March 3, 2003... Nymex WTI briefly came within a whisker of $40/bl last week as markets remained highly volatile, having to cope with dangerously low stocks and the imminent threat of war in Iraq. Product prices were equally turbulent with heating oil...

Crude markets.(Illustration)
March 3, 2003... Supply crunch plays havoc * A supply crunch in the US and mounting war fears drove prompt prices to post-1990 highs. WTI was particularly volatile with prices trading in a range of nearly $3/bl over a single day after the grade nearly hit...

Backwardation hampers arbitrage. (Arbitrage trade).(Brief Article)
March 3, 2003... * Arbitrage for Brent-related sweet crudes to the US Gulf appears wide open, but the steep backwardation for WTI is hampering sales for longer-haul crudes. Second month WTI is trading well under the front month meaning that long journey times...

Netbacks.(Illustration)
March 3, 2003... Netbacks 26 Feb Refinery gate value $/bl Simple [DELTA] Complex [DELTA] yield 19 Feb yield 19 Feb NW EUROPE Brent 36.93 1.53 40.39 1.23 Oseberg ...

Lack of shipping limits arbitrage. (European products markets).(Illustration)
March 3, 2003... * Low stocks and cold weather in the US continued to make transatlantic arbitrage attractive to sellers of most European products and drive prices higher. But a severe shortage of shipping limited traders from taking full advantage. *...

Prices soar on low stocks. (US products markets).(Illustration)
March 3, 2003... * Clean products prices soared last week on continuing war worries in Iraq and increasing concern about alarmingly low stocks for gasoline and distillates. Gulf coast refiners in turn-around and the possibility of major crude supply disruptions...

Refinery shutdowns raise prices. (Asia-Pacific products markets).(Illustration)
March 3, 2003... * Low stocks aggravated by refinery shutdowns conspired with higher crude to raise product prices. * Higher gasoil demand coincided with reduced supply. Vietnam and Thailand looked for March cargoes even as Taiwan and South Korea cut back...

Low stocks and war fears drive volatile markets higher. (Futures markets).(Illustration)
March 3, 2003... * A combination of low US product stocks and war fears led gains on crude futures. Nymex March WTI rose by 41c/bl over the week to settle at $37.20/bl on 27 February. IPE March Brent gained $1.48/bl to close at $33.04/bl. * March Nymex WTI...

Crude spot prices.(Illustration)
March 3, 2003... Crude marker grade spot prices $/bl 1Q02 2Q02 3Q02 4Q02 Forward Brent (Houston close) First month 21.51 25.33 26.94 26.73 Second month ...

Official crude prices at a glance. (Official crude prices).(Illustration)
March 3, 2003... Official crude prices at a glance $/bl Middle East Feb 02 Mar Apr May Jun Jul Abu Dhabi Murban 20.15 24.00 25.65 25.75 24.90 25.65 Lower...

Selected crude deals: January.
March 3, 2003... Northwest Europe BFO 13/01 Feb: at Mar BFO +0.85. 15/01 Feb: at Mar BFO +0.93. 16/01 Feb: at Mar BFO +1.02, at Mar BFO +1.01.20/01 Feb: at Mar BFO +0.90. 21/01 Mar: at Apr BFO +0.68.22/01 Feb: at Mar BFO +0.80.23/01 Feb: at Mar BFO +0.60,...

Product spot prices and freight rates.(Illustration)
March 3, 2003... Product cargo spot prices 1Q02 2Q02 3Q02 4Q02 Northwest Europe $/t (cif) Propane 202.69 212.19 233.75 296.80 Butane 192.69 199.19...

Looking ahead.(Petroleum industry future and option expiration data)(Brief Article)
March 3, 2003... 5 Mar IPE gasoil Mar options expire 7 Mar 21-day BFO contract expires 11 Mar Opec meeting, Vienna Argus Euroilstock Feb Inventory Report published IPE Brent Apr options expire 12 Mar IEA Monthly Oil Market Report IPE...

US distillate stocks plunge. (Fundamentals).(Illustration)
March 3, 2003... Heating oil supplies in the US are failing well short of demand as arctic weather batters the east coast. Primary distillate stocks have fallen by over 500,000 b/d so far this year and are now below 100mn bl for the first time since May...

The upper limits.(oil prices)
March 10, 2003... For the second time in three years prices are holding well above $30/bl. Opec has lost control, as it did in 2000, when it raised quotas four times trying to calm an overheating market. Ministers, meeting this week, may decide to abandon quotas...

Oman partials enhance benchmark role. (Price benchmarks).(Shell proposes trade in partial crude lots)
March 10, 2003... Shell's new proposal to introduce trade in partial lots of Oman crude could increase liquidity and transparency and hasten the grade's use as a regional marker. Shell wants to start trading partials of between 50,000 bl and 250,000 bl of...

