Dear Readers
I will not be posting here for the forseeable future. As I mentioned to some of you already, we have been successful in our application to the Central Bank in Dublin Ireland to launch our own stock broking firm. I will now be dedicating my time to this and developing a website for the business that will contain similar new flow but in real time mode. For those of you that have found the site useful and are interested in any of our business services ( trading or advisory or just for a simple chat), please contact me at ukoilshares@gmail.com for further details. Thank you for all the comments and feedback. Good luck to each and all of you in the future with your investments
Murph
Thursday, February 22, 2007
Wednesday, February 21, 2007
GOODBODY NOTE ON TULLOW DATED 21st FEB
Tullow (Buy, Closing Price £3.90)
Woodside FY06 release.
Analyst: Gerry HenniganAustralian-based Woodside Petroleum, the operator of the Chinguetti field offshore Mauritania in which Tullow has a 19% stake, released FY06 results this morning. The relevant details from a Tullow perspective were: (i) production is currently averaging 20 -22 kbopd; (ii) initial production from infill well Chinguetti-18 is to commence by the end of Q1 at a rate of 6 - 10 kbopd; (iii) ongoing workover to optimise production at Chinguetti-14; and (iv) new seismic on Tiof and Chinguetti is to start in March. While the current rate of production continues to drift lower (average rate of 23.4 kbopd in Q4'06), the rate of decline has slowed and the Chinguetti-18 infill well, which had a net pay of 35m, should reverse the trend once production commences at the end of March. We are forecasting net production to Tullow of 4.1 kbopd out over the forecast period on the assumption that production will at best stabilise. Chinguetti-18 may provide some upside to that, albeit that the long term implications of efforts to boost production remain at an early stage. On reserves, Woodside recorded a 27% increase year-on-year, though within that there was a significant cut in Chinguetti reserves to 11.7 mbo down from a pre-production level of 123 mbo.
Woodside FY06 release.
Analyst: Gerry HenniganAustralian-based Woodside Petroleum, the operator of the Chinguetti field offshore Mauritania in which Tullow has a 19% stake, released FY06 results this morning. The relevant details from a Tullow perspective were: (i) production is currently averaging 20 -22 kbopd; (ii) initial production from infill well Chinguetti-18 is to commence by the end of Q1 at a rate of 6 - 10 kbopd; (iii) ongoing workover to optimise production at Chinguetti-14; and (iv) new seismic on Tiof and Chinguetti is to start in March. While the current rate of production continues to drift lower (average rate of 23.4 kbopd in Q4'06), the rate of decline has slowed and the Chinguetti-18 infill well, which had a net pay of 35m, should reverse the trend once production commences at the end of March. We are forecasting net production to Tullow of 4.1 kbopd out over the forecast period on the assumption that production will at best stabilise. Chinguetti-18 may provide some upside to that, albeit that the long term implications of efforts to boost production remain at an early stage. On reserves, Woodside recorded a 27% increase year-on-year, though within that there was a significant cut in Chinguetti reserves to 11.7 mbo down from a pre-production level of 123 mbo.
Oil settles above $60
Oil prices settle above $60 a barrelNEW YORK (AP) - Oil prices settled above $60 a barrel for the first time this year on Wednesday after a spate of refinery shutdowns threatened to cut into supply. Increasing tensions over Iran's uranium enrichment program also helped to boost prices.Light, sweet crude for April delivery on the New York Mercantile Exchange climbed $1.22 to settle at $60.07 a barrel. Brent crude for April delivery also rose $1.37 to $59.35 a barrel on the ICE Futures Exchange in London.The refinery shutdowns also drove products higher. Heating oil gained nearly 4 cents to settle Wednesday at $1.6816 a gallon, while natural gas futures rose 6 cents to $7.646 per 1,000 cubic feet. Gasoline futures settled at $1.7047 a gallon, up 5.7 cents.TEPPCO Partners LP said Wednesday that part of a refined products pipeline was shut down after a leak was discovered in Indiana, according to Dow Jones Newswires. TEPPCO gave no estimate of how much diesel was lost or when the pipeline will be back in service.The news comes on the heels of an AP report late Tuesday that said BP shut down its Northstar oil field in the Arctic Ocean after a small leak was found in a gas line. The shutdown has taken about 40,000 barrels of oil offline each day Friday or Saturday, according to a BP spokesman. The company doesn't know when the field will resume operations."The BP news late yesterday didn't have that much of a pop on the market, but after the one in Indiana, these refinery issues got the market back on the upside," said Phil Flynn, an analyst at Alaron Trading Corp. "Some people are also thinking that Iran is adding a bit to the buying in the market today."The International Atomic Energy Agency, the U.N nuclear watchdog, was expected to confirm on Thursday that Iran -- OPEC's No. 2 exporter -- continues to enrich uranium, a finding that could trigger harsher U.N. sanctions.On Wednesday, Iran called for talks with the U.S. regarding its uranium enrichment activities, but showed no signs of halting its program."The enemy is making a big mistake if it thinks it can thwart the will of the Iranian nation to achieve the peaceful use of nuclear technology," Iranian state TV's Web site quoted President Mahmoud Ahmadinejad as saying.On Tuesday, Ahmadinejad offered a more conciliatory tone on the issue, saying it was no problem for Iran to halt enrichment, but that "fair talks" demanded a similar gesture from the West.Traders are also looking to the release of the government's fuel stocks data due out Thursday.Data from the Department of Energy is expected to show domestic crude oil stockpiles rose in the week ended Feb. 16, while distillates are seen falling, according to a Dow Jones Newswires survey of analysts.Crude oil inventories are expected to build by about 700,000 barrels, according to the mean of nine analysts' forecasts. Distillates, which include heating oil and diesel, are expected to fall by 2.8 million barrels.Gasoline inventories are seen building by about 100,000 barrels, the analysts' average says."This report is likely to reflect some of the coldest temperatures we've had" this winter, Flynn said.Bitterly cold temperatures in the first weeks of February helped boost oil prices to nearly $60 a barrel from a 20-month low of $49.90 on Jan. 18, after an unseasonably warm January.However, oil prices dropped more than $1 a barrel on Tuesday after warmer weather moved into the Northeast, which consumes 80 percent of the nation's heating oil. The U.S. National Weather Service is forecasting above-normal temperatures in the region through March 5."People are thinking the U.S. weather is going to be much warmer than expected, so heating oil demand should be easing," said Tetsu Emori, chief commodities strategist with Mitsui Bussan Futures in Tokyo.The National Oceanic and Atmospheric Administration also expects fuel demand in the region to be below long-term averages this week, the first such forecast in a month.Tim Evans, an energy analyst at Citigroup Futures Research, pointed out that while demand for heating oil typically declines week by week during this time of year, inventories also fall through March and into April."The typical seasonal low occurs in the third week of April," Evans said.
LME REVIEW
LONDON (Dow Jones)--London Metal Exchange tin built upon earlier strength, soaring to a fresh record high Wednesday, with market participants keeping a close watch on the developments in Indonesia for further price direction, traders said.
Three-month tin traded just shy of the $14,000 a metric ton mark driven by follow-through momentum buying after a strong morning session in Europe, a trader said.
News that seven Indonesian tin producers may be granted export licenses on Feb. 23 - including the world's largest integrated miner PT Timah - has the potential to send prices lower, but traders have said they will wait before believing the news. This uncertainty has helped push prices higher near term.
Supply concerns in Indonesia have dominated the tin market of late. Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located, over allegations of environmental damage and tax evasion.
The Trade Ministry then set new requirements on tin exports, including a minimum 99.85% purity standard, and demanded producers prove they mine tin ore from their own concessions and have paid royalties before they can export.
For the time being, further upside is expected until clarification of the Indonesian situation, traders said.
Meanwhile, several of the base metals rose during afternoon European hours due to bargain-hunting, said Michael Widmer of Calyon.
Three-month copper rose over 1% to a PM kerb of $5,790/ton from Tuesday, while three-month aluminum rose 0.5% to a PM kerb of $2,757/ton.
Earlier, prices had fallen due to a widening of the spreads and a push beneath key technical sell-stops, said an aluminum trader. However, good support is seen around $2,740/ton and then $2,680/ton, the trader added.
Three-month nickel remained slightly under pressure on profit-taking and fell 0.2% to a PM kerb of $39,800/ton.
However, LME nickel stocks fell 468 tons to 3,930 tons Wednesday, which provides good price support. With canceled warrants - or material accounted for and to be drawn down at a later date - at 47% Wednesday, available stocks comprise less than one day's worth of global nickel consumption.
Three-month lead edged back up towards its recent record high of $1,845/ton as strength spread across the entire complex.
Moreover, ongoing supply concerns at Xstrata's 161,000-ton Northfleet lead refinery in the U.K. further supported prices. Xstrata has temporarily restricted deliveries to Northfleet, which takes its feedstock from Mount Isa in Australia. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Tuesday PM kerb
Copper 5790.0-5800.0 Up 70
Lead 1825.0-1826.0 Dn 5
Zinc 3350.0-3360.0 Up 25
Aluminum 2757.0-2758.0 Up 15
Nickel 39500.0-39505.0 Dn 300
Tin 13825.0-13850.0 Up 335
Aluminum Alloy 2200.0-2210.0 Unch
Aluminum Alloy 2170.0-2180.0 Up 10
Three-month tin traded just shy of the $14,000 a metric ton mark driven by follow-through momentum buying after a strong morning session in Europe, a trader said.
