Sam Fletcher
Senior Writer
HOUSTON, Apr. 22 -- Crude and products futures continued climbing to record-high intraday and closing prices Apr. 21 as attacks on pipelines in Nigeria and a pending strike at a refinery in Scotland reminded traders of thinly stretched supply lines.
An Apr. 18 attack by Nigerian rebels on a pipeline forced Shell Petroleum Development Co., a Royal Dutch Shell PLC joint venture, to declare a force majeure on exports of 169,000 b/d of Bonny Light exports for the rest of April and May. "Shell suffered two further rebel attacks on its pipelines Apr. 21 and while it is unclear yet as to the size of additional output losses, it is apparent the risks of supply-side disruption in Nigeria are very much elevated for the time being," said analysts Barclays Capital Inc., London.
In Scotland, workers at Ineos PLC's 196,000 b/d Grangemouth refinery and petrochemical plant, one of the largest in Europe, are threatening to strike over changes to their pension plan. Barclays Capital in London said, "Reports of fuel rationing by farmers in the Scottish market, which will be further compounded by this strike, should add to the current tightness in the European distillates market, which has seen the front-month ICE gas oil contract rise some 24.7% so far this year to reach yesterday's all-time high of $1,057/tonne. On the demand side, the final Chinese trade data confirm the picture traced by preliminary data earlier this month that imports of oil (crude plus refined products) stay very strong. Crude net oil imports soared to an all-time high of 3.99 million b/d in March, almost 400,000 b/d above February's level, whereas at 470,000 b/d, net imports of refined products were also stronger year-over-year (up by 104,000 b/d)."
The analysts said, "Such strong trade figures, coupled with healthy refinery production levels, have pushed Chinese apparent oil demand growth in March above 500,000 b/d, its highest level since May 2007." In the US natural gas market, Barclays Capital reported upward momentum continued from last week.
Olivier Jakob at Petromatrix, Zug, Switzerland, said, "The recent rise in oil is not purely a dollar play. The dollar has been a main market maker, but crude oil is trading above the dollar correlation and has shown last week its capacity to decouple itself from the dollar." He said. "The recent rise in oil is also not part of a commodity investment drive. Most other commodities have been under pressure for the last 2 days, and energy stands out as the only commodity sector that has been able to make gains since Apr. 17."
Furthermore, Jakob said, "The rise in oil is not purely induced by a deficit in oil products. The product cracks have been weakening slightly in the recent run-up as product can not follow the pace of crude and are facing a certain slowdown of demand. West Texas Intermediate [for] June is higher by $2.18 /bbl since Apr. 17, but the June 3-2-1 refinery margin is down $1.41/bbl since then."
Mexico's oil production slipped 7.8% in the first quarter to 2.91 million b/d as output at the country's traditional oil fields wanes, state oil company Petroleos Mexicanos said.
Energy prices
The May contract for benchmark US sweet, light crudes hit an intraday record of $117.83/bbl before closing at a record $117.48/bbl, up 79¢ Apr. 21 on the New York Mercantile Exchange. The June contract gained 47¢ to $116.63/bbl. On the US spot market, WTI at Cushing, Okla., was up 79¢ to $117.48/bbl. Heating oil for May hit an intraday record of $3.33 and closed up 1.91¢ at a record $3.31/gal on NYMEX. The May contract for reformulated blend stock for oxygenate blending (RBOB) had an intraday high of $3/gal, but closed at $2.98/gal, down 1.02¢ for the day.
The May natural gas contract hit an intraday record of $10.75/MMbtu and closed at $10.73/MMbtu, up 14.6¢ on NYMEX. On the US spot market, gas at Henry Hub, La., climbed by 27¢ to $10.47/MMbtu.
In London, the June IPE contract for North Sea Brent crude registered intraday and closing records of $114.86/bbl and $114.43/bbl, respectively, up 51¢ for the day. The May gas oil contract hit a record $1,071/tonne in intraday trade before closing at a record $1, 057/tonne, up $6 for the day.
The average price for the Organization of Petroleum Exporting Countries' basket of 13 reference crudes advanced by $1.18 to $108.93/bbl on Apr. 21.
Contact Sam Fletcher at [email protected].
