MARKET WATCHNigerian oil workers call off proposed strike
Sam Fletcher
Senior Writer
HOUSTON, Oct. 9 -- World oil markets apparently dodged a bullet as Nigerian labor unions decided late Wednesday to cancel a 2-week general strike, slated to begin Thursday, that would have disrupted oil exports from that country.
The strike was planned to protest recent increases in retail fuel prices in Nigeria. But it was called off when marketers agreed during last-minute negotiations to roll back prices to previous lower levels. Officials from the state-run Nigerian National Petroleum Corp. met Wednesday with major retail marketers and union leaders in the capital Abuja in an attempt to avert the strike.
Nigerian union representatives earlier said problems go beyond price increases, however. Union members are especially concerned about potential plans to privatize the downstream oil sector (OGJ Online, Oct. 6, 2003).
News of the aborted strike caused oil futures prices to slip in early trade Thursday on the International Petroleum Exchange in London.
US oil stocks fall
That followed a drop Wednesday in oil futures prices in both New York and London in the wake of government and industry reports of large increases in commercial US crude inventories during the week ended Oct. 3.
The US Energy Information Administration reported US crude inventories jumped by 5.4 million bbl to 286.2 million bbl during the week ended Oct. 3, while the American Petroleum Institute put the gain at 8.2 million bbl to 290.2 million bbl.
EIA said US distillate inventories increased by 200,000 bbl to 131.5 million bbl during the same period, while gasoline stocks fell by 1.2 million bbl to 198 million bbl.
API said US distillates were up by 537,000 bbl to 127.1 million bbl and that US gasoline inventories plunged by 3.4 million bbl to 196.8 million bbl.
US gas storage climbs
EIA said Thursday that 75 bcf of natural gas were injected into US underground storage during the week ended Oct. 3, down from a record 100 bcf the previous week but up from 42 bcf during the same period last year. The US now has 2.86 tcf of gas in storage, which is 217 bcf less than a year ago and 37 bcf below the 5-year average, said Robert S. Morris, Banc of America Securities LLC, New York.
US temperatures last week averaged 47% lower than the previous week, resulting in less gas available for injection into storage. The pace of gas injections normally slows during October as cooler weather increases demand for gas-fueled heating. However, utilities and storage operators may continue an "aggressive" injection pace this year, "given concerns regarding the tight supply-demand balance," said Morris. If so and assuming normal temperatures this month, he said, US gas storage "may end up closer to 3.1 tcf than 3 tcf" by November.
EIA to change method
Meanwhile, EIA said it plans to change its methodology for gathering weekly natural gas storage data. The new process is to be revealed later this month, following meetings Oct. 16-17 with representatives of the American Statistical Association, and is expected to be implemented by yearend.
Analysts and industry officials previously complained of discrepancies between EIA's monthly storage data, collected from all 115 US storage operators, and its weekly data, collected from a sample of 45 operators representing 90-95% of total US storage capacity. EIA publishes its monthly data roughly 4 months after completing the larger survey, while the weekly data is published 1 week after the smaller survey.
After expanding November 2002-April 2003, the discrepancy narrowed in May and June, "although it is still fairly large at 59 bcf," said Morris. "Importantly, this discrepancy continues to fuel speculation regarding 'true' natural gas storage levels."
Energy prices
The November contract for benchmark US sweet, light crudes lost 60¢ to $29.81/bbl Wednesday on NYMEX, while the December position was down by 48¢ to $29.90/bbl. On the US spot market, the benchmark US oil declined by 55¢ to $29.83/bbl Wednesday.
On NYMEX, heating oil for November delivery retreated by 0.71¢ to 81.2¢/gal. Unleaded gasoline for the same month dipped by 0.49¢ to 83.12¢/gal.
The November natural gas contract inched up by 0.8¢ to $5.15/Mcf Wednesday on NYMEX, despite some profit taking early in that session on Tuesday's 5% price jump (OGJ Online, Oct. 8, 2003). "When locals [utilities] couldn't take the market down, they took it right back up," explained analysts Thursday at Enerfax Daily. "The market has rallied 47¢, or 10%, in the last five sessions as forecasters call for cool weather and rising heating demand in the Northeast and Midwest next week. However, a lagging cash market, still nearly 30¢[/Mcf] below the NYMEX [front-month price], and rising storage levels will likely limit the upside."
In London, the November contract for North Sea Brent oil fell 30¢ to $28.73/bbl Wednesday on IPE. However, the November natural gas contract gained 1.5¢ to the equivalent of $4.16/Mcf. Gas oil for November delivery was down by 50¢ to $244.50/tonne on IPE.
The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes lost 12¢ to $27.99/bbl Wednesday.
Contact Sam Fletcher at [email protected]