News that seven Indonesian tin producers may be granted export licenses on Feb. 23 - including the world's largest integrated miner PT Timah - has the potential to send prices lower, but traders have said they will wait before believing the news. This uncertainty has helped push prices higher near term.
Supply concerns in Indonesia have dominated the tin market of late. Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located, over allegations of environmental damage and tax evasion.
The Trade Ministry then set new requirements on tin exports, including a minimum 99.85% purity standard, and demanded producers prove they mine tin ore from their own concessions and have paid royalties before they can export.
For the time being, further upside is expected until clarification of the Indonesian situation, traders said.
Meanwhile, several of the base metals rose during afternoon European hours due to bargain-hunting, said Michael Widmer of Calyon.
Three-month copper rose over 1% to a PM kerb of $5,790/ton from Tuesday, while three-month aluminum rose 0.5% to a PM kerb of $2,757/ton.
Earlier, prices had fallen due to a widening of the spreads and a push beneath key technical sell-stops, said an aluminum trader. However, good support is seen around $2,740/ton and then $2,680/ton, the trader added.
Three-month nickel remained slightly under pressure on profit-taking and fell 0.2% to a PM kerb of $39,800/ton.
However, LME nickel stocks fell 468 tons to 3,930 tons Wednesday, which provides good price support. With canceled warrants - or material accounted for and to be drawn down at a later date - at 47% Wednesday, available stocks comprise less than one day's worth of global nickel consumption.
Three-month lead edged back up towards its recent record high of $1,845/ton as strength spread across the entire complex.
Moreover, ongoing supply concerns at Xstrata's 161,000-ton Northfleet lead refinery in the U.K. further supported prices. Xstrata has temporarily restricted deliveries to Northfleet, which takes its feedstock from Mount Isa in Australia. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Tuesday PM kerb
Copper 5790.0-5800.0 Up 70
Lead 1825.0-1826.0 Dn 5
Zinc 3350.0-3360.0 Up 25
Aluminum 2757.0-2758.0 Up 15
Nickel 39500.0-39505.0 Dn 300
Tin 13825.0-13850.0 Up 335
Aluminum Alloy 2200.0-2210.0 Unch
Aluminum Alloy 2170.0-2180.0 Up 10
Gold
BULLET: GOLD: Spiked to the $682.00 level after a slow climb.GOLD: Spiked to the $682.00 level after a slow steady climb to $673 accelerated, prompting a round of stop-driven buying through the $675/676 level that had capped the pair of late. One trader suspecting hedge fund demand behind the move after those names were sellers of the metal yesterday as it slid to lows near $655.00, now perhaps caugth wrong-footed.
Oil bounces
I mentioned last night that we would probably see a bounce in oil prices today as traders eye inventory data out a day later this week due to hol on Monday. Cold weather in the US last week has traders betting we will see big draws on distillates and nat gas supplies tomorrow. But we have seen this pattern over last few weeks..buying the rumour and selling the fact.. The cold weather acting as support is slowly unwinding. Wouldn't be surprised therefore to see oil come off after the reports tomorrow...
Will be interesting to see if oil can close over 60..technically this could put a new slant on things and send it higher short term
Will be interesting to see if oil can close over 60..technically this could put a new slant on things and send it higher short term
Oil
Oil edges up as traders expect lower US stocks in tomorrow's dataLONDON (AFX) - Oil rose, reversing earlier losses, as the market prepared for weekly US stocks data which is expected to show a drop in inventories.The Energy Information Administration will release the data tomorrow, a day later than usual as the US celebrated a national holiday on Monday. At 5.11 pm, front-month Brent North Sea crude contracts for April delivery were up 64 cents to 58.62 usd per barrel. Oil shed 16 cents to close at 57.98 usd yesterday.Meanwhile, front-month New York light sweet crude contracts for April delivery were up 46 cents to 59.31 usd a barrel, after falling 16 cents to close at 57.07 usd yesterday. "We had a pretty cold week last week," said Adam Sieminski, adding, "expectations for a gas draw are high."Gas prices are heading towards the highest level of this year.US/Iranian geopolitical concerns are also supporting prices.The UN had set a deadline of Wednesday for Iran to comply with its uranium enrichment programme, but "Tehran has all but scoffed at the idea," said Altavest trader, Tom Hartmann. "It appears that we could be seeing some buying due to Iranian posturing over its uranium enrichment programme," added Hartmann.However, gains were capped as demand looks set to fall on warmer temperatures. The US National Weather Service is forecasting temperatures in the US Northeast -- which consumes 80 pct of the nation's heating oil -- to stay above average levels through to March 5.While stocks last week are expected to have dropped, some analysts said the recent cold snap was not enough to overturn the growth in inventories as a result of a mostly mild winter.Prices in New York briefly dipped below the critical 50 usd level in mid-January as the US enjoyed an unusually warm winter.
Oil
Oil dips as expected warmer US weather set to curb demandLONDON (AFX) - Oil edged lower as warmer weather in the US is likely to curb demand.However, supply fears from Nigerian and Iran limited falls. At 9.23 am, front-month Brent North Sea crude contracts for April delivery were down 45 cents to 57.53 usd per barrel. Oil shed 16 cents to close at 57.98 usd yesterday.Meanwhile, front-month New York light sweet crude contracts for April delivery were down 49 cent to 58.32 usd a barrel, after falling 16 cents to close at 57.07 usd yesterday. "The onset of milder weather in the US, and expectations that more is on its way, have taken the top off oil prices," said Tobin Gorey, commodity strategist at the Commonwealth Bank of Australia.Prices have been consolidating since Friday's spike which lifted oil to over 59 usd after reports of violence in Nigeria sparked supply fears.Tensions over Iran's nuclear programmes are also preventing prices from dropping further.
LME INVENTORY LEVELS
Copper down 425 tonnes at 210,000 tonnes
Lead flat at 32,525 tonnes
Nickel down 468 tonnes at 3,930 tonnes
Aluminium up 6,450 tonnes at 779,675 tonnes
Tin flat at 9,995 tonnes
Zinc down 25 tonnes at 96,600 tonnes
Lead flat at 32,525 tonnes
Nickel down 468 tonnes at 3,930 tonnes
Aluminium up 6,450 tonnes at 779,675 tonnes
Tin flat at 9,995 tonnes
Zinc down 25 tonnes at 96,600 tonnes
Tuesday, February 20, 2007
LME REVIEW
LONDON (Dow Jones)--London Metal Exchange lead, nickel and tin surged to record highs Tuesday on fund buying driven by tight stocks and supply concerns, with further upside expected, traders said.
Bullish fundamentals triggered a wave of fund buying once the U.S. entered the markets that helped push the prices of nickel, lead and tin to record highs, an LME trader said.
A drop in LME nickel stocks by 36 metric tons to 4,398 tons Tuesday and a large cancelation in warrants helped push nickel to a fresh record high of $39,950/ton on electronic trade after the floor close, with traders expecting the $40,000/ton to be hit very shortly.
With canceled warrants - or material accounted for and to be drawn down at a later date - at 52% Tuesday, available stocks comprise less than one day's worth of global nickel consumption.
Elsewhere at the LME, three-month lead surged to a fresh record high of $1,845/ton on electronic trade after the floor close, triggered by declining stock levels and ongoing supply concerns at Xstrata's 161,000-ton Northfleet lead refinery in the U.K.
Xstrata said on Feb. 12 that it had temporarily restricted deliveries from its Northfleet lead refinery, which takes its feedstock from Mount Isa in Australia.
Three-month tin also hit a fresh record high of $13,500/ton due to ongoing supply concerns in Indonesia.
Last week, an Indonesian trade official said state-owned tin producer PT Timah Tbk. can no longer legally export tin, as it hasn't been reissued an export license under new regulations.
Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located. Indonesia's PT Koba Tin - a key industry player - said recently that it's still allowed to mine and smelt tin from Bangka-Belitung province while it's under police investigation.
Industry sources say Koba, which produces around 24,000 tons of tin a year, is only shipping about 20% of its normal amount.
Meanwhile, aluminum fell 1% to a PM kerb of $2,742/ton from Monday as spreads eased and aluminum stocks rose 9,250 tons to 773,225 tons Tuesday. LME aluminum inventories have climbed roughly 10% since the start of 2007. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Monday PM kerb
Copper 5720.0-5725.0 Dn 80
Lead 1830.0-1835.0 Up 55
Zinc 3325.0-3330.0 Dn 67
Aluminum 2742.0-2744.0 Dn 38
Nickel 39800.0-39850.0 Up 1100
Tin 13490.0-13495.0 Up 295
Aluminum Alloy 2200.0-2210.0 Up 10
Aluminum Alloy 2160.0-2170.0 Dn 10
Bullish fundamentals triggered a wave of fund buying once the U.S. entered the markets that helped push the prices of nickel, lead and tin to record highs, an LME trader said.
