Market watch, Nov. 7

Trading was mixed on international futures markets Monday, with oil prices rising after sabotage of pipelines in Nigeria forced the Royal Dutch/Shell group to declare a 'force majeure' because of its inability to meet export requirements for Bonny crude. Shell, the largest operator in Nigeria, said that country's oil exports could be cut by 250,000 b/d because local people had damaged the pipelines.

Nov 7th, 2000


Trading was mixed on international futures markets Monday, with oil prices rising after reported sabotage of pipelines in Nigeria forced the Royal Dutch/Shell group to declare a "force majeure" because of its inability to meet export requirements for Bonny crude.

Shell, the largest operator in Nigeria, said that country's oil exports could be cut by 250,000 b/d because local people had damaged the pipelines.

Trading had been bearish until that news reached the New York and London markets, analysts said.

The December contract for benchmark US light, sweet crude gained 15� to $32.86/bbl on the New York Mercantile Exchange, while the January contract was up 14� to $31.69/bbl. Both contracts continued moving up in after-hours electronic trading to $33.10/bbl and $31.97/bbl, respectively.

In London, North Sea Brent futures earlier had tested a bottom around $30.50/bbl, but rallied with the reports from Nigeria. The December Brent contract closed at $31.29/bbl, up 44� for the day, on the International Petroleum Exchange.

Analysts said traders seized on the Nigerian news as justification to buy and put some movement back in an otherwise dull futures market Monday. But futures were little changed in early afternoon trading Tuesday as the market awaited fresh news.

The December Brent contract was trading at $31.20/bbl Tuesday afternoon in London, down 9� from Monday's close. But follow-through buying on the NYMEX during the day could boost IPE trading again, said analysts.

On the NYMEX, the December contract for unleaded gasoline rose 1.27� to 88.22�/gal Monday, but home heating oil for the same month dipped 0.48� to 91.69�/gal with indications of not-so-cold weather in the key Northeast US market. Heating oil futures earlier were bid up to significant levels in anticipation of a quicker start of winter demand this month, analysts said.

The December contract for natural gas also was down 8.2� to $4.85/Mcf on the NYMEX.

In London, the December natural gas contract gained 4� to the equivalent of $3.80/Mcf on the IPE.

The average price of the Organization of Petroleum Exporting Countries' basket of seven crudes inched up 4� to $30.26/bbl Monday.

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