SPR management blamed for Brent squeeze. (Market distortions).(Strategic Petroleum Reserve)
March 10, 2003... The US Department of Energy's mismanagement of its Strategic Petroleum Reserve (SPR) fomented a squeeze on Brent crude in late 2001 and early 2002, when it accepted 25mn bl for deposit in the SPR, a Senate panel concludes in a report issued...

Opec gears up for Iraq war. (Opec production).
March 10, 2003... The looming US assault on Iraq spurred a sharp rise in Opec output last mouth and is likely to dominate discussions when oil ministers meet this week. Saudi Arabia is likely to back a proposal at this week's ministerial meeting to suspend...

Post-war Iraqi oil sales plans. (Iraq).
March 10, 2003... The UN may take over Iraqi oil sales after war-related interruptions, in one post-war option Washington is considering. A new structure of Iraqi crude trade is likely as the small companies now at the start of the trading chain disappear. ...

Broader role for China's traders. (China).(processing deals sought in Taiwan)
March 10, 2003... China's traders are seeking term processing deals in Taiwan in a move to expand their international activities ahead of Beijing's plan to abolish product import quotas. Trader Sinochem hopes to sign a letter of intent with Taiwanese...

Low imports boost Asian sweet crudes. (Long-haul trade).
March 10, 2003... The market for sweet crudes in Asia-Pacific has become exceptionally tight as backwardation curbs the normal inflow of long-haul supplies from the Atlantic basin. The light sweet crude market is now so tight that it is impeding trade out...

Kuwait cancels product cargoes.(Brief Article)
March 10, 2003... Kuwait's KPC has cancelled jet and gasoil cargoes due to load this month, affecting at least four term buyers. KPC is struggling to meet commitments amid delays of up to two weeks, because of heavy berth congestion as buyers rush to load...

Iraqi crude exports soar.(Brief Article)
March 10, 2003... Iraqi oil-for-aid exports in February were the highest since March 2002. Total exports, including 340,000 b/d outside the UN programme, topped 2mn b/d, the highest since November 2001. Iraqi oil-for-aid exports February 2003 ...

Saudi Aramco targets US market.(formula prices cut)(Brief Article)
March 10, 2003... Saudi Aramco has cut formula prices for April lifting crude to the US. The biggest cut was for Arab Heavy, down by $1.60/bl, and reflected widening sweet/sour differentials in the US. But the cuts could also be a bid to capture market share...

Cushing awaits foreign crude.(Brief Article)
March 10, 2003... BP could deliver up to 6mn bl of Brent, Bonny Light and Qua Iboe to the US midcontinent over coming weeks, with most arriving in April. Some could be delivered against Nymex futures, and some to local refineries. Midcontinent crude stocks are...

Argus-related European fuel oil swap.(Brief Article)
March 10, 2003... Vitol and Credit Lyonnais traded the first recorded European fuel oil swap based fully on Argus assessments last week. Their deal for April high-sulphur fuel oil barge swaps was at $152.75/t.

Concerns mount in Nigeria.(Brief Article)
March 10, 2003... A senior opposition politician from Nigeria's oil producing Rivers State was assassinated last week, adding to tensions ahead of general elections next month. The majors with onshore production in Nigeria are beefing up security to avoid any...

PdV claims gasoline boost.(Brief Article)
March 10, 2003... Venezuela's PdV has begun producing gasoline at its 940,000 b/d Paraguana refinery again. It says exports should resume by mid-March. But sceptical traders say there were no indications of volumes being offered last week.

Citgo trading for PdV.
March 10, 2003... Venezuela's PdV is using staff at US affiliate Citgo to trade etude and products. PdV, which has sacked 15,000 employees since a strike began in December, installed new management in early January and said it would trade oil on the Pepex...

California gasoline prices set records.(Brief Article)
March 10, 2003... Retail gasoline prices in California hit record highs last week, with low-octane reformulated gasoline at $2.036/USG, says the Automobile Club of California. But wholesale gasoline prices are well below record highs in September 2000. Booming...

Korean independents boost share.(Brief Article)
March 10, 2003... South Korean independent importers took 6.9pc of the market for key products in 2002, up from 3.1pc in 2001. S Korea independent oil importers 2002 `000 b/d Sales % [DELTA] 02/01 mkt share % Gasoline 11.4 103 ...

South Korea sees modest growth.(Brief Article)
March 10, 2003... South Korean oil demand will rise by 2pc this year to 2.13mn b/d, says Korea National Oil. Domestic refiners' output is expected to fall by 1.3pc to 2.33mn b/d amid competition from independent importers. Product imports are predicted to rise...