A drop in LME nickel stocks by 36 metric tons to 4,398 tons Tuesday and a large cancelation in warrants helped push nickel to a fresh record high of $39,950/ton on electronic trade after the floor close, with traders expecting the $40,000/ton to be hit very shortly.
With canceled warrants - or material accounted for and to be drawn down at a later date - at 52% Tuesday, available stocks comprise less than one day's worth of global nickel consumption.
Elsewhere at the LME, three-month lead surged to a fresh record high of $1,845/ton on electronic trade after the floor close, triggered by declining stock levels and ongoing supply concerns at Xstrata's 161,000-ton Northfleet lead refinery in the U.K.
Xstrata said on Feb. 12 that it had temporarily restricted deliveries from its Northfleet lead refinery, which takes its feedstock from Mount Isa in Australia.
Three-month tin also hit a fresh record high of $13,500/ton due to ongoing supply concerns in Indonesia.
Last week, an Indonesian trade official said state-owned tin producer PT Timah Tbk. can no longer legally export tin, as it hasn't been reissued an export license under new regulations.
Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located. Indonesia's PT Koba Tin - a key industry player - said recently that it's still allowed to mine and smelt tin from Bangka-Belitung province while it's under police investigation.
Industry sources say Koba, which produces around 24,000 tons of tin a year, is only shipping about 20% of its normal amount.
Meanwhile, aluminum fell 1% to a PM kerb of $2,742/ton from Monday as spreads eased and aluminum stocks rose 9,250 tons to 773,225 tons Tuesday. LME aluminum inventories have climbed roughly 10% since the start of 2007. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Monday PM kerb
Copper 5720.0-5725.0 Dn 80
Lead 1830.0-1835.0 Up 55
Zinc 3325.0-3330.0 Dn 67
Aluminum 2742.0-2744.0 Dn 38
Nickel 39800.0-39850.0 Up 1100
Tin 13490.0-13495.0 Up 295
Aluminum Alloy 2200.0-2210.0 Up 10
Aluminum Alloy 2160.0-2170.0 Dn 10
Oil
March WTI settles @ $58.07. Interesting to get the close over 58. Maybe a short term base here. May see moves higher tomorrow ..traders focus on inventories Thursday..Looking for those big draws in distillates and nat gas..Plus the news of Iran ..Don't you just love this volatility
Airtricity
Giant offshore wind farm gets the green light
By Susie Mesure
Published: 20 February 2007
The first British offshore wind farm to be built outside UK territorial waters was given the green light yesterday.
Airtricity, the Irish wind developer aiming to make Europe self-sufficient in energy, was awarded the 500-megawatt project, which will be built 16 miles off the Suffolk coast.
Eddie O'Connor, Airtricity's chief executive, said it would take two years to build the 150 sq km windfarm and he expects work to commence in 2009. Fluor, the US construction giant, is working with the Irish company on the £1.2bn project. The windfarm will be able to supply clean electricity to over 415,000 homes, more than all the demand in Suffolk.
The Greater Gabbard wind farm will be the first to be built outside the 12 nautical-mile boundary of UK waters. The 2004 Energy Act established a renewable energy zone that extended the Government's authority to 200 miles in some places.
Alistair Darling, the Trade and Industry Secretary, said: "We need more renewable energy as part of the mix of generation of electricity. It cuts emissions while powering homes."
Ian Pearson, the climate change minister, said wind farms such as Greater Gabbard "will play a major role in helping to reduce the UK's carbon dioxide emissions by 60 per cent by 2050".
He added: "We must start moving towards a zero-carbon economy now, which involves a significant increase in the uptake of clean technologies, especially renewable energy."
The 140-turbine wind farm will help to reduce carbon dioxide emissions by nearly 1.5 million tonnes a year - the equivalent of taking 350,000 cars off the road.
Mr O'Connor said he believes that eventually all of Europe's energy needs could be met by wind power.
"Wind is not just the North Sea oil and gas of the 21st century but its Saudi Arabia," he said. He wants Britain and Germany to pool their wind-powered electricity in a "supergrid ... that would provide infinite access to this treasure trove of energy".
He is flying to Berlin this week for meetings with the German government.
By Susie Mesure
Published: 20 February 2007
The first British offshore wind farm to be built outside UK territorial waters was given the green light yesterday.
Airtricity, the Irish wind developer aiming to make Europe self-sufficient in energy, was awarded the 500-megawatt project, which will be built 16 miles off the Suffolk coast.
Eddie O'Connor, Airtricity's chief executive, said it would take two years to build the 150 sq km windfarm and he expects work to commence in 2009. Fluor, the US construction giant, is working with the Irish company on the £1.2bn project. The windfarm will be able to supply clean electricity to over 415,000 homes, more than all the demand in Suffolk.
The Greater Gabbard wind farm will be the first to be built outside the 12 nautical-mile boundary of UK waters. The 2004 Energy Act established a renewable energy zone that extended the Government's authority to 200 miles in some places.
Alistair Darling, the Trade and Industry Secretary, said: "We need more renewable energy as part of the mix of generation of electricity. It cuts emissions while powering homes."
Ian Pearson, the climate change minister, said wind farms such as Greater Gabbard "will play a major role in helping to reduce the UK's carbon dioxide emissions by 60 per cent by 2050".
He added: "We must start moving towards a zero-carbon economy now, which involves a significant increase in the uptake of clean technologies, especially renewable energy."
The 140-turbine wind farm will help to reduce carbon dioxide emissions by nearly 1.5 million tonnes a year - the equivalent of taking 350,000 cars off the road.
Mr O'Connor said he believes that eventually all of Europe's energy needs could be met by wind power.
"Wind is not just the North Sea oil and gas of the 21st century but its Saudi Arabia," he said. He wants Britain and Germany to pool their wind-powered electricity in a "supergrid ... that would provide infinite access to this treasure trove of energy".
He is flying to Berlin this week for meetings with the German government.
Oil
Oil falls on expectations US temperatures will moderateLONDON (AFX) - Oil fell on expectations temperatures in the US Northeast are set to moderate, decreasing heating oil demand.At 3.27 pm, front-month Brent North Sea crude contracts for April delivery were down 88 cents to 57.26 usd per barrel. The contracts dipped 81 cents to close at 58.14 usd yesterday.Meanwhile, front-month New York light sweet crude contracts for March delivery, which expire later today, were trading at 57.71 usd a barrel, down 1.66 usd from Friday's close. NYMEX did not issue a settlement price yesterday as US markets were closed for the Presidents Day holiday."Prices have pulled back significantly, particularly heating oil, as weather remains the primary focus," said Fimat analyst Mike Fitzpatrick.He added as the winter draws to a close amid still healthy inventory levels, and as economic signals from the US remain mixed, prices will struggle to hold near 60 usd per barrel this week. Weather forecasters have said the cold in the US Northeast, the world's largest heating oil market, should ease this week. Forecasts aside, the winter is, in any case, drawing to a close, analysts note.As a result, the market's attention is fast turning to the US summer driving season, when demand for gasoline typically surges.Jim Ritterbusch, President of Ritterbusch & Associates, this week's US inventory data might support of oil prices, especially if it shows a decline in refinery operating rates or gasoline production capacity.The data is being released on Thursday, a day later than usual on account of the Presidents' Day holiday Monday.Oil could also find some support this weak from geo-political tensions with Iran, as the UN Security Council's deadline for Iran to halt sensitive uranium enrichment work expires Friday.Uranium is used to fuel for civilian reactors but can also produce atom bomb material. Iran's president Mahmoud Ahmadinejad has said his country will not halt nuclear fuel work as a precondition to UN talks. "There is certainly some concern western leaders will tighten sanctions" after Friday's deadline expires, said Fitzpatrick.Oil prices were steady earlier in the session, supported by concerns over possible supply disruptions in Nigeria, where three European oil workers were kidnapped late Sunday."Yesterday, there was news of further kidnappings of oil workers and with presidential elections coming up in April, many believe that the situation can only get worse before it gets better," said Sucden analyst, Michael Davies.Also supporting prices were worries over potential supply glitches from a fire which halted operations at Valero Energy in Texas over the weekend. Valero oil refinery processes 158,000 bpd.
