HOUSTON, May 15 -- Threats to Nigerian crude supplies pushed the front-month futures price above $63/bbl in early electronic trading May 14, but the New York market was unable to sustain that rally.
The futures market for benchmark US crudes is continuing last week's pattern of trading "in a narrow intraday range" while reformulated blendstock for oxygenate blending (RBOB) provided volatility through "severe profit taking" in the gasoline market, said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland.
Despite market worries about low US inventories of gasoline so close to the May 26-28 Memorial Day holiday weekend in the US that marks the official start of the summer driving season, Jakob said, "The gasoline crack remains, however, at extreme values more than sufficient to guarantee that any operable capacity in the US will be running."
Meanwhile, Chevron Corp. said it is withdrawing hundreds of workers and contractors from operations off Nigeria after increased violence and abductions of foreign workers shut in 220,000 b/d of the company's production in the last 2 weeks. More violence is expected leading up to the inauguration of the newly elected government on May 29.
Hercules Offshore Inc., Houston, under a work contract with Chevron in Nigeria, said it is taking "precautionary measures" with its liftboat operations in Nigeria. The company plans to evacuate all nonessential expatriate personnel from Nigeria and move 10 liftboats to a more protected area.
Three vessels will continue working for Chevron under increased security, and two more are in the shipyard undergoing scheduled maintenance. One vessel operating in a more-protected area off Nigeria for another customer and one scheduled to start work in Ghana in early June will not be affected, officials said. During lay-up, the affected vessels are expected to earn a stand-by rate of 75% of the normal operating rate.
However, analysts in the Houston office of Raymond James & Associates Inc. said, "West African supply fears eased after the announcement came that the Nkossa field in the Congo Republic should be restored within 3 weeks after an earlier fire.
The June contract for benchmark US sweet, light crudes traded at $62.14-$63.07/bbl May 14, before closing at $62.46/bbl, up 9¢ for the day on the New York Mercantile Exchange. The July contract lost 23¢ to $63.89/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was up 9¢ to $62.47/bbl.
The June contract for reformulated blend stock for oxygenate blending (RBOB) dropped 5.09¢ to$2.30/gal. Heating oil for the same month was down 1.55¢ to $1.87/gal.
The June contract for natural gas climbed by 5.3¢ to $7.95/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., rose by 3¢ to $7.86/MMbtu. "The shoulder season doldrums continue [in the gas market]; however LNG continues to be in the spotlight as import levels continue to bounce around record levels," said Raymond James analysts.
In London, the June IPE contract for North Sea Brent crude was unchanged at $66.83/bbl. Gas oil for June inched up 25¢ to $592.25/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes increased 65¢ to $63.68/bbl on May 14.
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