Russian exporters look north.(Brief Article)
March 10, 2003... Crude exports through Russia's Transneft pipeline system are being directed through Baltic ports at the expense of Black Sea outlets. Transneft hopes to boost capacity to 800,000 b/d at Russia's Baltic port of Primosk, and capacity at...

Singapore crude runs steady.
March 10, 2003... Singapore crude runs steady `000 b/d Jan Feb Mar Cap Shell 286 308 308 440 SRC 228 228 228 285 ExxonMobil 351 410 410 585 Total 865 946 946 1,310

Approaching supply fails to cap high prices. (Market overview).
March 10, 2003... Oil markets rose slightly last week ahead of seemingly inevitable war in Iraq. But a fresh flood of Saudi Arabian oil is on its way to the US. Signals that a US-led war in Iraq is imminent are multi-plying by the day, and it is simply the...

Crude markets.
March 10, 2003... Sours hurt by Venezuelan restart * The US market is becoming saturated with sour crude. Differentials for higher-sulphur grades are sliding, and the announcement that Venezuela is lifting force majeure on crude exports, promises to...

Venezuelan oil displaced to Europe. (Arbritrage trade).(Brief Article)
March 10, 2003... * US demand for light sweet crude remains strong but sour grades have fallen ahead of incoming Saudi supplies and rising Venezuelan output. Colombian Vasconia and Venezuelan Mesa fell to $6/bl discounts to US light sweet WTI. This led sellers...

Netbacks.
March 10, 2003... Netbacks 5 Mar Refinery gate value Freight $/b/ Simple [DELTA] Complex [DELTA] yield 26 Feb yield 26 Feb NW EUROPE Brent 37.36 0.43 40.95 ...

Diesel trades at record high. (European products markets).
March 10, 2003... * Expensive freight rates, war fears and cold weather in the US continue to drive most product prices higher. Diesel raced higher after a major bid an already tight market up to record premiums to gasoil futures. * French winter diesel...

Natural gas shaping prices. (US products markets).
March 10, 2003... * Extreme volatility continues to dominate US product markets, with values shaped by soaring natural gas prices and gyrations on crude futures. Lingering winter weather helped keep demand high for heating and fuel oil and drain stocks. *...

Low supply boosts clean prices. (Asia-Pacific products markets).(fuel oils )
March 10, 2003... * Supply constraints in the Mideast Gulf and Indonesia supported most clean product prices. But fuel oil prices were hit by poor local demand and were trading at an ever-increasing discount to gasoil (see graph). [GRAPHICS OMITTED] *...

Prices remain high in volatile market. (Futures markets).
March 10, 2003... * Nymex April crude prices remained well over $35/bl last week, after briefly flirting with $40/bl the previous week. But volatility still characterised the market, as traders reacted to headlines about the timing of war in Iraq. When Iraq...

Crude spot prices.
March 10, 2003... Crude marker grade spot prices $/bl 1Q02 2Q02 3Q02 4Q02 Forward Brent (Houston close) First month 21.51 25.33 26.94 26.73 Second month ...

Formula pricing. (Official crude price formulas).
March 10, 2003... Formula pricing Saudi Arabia fob Ras Tanura May 02 Jun Jul Aug to US: spot WTI Berri (Extra light) -2.15 -2.10 -2.80 -2.55 Arab Light -2.95 -2.80 -3.35 -3.20 ...

Official crude prices at a glance. (Official crude prices).
March 10, 2003... Official crude prices at a glance $/bl Middle East Mar 02 Apr May Jun Jul Abu Dhabi Murban 24.00 25.65 25.75 24.90 25.65 Lower Zakum ...

Product spot prices and freight rates.(petroleum industry)
March 10, 2003... Product cargo spot prices 1Q02 2Q02 3Q02 4Q02 Northwest Europe $/t (cif) Propane 202.69 212.19 233.75 296.80 Butane 192.69...

Looking ahead.(Brief Article)(Calendar)
March 10, 2003... 11 Mar Opec meeting, Vienna Argus Euroilstock Feb Inventory Report published IPE Brent Apr options expire 12 Mar IEA Monthly Oil Market Report IPE gasoil Mar futures expire Nymex Brent Apr options expire ...

Announcement.(Argus Media and The McCloskey Group have launched the Newcastle Coal Index)(Brief Article)
March 10, 2003... Argus Media and The McCloskey Group have launched the Newcastle Coal Index. This will boost badly needed liquidity in the Asia-Pacific coal market by providing a robust and acceptable benchmark for the physical coal market at Newcastle,...