TLW
20.02.2007 Investors Keen To Hear Test Results From Heritage Oil Corp’s Kingfisher-1A Well Canada’s Heritage Oil Corp has gladdened the heart of investors with news that it is preparing to production test the deeper intervals of the Kingfisher-1A well in Uganda. The well, drilled to a total depth of 3,195 metres, has already successfully flowed oil, pumping over 4,000 barrels per day from an 10 metre thick interval 1,783 metres down. That was a good result, exceeding company expectations, but success in the deeper zones could put Kingfisher in a different league. The first production test was back in November. Since then the well has been sidetracked to probe the deeper primary objective. The Toronto-listed firm, which is presenting at this week’s oilbarrel.com conference in London, and its 50/50 partner Tullow Oil plan to test three intervals with a total thickness of 44 metres between 2,260 and 2,367 metres, with the thickest interval measuring 21 metres. This sounds promising and success here could put Kingfisher, which has an areal extent of around 70 sq km, in a different league. It’s not all been plain sailing, however. The well has made slow progress from November, reaching 2,962 metres in mid-January and taking another month to dig another 250 metres before stopping well short of the targeted total depth of 4,000 metres. It appears the limitations of the rig have hampered progress and obscured the potential of this well: the November production test, for example, was constrained by the rig, with Heritage estimating it could have flowed 5,600 barrels per day with the right equipment. This is frustrating for investors but not uncommon when drilling in remote and untested areas when it can be difficult - and expensive - to access resources. Investors now have to wait up to three months for the results of the test programme and to find out by just how much Kingfisher will enhance the Albertine Basin’s prospectivity. Last year Heritage’s CEO Tony Buckingham said the basin “looks increasingly like it has the elements to make it a world-class petroleum basin”. There is still a long way to go, however. Further drilling will be required to really get to grips with the resource potential here and to answer questions about the waxy nature of the crude. Tullow Oil, which last year acquired Hardman Resources for US$1.1 billion to secure 100 per cent of Block 2, home to the Waraga, Mputa and Nzizi discoveries, is keen to get the drillbit to work to find sufficient reserves to justify a pipeline to the coast. In the wake of the Nzizi-1 well - a slimhole well which encountered good oil shows over a gross interval of around 180 metres but was not tested - Tullow said it believed there was scope to significantly increase the previous recoverable volume (around 30 million barrels) in the Mputa/Waraga area. Tullow and Heritage now dominate this play, holding 50 per cent each of blocks 1 and 3A in Uganda and also taking on Blocks 1 and 2 in the east of the Democratic Republic of Congo, on the border with Uganda in the Lake Albert region. Tullow also holds 100 per cent of Block 2 in Uganda. This gives the companies a real understanding of the basin-wide geology, not to mention a material stake in what is shaping up to be a very interesting play.
LME INVENTORY LEVELS
Copper down 650 tonnes at 210,425 tonnes
Lead up 50 tonnes at 32,525 tonnes
Nickel down 36 tonnes at 4,398 tonnes
Aluminium up 8,250 tonnes at 773,225 tonnes
Tin down 85 tonnes at 9,995 tonnes
Zinc down 50 tonnes at 96,625 tonnes
Lead up 50 tonnes at 32,525 tonnes
Nickel down 36 tonnes at 4,398 tonnes
Aluminium up 8,250 tonnes at 773,225 tonnes
Tin down 85 tonnes at 9,995 tonnes
Zinc down 50 tonnes at 96,625 tonnes
Monday, February 19, 2007
LME REVIEW
DJ LME Review: Quiet Trading On US Holiday; Consolidation Seen
LONDON (Dow Jones)--Trading activity on London Metal Exchange base metals was quiet Monday because of the U.S. Presidents Day holiday, but consolidation is expected to be a key feature over the next few days, traders said.
Earlier Monday, three-month lead pushed to a new record high of $1,817.50 a metric ton before retreating to a PM kerb of $1,775/ton on profit-taking.
Systematic buying and trade short covering provided strong upside momentum that was underpinned by supply concerns.
News last week that Xstrata PLC declared force majeure at its Northfleet lead refinery in the U.K. following reduced supplies from its Mount Isa smelter in Australia, provided further price support. Northfleet produced around 161,350 tons of lead last year, using feedstock from Mount Isa.
LME lead stocks Monday fell 825 metric tons to 32,475 tons, adding to price strength, and stocks have fallen roughly 20% since the start of 2007.
"With the U.S. out on holiday, we've seen incredibly light volumes traded Monday," said one LME trader. "Many of the markets are in consolidation mode which I expect will continue for the next several days, particularly as the Chinese are out for the week celebrating the Lunar New Year," the trader added. China is the world's largest consumer of a variety of base metals.
Three-month tin was lightly supported, rising 0.03% to a PM kerb of $13,195/ton.
Tin industry specialist ITRI said Monday that 2007 global tin production is estimated at 337,000 tons while global tin consumption is estimated at 377,000 tons. Combined with a U.S. stockpile disposal of roughly 10,000 tons, this leaves a 2007 supply deficit of roughly 30,000 tons, ITRI said.
Three-month copper, nickel and aluminum were under modest pressure due to profit-taking, the LME trader said.
Aluminum prices fell 0.5% to a PM kerb of $2,780/ton from Friday. "The squeeze in aluminum seems to be falling apart as the dominant long position has give up part of its position," said a LME broker.
In addition, LME aluminum stocks are readily available with inventories having climbed nearly 10% since the start of 2007.
Ongoing political tensions in Guinea - the world's largest exporter of bauxite - have provided underlying support despite the head of Guinea's military relaxing a nationwide curfew Sunday.
Bauxite is a key raw ingredient to make alumina, which is in turn refined to make aluminum.
According to an official at Norwegian shipping company Torvald Klaveness Group Monday, there haven't been any bauxite shipments yet from Guinea's port of Kamsar despite the restart of limited production at the country's operations.
Sources in the panamax-bulkers market said full port activity is unlikely until the end of martial law there, currently scheduled for Feb. 23.
Guinean President Lansana Conte declared martial law early last week after dozens died in riots and clashes between protesters and security forces over Conte's appointment of a political ally as prime minister.
Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Friday PM kerb
Copper 5800.0-5805.0 Dn 5
Lead 1775.0-1780.0 Dn 10
Zinc 3392.0-3395.0 Up 12
Aluminum 2780.0-2783.0 Dn 13
Nickel 38700.0-38800.0 Dn 200
Tin 13195.0-13200.0 Up 55
Aluminum Alloy 2190.0-2210.0 Dn 20
Aluminum Alloy 2170.0-2180.0 Dn 10
LONDON (Dow Jones)--Trading activity on London Metal Exchange base metals was quiet Monday because of the U.S. Presidents Day holiday, but consolidation is expected to be a key feature over the next few days, traders said.
Earlier Monday, three-month lead pushed to a new record high of $1,817.50 a metric ton before retreating to a PM kerb of $1,775/ton on profit-taking.
Systematic buying and trade short covering provided strong upside momentum that was underpinned by supply concerns.
News last week that Xstrata PLC declared force majeure at its Northfleet lead refinery in the U.K. following reduced supplies from its Mount Isa smelter in Australia, provided further price support. Northfleet produced around 161,350 tons of lead last year, using feedstock from Mount Isa.
LME lead stocks Monday fell 825 metric tons to 32,475 tons, adding to price strength, and stocks have fallen roughly 20% since the start of 2007.
"With the U.S. out on holiday, we've seen incredibly light volumes traded Monday," said one LME trader. "Many of the markets are in consolidation mode which I expect will continue for the next several days, particularly as the Chinese are out for the week celebrating the Lunar New Year," the trader added. China is the world's largest consumer of a variety of base metals.
Three-month tin was lightly supported, rising 0.03% to a PM kerb of $13,195/ton.
Tin industry specialist ITRI said Monday that 2007 global tin production is estimated at 337,000 tons while global tin consumption is estimated at 377,000 tons. Combined with a U.S. stockpile disposal of roughly 10,000 tons, this leaves a 2007 supply deficit of roughly 30,000 tons, ITRI said.
Three-month copper, nickel and aluminum were under modest pressure due to profit-taking, the LME trader said.
Aluminum prices fell 0.5% to a PM kerb of $2,780/ton from Friday. "The squeeze in aluminum seems to be falling apart as the dominant long position has give up part of its position," said a LME broker.
In addition, LME aluminum stocks are readily available with inventories having climbed nearly 10% since the start of 2007.
Ongoing political tensions in Guinea - the world's largest exporter of bauxite - have provided underlying support despite the head of Guinea's military relaxing a nationwide curfew Sunday.
Bauxite is a key raw ingredient to make alumina, which is in turn refined to make aluminum.
According to an official at Norwegian shipping company Torvald Klaveness Group Monday, there haven't been any bauxite shipments yet from Guinea's port of Kamsar despite the restart of limited production at the country's operations.
Sources in the panamax-bulkers market said full port activity is unlikely until the end of martial law there, currently scheduled for Feb. 23.
Guinean President Lansana Conte declared martial law early last week after dozens died in riots and clashes between protesters and security forces over Conte's appointment of a political ally as prime minister.
Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Friday PM kerb
Copper 5800.0-5805.0 Dn 5
Lead 1775.0-1780.0 Dn 10
Zinc 3392.0-3395.0 Up 12
Aluminum 2780.0-2783.0 Dn 13
Nickel 38700.0-38800.0 Dn 200
Tin 13195.0-13200.0 Up 55
Aluminum Alloy 2190.0-2210.0 Dn 20
Aluminum Alloy 2170.0-2180.0 Dn 10
Copper
Copper may surge on spill-over effect from Zambian oil workers' strikeLONDON (AFX) - A strike at Zambia's sole oil refinery, Indeni, may spill-over to push copper prices higher.Zambian mines rely heavily on oil and any disruption to production will dent global supply of the metal.The country's 500,000-tonne a year copper industry could suffer, as a "similar thing happened last year and had a knock on effect on (copper) prices" said Standard Chartered analyst, Tariq Salaria."The Zambian copper market is reliant on this one oil refinery, which serves the whole industry." The refinery processes up to 20,000 bpd.Reports said negotiations between management and the National Union of Transport and Allied Workers Union failed to reach an agreement, forcing management to halt operations.At 4.23 pm, LME copper for three month delivery was down 5 usd at 5,805 usd a tonne against 5,810 usd at the close Friday.
Irish newspaper article on TLW
18 February 2007
The Sunday Independent (Ireland)
Tullow Oil squeezed by soaring costs
INVESTORS who bought into oil companies four or five years ago have enjoyed a great run as global fuel prices soared - and Tullow Oil has done better than most, with its share price more than quadrupling from €1.48 to €5.94 over the past five years. Unfortunately for their pockets, investors have paid less attention to the escalating costs of prospecting for, and then extracting that same oil and gas. Last week, the energy consultants at Cambridge Energy Research Associates published their upstream capital costs index. This showed that a basket of exploration and production costs had risen by 53 per cent over the past two years. The bad news for investors is that price inflation in this sector shows no sign of easing. Tullow Oil produced the equivalent of 58,000 barrels of oil per day in 2005. The cash cost of extracting this oil was the equivalent of stg£4.84 per barrel (Tullow presents its accounts in sterling), which amounts to just over stg£102m for the full year. This year, Tullow is producing the equivalent of over 80,000 barrels a day. Given the sort of inflation being experienced in the oil and gas sector, the company probably won't get any change out of stg£7 a barrel to extract the stuff. That's at least stg£205m for 2007. Back when oil prices were at over $70 and gas prices at over stg70p per therm (ie: per unit of heat), these escalating exploration and production costs were no more than a minor nuisance. Not any more. With their recent mini-rally now run out of steam, oil prices are falling again - and were down to $56 by the end of last week. Meanwhile, gas prices - at just over stg20p per therm - are at their lowest for over three years. Tullow is being squeezed between lower prices and higher costs. This means that the only direction the shares are headed is down.
The Sunday Independent (Ireland)
Tullow Oil squeezed by soaring costs
INVESTORS who bought into oil companies four or five years ago have enjoyed a great run as global fuel prices soared - and Tullow Oil has done better than most, with its share price more than quadrupling from €1.48 to €5.94 over the past five years. Unfortunately for their pockets, investors have paid less attention to the escalating costs of prospecting for, and then extracting that same oil and gas. Last week, the energy consultants at Cambridge Energy Research Associates published their upstream capital costs index. This showed that a basket of exploration and production costs had risen by 53 per cent over the past two years. The bad news for investors is that price inflation in this sector shows no sign of easing. Tullow Oil produced the equivalent of 58,000 barrels of oil per day in 2005. The cash cost of extracting this oil was the equivalent of stg£4.84 per barrel (Tullow presents its accounts in sterling), which amounts to just over stg£102m for the full year. This year, Tullow is producing the equivalent of over 80,000 barrels a day. Given the sort of inflation being experienced in the oil and gas sector, the company probably won't get any change out of stg£7 a barrel to extract the stuff. That's at least stg£205m for 2007. Back when oil prices were at over $70 and gas prices at over stg70p per therm (ie: per unit of heat), these escalating exploration and production costs were no more than a minor nuisance. Not any more. With their recent mini-rally now run out of steam, oil prices are falling again - and were down to $56 by the end of last week. Meanwhile, gas prices - at just over stg20p per therm - are at their lowest for over three years. Tullow is being squeezed between lower prices and higher costs. This means that the only direction the shares are headed is down.
Tullow
There are mixed views on Tullow Oil with KBC urging that holdings be reduced while Merrill Lynch is a buyer and Bridgewell overweight.
Recent note from Goodbody stockbrokers
In a report this morning we revisit our models and recommendations for the E&P’s under coverage, on the foot of recent pre-close statements and ahead of the release of FY06 results in March. The tone of those statements ranged from positive in the case of Dragon, to broadly in line in the case of Tullow, to disappointing with respect to Burren. FY06 earnings adjustments range from +12% for Tullow (largely due to one-off exceptional items), to -3% for Burren and +1% for Dragon. Variations for FY07 are more pronounced, particularly in the case of Tullow – down 22% (higher interest charges and share count as a consequence of the Hardman deal) and Dragon - up 15% (due to an increase in FY07 forecast average gross production from 24.0 kbopd to 27.5 kbopd). NAV revisions include 11% and 4% upgrades to total NAV for Tullow and Dragon, but a 13% decline in the case of Burren. Notwithstanding further positive news from Uganda this morning (see below), we are raising our recommendation on Tullow from ADD to BUY. Ongoing success in Uganda eases prior concerns associated with a high proportion of the NAV attributed to the region. The Hardman deal further expands the exploration portfolio and the pipeline of opportunities (20 wells scheduled for 2007) ensures a steady stream of newsflow with stand-outs in the shape of Uganda, India and Kudu. Applying a 10% premium to total NAV across the group results in a price target for Tullow of 460p (425p previously), a marginal uplift for Dragon, from 205p to 210p, but a significant reduction for Burren from 930p to 800p, on a re-assessment of the exploration portfolio. We maintain our BUYrecommendation on Dragon and ADD while our price target on Burren suggests it is currently trading at fair value. Tullow (Buy, Closing Price £4.00); Ugandan ‘good news’on tap. Following on from the discovery of oil at two higher levels, Heritage, the operator of the Kingfisher well in Block 3a in Uganda (Tullow 50% stake), has announced that it is to test three intervals with a gross pay of 44m between 2,260m and 2,367m in Kingfisher-1a. The reason stems from “encouraging indications of hydrocarbons” from wireline logs and pressure testing and the fact that the current rig, which has drilled to a depth of 3,195m has reached the limit of its operational capability. One of the intervals to be tested is 21m thick. Heritage has indicated that it expects testing of the zones to commence in 10 days time with the process to take up to three weeks to compete. While inconclusive as yet, the latest news continues to enhance the ultimate commerciality of the Lake Albert basin. The question remains as to ultimate prospect size, an answer to which is likely to take well over a year to ascertain.
Metals
Metals - Base metals mkts quiet on Chinese, US holiday; lead hits all time highLONDON (AFX) - Base metals markets were quiet because of the Lunar New Year holiday in China and the Presidents Day holiday in the US, although most metals remained steady, underpinned by supply side issues.Lead hit an all time high of 1,810 usd a tonne earlier, on speculation Xstrata is shopping around for material for its customers, after declaring force majeur on exports from its Mount Isa smelter in Australia two weeks ago.At 12.14 am, LME lead for three month delivery was up at 1,806 usd a tonne against 1,785 usd at the close Friday.Copper was steady amid a fall of 2,725 tonnes in LME inventories and continued expectations the Chinese will return to the market after the week long Chinese New Year break."We are very positive on copper because of recovering Chinese demand. News during Copper Club Week in New York last week was very encouraging on this matter," said UBS Investment Bank analyst Robin Bhar.Data out last week showed Chinese imports of refined copper and copper alloy rose to 147,650 tonnes in January -- a 70 pct increase over year-earlier levels."Chinese import statistics indicate a strong pick up in Chinese copper imports implying re-stocking is taking place following a year where the Chinese have been running down their inventories," said Numis analyst John Meyer.Copper was flat at 5,810 usd a tonne.Aluminium edged down, under pressure from a resumption of bauxite exports from Guinea. Bauxite is used in the production of alumina -- the raw material used to make aluminium.Aluminium was at 2,790 usd a tonne against 2,795 usd at the close Friday.Tin edged up, still finding support from disrupted exports from Indonesia. Last week, Indonesian authorities shut down most of PT koba Tin's operations, sending tin top with an all time high of 13,300 usd a tonne on Friday.Tin was up at 13,250 usd a tonne against 13,145 usd at the close Friday.In other metals, nickel was down at 38,875 usd a tonne against 38,900 usd at the close Friday, while zinc was up at 3,402 usd a tonne against 3,380 usd at the close Friday.
LME MIDDAY
DJ LME MIDDAY: Lead Extends Strength On Supply Worries
LONDON (Dow Jones)--London Metal Exchange lead extended its recent strength to hit a fresh record high Monday, with analysts expecting further moves to the upside despite a holiday in the U.S.
Three-month lead pushed to a record high of $1,810 a metric ton Monday, up over 1% from Friday. At 1158 GMT, lead traded at $1,805/ton.
The recent price strength seen in LME lead might have further to run due to low stock levels, short covering, and ongoing supply concerns, said William Adams of BaseMetals.com/ Short covering seen above $1,750/ton and $1,770/ton have helped to push prices sharply higher, Adams added.
News last week that Xstrata PLC declared force majeure at its Northfleet lead refinery in the U.K. following reduced supplies from its Mount Isa smelter in Australia, provided further upside momentum. Northfleet produced around 161,350 tons of lead last year, using feedstock from Mount Isa.
LME lead stocks fell 825 metric tons to 32,475 tons Monday, adding to price strength, and have fallen roughly 20% since the start of 2007.
"Dips should be well supported (across the base metals) given various supply-side issues which have come to the fore," said Robin Bhar of UBS.
However, analysts said trading volumes may be light in the afternoon session because the U.S. is closed for the Presidents Day holiday.
Three-month nickel consolidated near its recent record high of $39,501/ton underpinned by another large cancelation in warrants.
Despite an increase in nickel stocks by 282 tons to 4,152 tons Monday, with canceled warrants - or material accounted for and to be drawn down at a later date - at 51% Monday, available stocks comprise roughly one day's worth of global nickel consumption.
At 1159 GMT, three-month nickel traded at $39,000/ton, up 0.25% from Friday.
In other metals, copper also consolidated within its recent range, underpinned by a 2,725-ton drawdown in stocks to 211,075 tons. At 1159 GMT, copper traded at $5,825/ton, up 0.2% from Friday.
Aluminum traded slightly below $2,800/ton pressured to the downside by a 3,150-ton increase in aluminum stocks to 764,975 tons. At 1159 GMT, aluminum traded at $2,799/ton, up 0.1% from Friday.
Ongoing political tensions in Guinea - the world's largest exporter of bauxite - have helped keep aluminum prices afloat despite the head of Guinea's military relaxing a nationwide curfew on Sunday.
Bauxite is a key raw ingredient to make alumina, which is in turn refined to make aluminum.
Late last week, Alcoa said a partial restart of production is in progress at the CBG bauxite operations in Guinea. However, Alcoa was unable to say whether bauxite shipments had resumed.
Guinean President Lansana Conte declared martial law early last week after dozens died in riots and clashes between protesters and security forces over Conte's appointment of a political ally as prime minister.
In other news, Dubai Aluminium, the United Arab Emirates' largest aluminum producer, said over the weekend that it will raise production capacity to more than 920,000 tons a year by 2008 to help it meet rising international demand. Dubal's production capacity presently stands at 861,000 tons a year.
In addition, the company has entered into a joint venture with Abu Dhabi investment firm Mubadala to build the world's largest aluminum smelter with a capacity of 1.4 million tons a year in Abu Dhabi at a cost of $8 billion.
LONDON (Dow Jones)--London Metal Exchange lead extended its recent strength to hit a fresh record high Monday, with analysts expecting further moves to the upside despite a holiday in the U.S.
Three-month lead pushed to a record high of $1,810 a metric ton Monday, up over 1% from Friday. At 1158 GMT, lead traded at $1,805/ton.
The recent price strength seen in LME lead might have further to run due to low stock levels, short covering, and ongoing supply concerns, said William Adams of BaseMetals.com/ Short covering seen above $1,750/ton and $1,770/ton have helped to push prices sharply higher, Adams added.
News last week that Xstrata PLC declared force majeure at its Northfleet lead refinery in the U.K. following reduced supplies from its Mount Isa smelter in Australia, provided further upside momentum. Northfleet produced around 161,350 tons of lead last year, using feedstock from Mount Isa.
LME lead stocks fell 825 metric tons to 32,475 tons Monday, adding to price strength, and have fallen roughly 20% since the start of 2007.
"Dips should be well supported (across the base metals) given various supply-side issues which have come to the fore," said Robin Bhar of UBS.
However, analysts said trading volumes may be light in the afternoon session because the U.S. is closed for the Presidents Day holiday.
Three-month nickel consolidated near its recent record high of $39,501/ton underpinned by another large cancelation in warrants.
Despite an increase in nickel stocks by 282 tons to 4,152 tons Monday, with canceled warrants - or material accounted for and to be drawn down at a later date - at 51% Monday, available stocks comprise roughly one day's worth of global nickel consumption.
At 1159 GMT, three-month nickel traded at $39,000/ton, up 0.25% from Friday.
In other metals, copper also consolidated within its recent range, underpinned by a 2,725-ton drawdown in stocks to 211,075 tons. At 1159 GMT, copper traded at $5,825/ton, up 0.2% from Friday.
Aluminum traded slightly below $2,800/ton pressured to the downside by a 3,150-ton increase in aluminum stocks to 764,975 tons. At 1159 GMT, aluminum traded at $2,799/ton, up 0.1% from Friday.
Ongoing political tensions in Guinea - the world's largest exporter of bauxite - have helped keep aluminum prices afloat despite the head of Guinea's military relaxing a nationwide curfew on Sunday.
Bauxite is a key raw ingredient to make alumina, which is in turn refined to make aluminum.
Late last week, Alcoa said a partial restart of production is in progress at the CBG bauxite operations in Guinea. However, Alcoa was unable to say whether bauxite shipments had resumed.
Guinean President Lansana Conte declared martial law early last week after dozens died in riots and clashes between protesters and security forces over Conte's appointment of a political ally as prime minister.
In other news, Dubai Aluminium, the United Arab Emirates' largest aluminum producer, said over the weekend that it will raise production capacity to more than 920,000 tons a year by 2008 to help it meet rising international demand. Dubal's production capacity presently stands at 861,000 tons a year.
In addition, the company has entered into a joint venture with Abu Dhabi investment firm Mubadala to build the world's largest aluminum smelter with a capacity of 1.4 million tons a year in Abu Dhabi at a cost of $8 billion.
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LME INVENTORY
LONDON (AFX) - Metals - LME inventory data (Monday)Change in London Metal Exchange
inventory as of Friday, Feb 19:Copper down 2,725 tonnes at 211,075 tonnes
Lead down 825 tonnes at 32,475 tonnes
Nickel up 282 tonnes at 4,434 tonnes
Aluminium up 3150 tonnes at 764,975 tonnes
Tin down 145 tonnes at 10,080 tonnes
Zinc down 350 tonnes at 96,675 tonnes
inventory as of Friday, Feb 19:Copper down 2,725 tonnes at 211,075 tonnes
Lead down 825 tonnes at 32,475 tonnes
Nickel up 282 tonnes at 4,434 tonnes
Aluminium up 3150 tonnes at 764,975 tonnes
Tin down 145 tonnes at 10,080 tonnes
Zinc down 350 tonnes at 96,675 tonnes
Oil
Oil dips on falling demand ahead of warmer US weatherLONDON (AFX) - Oil dipped as US demand looked set to fall as temperatures become warmer. Short covering ahead of Presidents' Day (today) lifted prices Friday, so this morning's fall "could be a little profit taking," said Calyon analyst, Mike Wittner.At 9.22 am, front-month Brent North Sea crude contracts for April delivery were down 19 cents to 58.76 usd per barrel. On Friday, oil rose 1.35 usd to close at 58.95 usd.Meanwhile, front-month New York light sweet crude contracts for March delivery were down 36 cents to 59 usd a barrel, after gaining 1.40 usd to close at 59.39 usd on Friday.Since the beginning of this year prices had been under downward pressure as the US enjoyed a milder winter. In the middle of January oil briefly slumped below the critical 50 usd level in New York. A cold snap followed, pulling oil back to levels in the 55 - 60 usd range. But the cold snap seems to be slowly coming to an end."The market has had a lot of support because of the cold weather," said Wittner. "But, that support is going to be coming to an end sooner or later," he added.
Copper
0629 GMT [Dow Jones] LME copper moves sideways during Asian trading hours, traders expecting little change given low liquidity during Chinese New Year Holiday; Chinese demand after holiday seen to sharply rebound following Jan copper import data pointing to end of destocking phase of 2006. LME 3-month copper trades at $5,830/ton, up $25 vs Friday PM kerb. (EFB)
DJ MARKET TALK: LME Copper Subdued As Chinese Holiday Starts
0819 GMT [Dow Jones] Copper trade is seen subdued Monday and through the week ahead as Chinese lunar new year begins and expectations of impetus from buyers here fades, a broker notes. Small pockets of profit-taking is seen at the upper end of copper's current London Metal Exchange range with activity in the spreads quiet, he says. No pick up seen given absence of US due to Presidents Day holiday. LME copper trades last at $5,827 a metric ton, down 1% from Friday's high. (ADH)
DJ MARKET TALK: LME Copper Subdued As Chinese Holiday Starts
0819 GMT [Dow Jones] Copper trade is seen subdued Monday and through the week ahead as Chinese lunar new year begins and expectations of impetus from buyers here fades, a broker notes. Small pockets of profit-taking is seen at the upper end of copper's current London Metal Exchange range with activity in the spreads quiet, he says. No pick up seen given absence of US due to Presidents Day holiday. LME copper trades last at $5,827 a metric ton, down 1% from Friday's high. (ADH)
Sunday, February 18, 2007
UK GAS MARKET
UK's answer to gas dependency lies in the salt caverns of Dorset
By Tim Webb
Published: 18 February 2007
AIM-listed Egdon Resources will submit final planning applications to turn salt caverns in Dorset into a huge, £350m underground gas storage facility within the next six weeks.