Product stocks critically low. (Fundamentals).
March 10, 2003... Product stocks have fallen sharply in all consuming regions u demand rapidly outstrips supply. Tight supplies of crude--exacerbated by the Venezuelan strike--have prevented refiners boosting throughputs to keep pace with rising deliveries,...

Double standards.(US foreign policy)
March 17, 2003... It is a dialogue of the deaf. "Saddam Hussein is a threat--the price of doing nothing exceeds the price of taking action," says President Bush. "We want a world where crises can be managed... and which tries to avoid confrontation," France's...

Benefit of an SPR release in doubt. (US strategic stocks).(Strategic Petroleum Reserve )
March 17, 2003... The looming war in Iraq is widely expected to be accompanied by a release from the US Strategic Petroleum Reserve (SPR). But doubts are surfacing over the effect of a release so long after the current supply crisis began. Earlier this...

Mediterranean traders play down looming war. (Iraq).
March 17, 2003... The Mediterranean market will be the first to be hit by a cutoff in Iraqi exports. The loss of Kirkuk loaded in Turkey will have an immediate impact on a market that is especially sensitive to small shifts in supply. The Mediterranean...

Don't mention the war. (Opec meeting).(war dictating increased supply)
March 17, 2003... Ministers were not admitting it last week, but the logic of war is directing Opec output policy. They have suppressed their preference for seasonal cuts in output and stand ready--albeit discreetly--to ramp up supply. According to the...

IEA sees capacity crunch.(Brief Article)
March 17, 2003... The IEA says "a further supply disruption would tax a system operating at close to capacity". Its latest Oil Market Report says a 2mn b/d surge in output last month has significantly reduced spare capacity. "Venezuelan spare capacity should be...

EIA sees higher prices.(U.S. crude imports)(Brief Article)
March 17, 2003... The EIA has revised up its forecast of average US imported crude prices to $30.91/bl from its estimate of $30.02/bl published last month. Its latest Short Term Energy Outlook predicts that crude stocks will remain near the lower end of the...

US plans additions to SPR.(Strategic Petroleum Reserve)(Brief Article)
March 17, 2003... Even as officials consider drawing crude from the US Strategic Petroleum Reserve (SPR), new supplies have been lined up (see p2). From next month, producers off the Texas coast that ship through the Hoover pipeline will deliver 15,000 b/d of...

EU dismisses need for strategic draw.(European Union will not draw on crude oil reserves)(Brief Article)
March 17, 2003... The EU's Oil Supply Group last week discussed the impact of war in Iraq on energy supplies, and EU reaction to a crude supply crisis. But the group saw no urgency to draw on IEA reserve stocks as Venezuelan output resumes and demand falls...

US retail gasoline prices soar.(Brief Article)
March 17, 2003... US retail gasoline prices are within 1 cents/USG of the record $1.718/USG (45.4 cents/litre) for regular grades set in May 2001, says the American Automobile Association. Prices are 48.1 cents/USG; or 39pc, more than a year ago. In a market of...

Amuay refinery staggers back.(Brief Article)
March 17, 2003... Venezuela's PdV took a big step towards restoring gasoline output last week with the restart of the 110,000 b/d catalytic cracker at the 635,000 b/d Amuay refinery. The 305,000 b/d Cardon plant resumed output of 55,000 b/d of leaded gasoline on...

West African output lags soaring capacity.
March 17, 2003... West African production capacity is soaring, but Opec constraints on Nigeria limited rises in output last year. Capacity jumped by 400,000 b/d in 2002, reaching 4.3mn b/d by the end of the year, as Nigeria and Angola developed new projects....

IPE extends electronic trading hours.(Brief Article)
March 17, 2003... London's IPE has extended the start of its early-morning Brent and gasoil electronic trading sessions from 8am to 2am London time as of 13 March. The earlier open stands to benefit Asia-Pacific based traders in particular. Electronic trade will...

Platts implements MOC pricing.(Brief Article)
March 17, 2003... Platts is pressing ahead with plans to adopt a market on close (MOC) price reporting methodology on European product markets from 1 April. A price snapshot at 5:30pm UK time will replace consideration of trade over the whole day. The plans met...

Russia's TNK in Israeli pipeline talks.(Tyumen Oil)(Brief Article)
March 17, 2003... Russian producer Tyumen Oil (TNK), in which BP recently took a 50pc stake, is in talks with Israel's Eilat-Ashkelon Pipeline with a view to using the 1 mn b/d line to export Russian crude to Asia-Pacific. BP managers are thought to be lukewarm...

Russian product exports rise.(Brief Article)
March 17, 2003... Product exports from the former Soviet Union soared by 10pc in February. Gasoline exports rose by 50pc to 200,000 b/d, amid strong US demand for Russian low-octane blending grades. FSU seaborne product exports `000 b/d Feb Jan...