If approved, the facility on the Portland peninsula will increase the amount of gas that can be stored in Britain by a quarter.
The UK became a net importer of gas in 2004, and as the North Sea matures, imports will rise further. If supply is disrupted, Britain's stored gas would run out after only an estimated 17 days. In comparison, France has capacity to store about 91 days' consumption of gas, while Germany has 77 days' worth.
Egdon Resources is submitting the application to Dorset County Council. The company expects a decision in six months.
If the project gets the go-ahead, the first gas will be stored on the site in late 2010. Total capacity will be 1bn cubic metres. The UK's current total capacity is 4bn cubic metres. The company will sign long-term contracts with gas suppliers to auction off storage capacity.
Later this year, Egdon Resources, which also has an oil exploration and production arm, will spin off its gas storage division, Portland Gas.
The investment bank NM Rothschild will lead the fund-raising for the development of the site. The estimated £350m costs will mostly be met by debt but new Portland Gas shares could be placed in the market to raise more funds.
Last year, the Government stressed the need for more gas storage sites to be built to enhance security of energy supply. But a cumbersome planning regime has discouraged the construction of new facilities.
Andrew Hindle, the managing director of Egdon Resources, said: "Dramatic structural changes are taking place in the gas market as we move from a net exporter of gas to importing an estimated 90 per cent of our gas by the middle of the next decade. Having sufficient gas storage capacity is one component of the market being able to function. Portland is one of several projects needed to satisfy that requirement."
Gas storage facilities tend to be filled mostly in the summer, when gas prices are lower, and emptied in the winter, when prices and demand increase.
A fire in March last year at Britain's largest existing facility, off the Yorkshire coast at Rough, caused gas prices on the wholesale market to double almost overnight. UK gas prices last winter were already at record highs, remaining above 60p per therm most of the time.
Prices have now slumped to less than 20p per therm because new pipelines linking Britain to the Continent have increased supply, and also on account of the mild winter.
British Gas owner Centrica belatedly reacted last week by cutting its tariffs for consumers, as did Powergen's owner, E.ON. RWE npower, Scottish & Southern and Scottish Power are all expected to follow suit soon.
Industry experts have begun speculating that the Russian gas giant Gazprom - which supplies a quarter of Europe's gas - could be planning to start a retail operation in the UK. Last year, it bought the marketing company Pennine Natural Gas, which sells gas to small and medium-sized businesses. Gas is now sold to these customers under the Gazprom brand name.
The Russian company has also been rumoured to be thinking of acquiring Centrica to get access to residential consumers. But instead of buying a supplier such as Centrica, it could start selling gas to households from scratch instead.
It is thought that the company, which is looking to hire a public relations firm in Britain, believes selling gas directly in this way will help to change its often negative image and that of Russia in general.
A spokesman for Gazprom said: "We have ambitions to sell all forms of energy in the value chain. But at the moment, we do not have plans to get into the residential market."
By Tim Webb
Published: 18 February 2007
AIM-listed Egdon Resources will submit final planning applications to turn salt caverns in Dorset into a huge, £350m underground gas storage facility within the next six weeks.
If approved, the facility on the Portland peninsula will increase the amount of gas that can be stored in Britain by a quarter.
The UK became a net importer of gas in 2004, and as the North Sea matures, imports will rise further. If supply is disrupted, Britain's stored gas would run out after only an estimated 17 days. In comparison, France has capacity to store about 91 days' consumption of gas, while Germany has 77 days' worth.
Egdon Resources is submitting the application to Dorset County Council. The company expects a decision in six months.
If the project gets the go-ahead, the first gas will be stored on the site in late 2010. Total capacity will be 1bn cubic metres. The UK's current total capacity is 4bn cubic metres. The company will sign long-term contracts with gas suppliers to auction off storage capacity.
Later this year, Egdon Resources, which also has an oil exploration and production arm, will spin off its gas storage division, Portland Gas.
The investment bank NM Rothschild will lead the fund-raising for the development of the site. The estimated £350m costs will mostly be met by debt but new Portland Gas shares could be placed in the market to raise more funds.
Last year, the Government stressed the need for more gas storage sites to be built to enhance security of energy supply. But a cumbersome planning regime has discouraged the construction of new facilities.
Andrew Hindle, the managing director of Egdon Resources, said: "Dramatic structural changes are taking place in the gas market as we move from a net exporter of gas to importing an estimated 90 per cent of our gas by the middle of the next decade. Having sufficient gas storage capacity is one component of the market being able to function. Portland is one of several projects needed to satisfy that requirement."
Gas storage facilities tend to be filled mostly in the summer, when gas prices are lower, and emptied in the winter, when prices and demand increase.
A fire in March last year at Britain's largest existing facility, off the Yorkshire coast at Rough, caused gas prices on the wholesale market to double almost overnight. UK gas prices last winter were already at record highs, remaining above 60p per therm most of the time.
Prices have now slumped to less than 20p per therm because new pipelines linking Britain to the Continent have increased supply, and also on account of the mild winter.
British Gas owner Centrica belatedly reacted last week by cutting its tariffs for consumers, as did Powergen's owner, E.ON. RWE npower, Scottish & Southern and Scottish Power are all expected to follow suit soon.
Industry experts have begun speculating that the Russian gas giant Gazprom - which supplies a quarter of Europe's gas - could be planning to start a retail operation in the UK. Last year, it bought the marketing company Pennine Natural Gas, which sells gas to small and medium-sized businesses. Gas is now sold to these customers under the Gazprom brand name.
The Russian company has also been rumoured to be thinking of acquiring Centrica to get access to residential consumers. But instead of buying a supplier such as Centrica, it could start selling gas to households from scratch instead.
It is thought that the company, which is looking to hire a public relations firm in Britain, believes selling gas directly in this way will help to change its often negative image and that of Russia in general.
A spokesman for Gazprom said: "We have ambitions to sell all forms of energy in the value chain. But at the moment, we do not have plans to get into the residential market."
Saturday, February 17, 2007
KBC NOTE ON VPC, TLW AND DNX
KBC note from 13/02/2007
UK spot gas price is looking pretty sick so far in 2007. The daily price has averaged 27p year to date while the forward price for the remainder of 1Q07 is now 18.5p per therm. One year ago, the futures contract for 1Q 2007 gas was trading at 90p per therm and the last quoted price before expiry of the contract was over 40p, in November.So what is going on? Clearly the weather is the main driver. It is likely that gas suppliers, intending not to be caught short of gas as they were in 1Q06 (see the chart below) were more heavily covered than normal and have been absent from the market, depressing demand for spot gas. With this very poor start, and two quarters ahead in which prices are seasonally weaker, the volume-weighted average price realised by producers selling into the spot market (after allowing for seasonally lower 2Q and 3Q production) looks like it will be no better than26p per therm assuming the current futures prices for the forward quarters. This is a more adverse position than we had assumed mid-January, when we published 2007 forecasts based on a 30p weighted spot price.The key question is whether this is just the reverse of the spike we had one year ago. It probably is. There is a credible argument for a long-term linkage between oil prices and gas prices along the following lines: Gas markets are now far more closely tied together by pipeline connection than even five years ago. In the future, global trade in LNG (liquefied natural gas) will also have an increasing influence on the UK gas market. Thus as domestic UK gas supply dwindles, global markets will have increasing influence on the UK gas price.Historically, European gas contracts were indexed to fuel oil prices and Japanese LNG contracts linked to crude oil. Thus, provided there is no structural oversupply of gas, oil prices will tend to drag gas prices along withthem. Thus on the basis of our central assumption of a Brent oil price of $50 per barrel, we would consider 35p to be a reasonable trend level of the UK gas market. (This assumes a fuel oil price of 20% less than crude and anenergy equivalence based on 6,000 cubic feet to the barrel of oil, giving a gas price of $6.66/mcf which equates to 34p per therm). Clearly spot prices at any one time would be influenced by weather conditions and seasonality as well as any relevant operational issues that tend to arise from time to time, but we believe this assumption to be a reasonable basis for assessing the economics of UK gas production and is the centralassumption in our NAV models.In the short term, however, the spot price will undoubtedly influence the financial performance of a handful ofcompanies: Dana, Tullow and Venture being the main ones to consider, all having substantial exposure tocurrent UK gas production.
Dana Petroleum (DNX) – UK Gas price – FCAST: No Change, REC: SELLOur views on the Dana share price are more driven by long term valuation issues than short term earnings. Consensus valuations on several important UK assets (Johnstone, Cavendish, Melville, Barbara and Babbage in particular) seem to be very optimistic and we think our Core NAV of 604p per share is actually quitegenerous. Then one needs to ask whether the international exploration is actually worth the £350m implied by the current share price.
Tullow Oil (TLW) – UK Gas price – FCAST: No Change, REC: REDUCETullow has already modified its drilling programme in the UK in the light of the gas price development, choosing not to extend a rig contract for a second term. This shows financial discipline for which the UK independents are not historically known and which we applaud. In terms of valuation, there is quite a lot in the share price for exploration – our Core NAV estimate is just over 200p. There are 2 or 3 exploration plays that could transformthe Core NAV in the medium term, the largest of which is in Uganda. Short term, the Kingfisher well in Uganda could have a significant influence on the share price – possibly with as much downside potential as upside, ifthe results do not fully match expectations. Uganda aside, there price Tullow paid for Hardman could well be looking over-generous also.
Venture Production (VPC) – UK Gas price – FCAST: No Change, REC: HOLDWe are generally very positive on Venture Production in the longer term. As the company deliberately targets development and production rather than exploration as its investment thesis, less hope value can be attached to the stock. Our caution is based on a view that consensus forecasts for 2007 earnings are too high (even after taking into account the hedging programme disclosed by the company in its recent strategy presentation) and that there may be some significant downgrades to come. The shares may trade lower in the short term.
UK spot gas price is looking pretty sick so far in 2007. The daily price has averaged 27p year to date while the forward price for the remainder of 1Q07 is now 18.5p per therm. One year ago, the futures contract for 1Q 2007 gas was trading at 90p per therm and the last quoted price before expiry of the contract was over 40p, in November.So what is going on? Clearly the weather is the main driver. It is likely that gas suppliers, intending not to be caught short of gas as they were in 1Q06 (see the chart below) were more heavily covered than normal and have been absent from the market, depressing demand for spot gas. With this very poor start, and two quarters ahead in which prices are seasonally weaker, the volume-weighted average price realised by producers selling into the spot market (after allowing for seasonally lower 2Q and 3Q production) looks like it will be no better than26p per therm assuming the current futures prices for the forward quarters. This is a more adverse position than we had assumed mid-January, when we published 2007 forecasts based on a 30p weighted spot price.The key question is whether this is just the reverse of the spike we had one year ago. It probably is. There is a credible argument for a long-term linkage between oil prices and gas prices along the following lines: Gas markets are now far more closely tied together by pipeline connection than even five years ago. In the future, global trade in LNG (liquefied natural gas) will also have an increasing influence on the UK gas market. Thus as domestic UK gas supply dwindles, global markets will have increasing influence on the UK gas price.Historically, European gas contracts were indexed to fuel oil prices and Japanese LNG contracts linked to crude oil. Thus, provided there is no structural oversupply of gas, oil prices will tend to drag gas prices along withthem. Thus on the basis of our central assumption of a Brent oil price of $50 per barrel, we would consider 35p to be a reasonable trend level of the UK gas market. (This assumes a fuel oil price of 20% less than crude and anenergy equivalence based on 6,000 cubic feet to the barrel of oil, giving a gas price of $6.66/mcf which equates to 34p per therm). Clearly spot prices at any one time would be influenced by weather conditions and seasonality as well as any relevant operational issues that tend to arise from time to time, but we believe this assumption to be a reasonable basis for assessing the economics of UK gas production and is the centralassumption in our NAV models.In the short term, however, the spot price will undoubtedly influence the financial performance of a handful ofcompanies: Dana, Tullow and Venture being the main ones to consider, all having substantial exposure tocurrent UK gas production.
Dana Petroleum (DNX) – UK Gas price – FCAST: No Change, REC: SELLOur views on the Dana share price are more driven by long term valuation issues than short term earnings. Consensus valuations on several important UK assets (Johnstone, Cavendish, Melville, Barbara and Babbage in particular) seem to be very optimistic and we think our Core NAV of 604p per share is actually quitegenerous. Then one needs to ask whether the international exploration is actually worth the £350m implied by the current share price.
Tullow Oil (TLW) – UK Gas price – FCAST: No Change, REC: REDUCETullow has already modified its drilling programme in the UK in the light of the gas price development, choosing not to extend a rig contract for a second term. This shows financial discipline for which the UK independents are not historically known and which we applaud. In terms of valuation, there is quite a lot in the share price for exploration – our Core NAV estimate is just over 200p. There are 2 or 3 exploration plays that could transformthe Core NAV in the medium term, the largest of which is in Uganda. Short term, the Kingfisher well in Uganda could have a significant influence on the share price – possibly with as much downside potential as upside, ifthe results do not fully match expectations. Uganda aside, there price Tullow paid for Hardman could well be looking over-generous also.
Venture Production (VPC) – UK Gas price – FCAST: No Change, REC: HOLDWe are generally very positive on Venture Production in the longer term. As the company deliberately targets development and production rather than exploration as its investment thesis, less hope value can be attached to the stock. Our caution is based on a view that consensus forecasts for 2007 earnings are too high (even after taking into account the hedging programme disclosed by the company in its recent strategy presentation) and that there may be some significant downgrades to come. The shares may trade lower in the short term.
Settlement prices as per 16th FEB
ICE Brent APR-07 58.95
ICE Gas Oil MAR-07 512.00
ICE WTI APR-07 59.86
ICE UK Natural Gas MAR-07 18.14
ICE Gas Oil MAR-07 512.00
ICE WTI APR-07 59.86
ICE UK Natural Gas MAR-07 18.14
Gasport opens door to LNG
Gasport opens door to LNG
By UPSTREAM
The first delivery of liquefied natural gas to Excelerate Energy's new Teesside Gasport in north-east England began this morning, according to the port authority.
The delivery marks the opening of the UK's second LNG import terminal. The only other operational terminal in the country is at the Isle of Grain, near London.
The Teesside project is unique in Europe because the LNG is warmed up and turned into gas while still on board Excelerate's specially-designed tankers, before the gas is pumped directly into the gas network.
This avoids the need to build a terminal on land, which is time consuming, so Excelerate has been able to start operations less than a year after getting planning permission.
The Excelsior arrived from Scapa Flow in the Orkney Islands after collecting its cargo from another vessel, the Excalibur, and began discharging its LNG cargo this morning, PD Ports said.
Excelerate has said that the facility could deliver up to 11.3 million cubic metres of gas a day.
However, there is no guarantee that the company will deliver that much LNG to the terminal because it may be able to get much more money for its gas in other parts of the world, Reuters reported.
By UPSTREAM
The first delivery of liquefied natural gas to Excelerate Energy's new Teesside Gasport in north-east England began this morning, according to the port authority.
The delivery marks the opening of the UK's second LNG import terminal. The only other operational terminal in the country is at the Isle of Grain, near London.
The Teesside project is unique in Europe because the LNG is warmed up and turned into gas while still on board Excelerate's specially-designed tankers, before the gas is pumped directly into the gas network.
This avoids the need to build a terminal on land, which is time consuming, so Excelerate has been able to start operations less than a year after getting planning permission.
The Excelsior arrived from Scapa Flow in the Orkney Islands after collecting its cargo from another vessel, the Excalibur, and began discharging its LNG cargo this morning, PD Ports said.
Excelerate has said that the facility could deliver up to 11.3 million cubic metres of gas a day.
However, there is no guarantee that the company will deliver that much LNG to the terminal because it may be able to get much more money for its gas in other parts of the world, Reuters reported.
Copper news
Copper Prices Decline in New York as Global Surplus Builds
By Halia Pavliva and Millie Munshi
Feb. 16 (Bloomberg) -- Copper fell in New York, snapping a three-day rally, on signs production of the metal used in pipes and wires is outpacing consumption.
Output from mines and scrap yards exceeded demand by 108,000 metric tons in the 11 months ended November, compared with a shortfall a year earlier, the International Copper Study Group said today in a report. Prices have dropped 34 percent from a record $4.04 a pound in May, partly because a U.S. housing slump curtailed usage.
``Consumption is growing more slowly than before, and much more slowly than world output,'' John Kemp, an analyst at Sempra Metals Ltd., said in a report.
Copper futures for May delivery fell 2 cents, or 0.8 percent, to $2.659 a pound on the Comex division of the New York Mercantile Exchange. Prices still gained 5.6 percent this week, the most since late July.
``We've rallied all week, so it's expected people are going to take some money off the table today,'' said Darren Stoody, futures trading director at Omnisource Inc. in Fort Wayne, Indiana.
Stockpiles in warehouse monitored by exchanges in London, New York and Shanghai have gained 13 percent this year, reaching the highest in 32 months, while prices have dropped 7.4 percent.
Homebuilders in the U.S. started work last month on the smallest number of new houses since August 1997 as a glut of unsold home and colder weather discouraged new projects.
The report suggests ``a slowdown in construction activity over the next two to four months,'' Kemp of Sempra said.
Builders are the biggest consumers of copper. The average U.S. home has 400 pounds of the metal.
The three-day rally was been driven by signs that demand will pick up in China, the worlds' biggest consumer of the metal. Chinese imports of copper and related products jumped 44 percent in January from a year earlier, customs data showed Feb. 12,
Chinese demand for raw materials will grow by an average 8 percent a year for the next 15 to 20 years, Robin Bhar, a base- metals strategist at UBS AG, said yesterday.
``It's not the mature, developed world that will drive base metals,'' Bhar said. ``It's the developing world.''
On the London Metal Exchange, copper for delivery in three months fell $40, or 0.7 percent, to $5,810 a metric ton. Prices still have gained 21 percent in the past year.
A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.
By Halia Pavliva and Millie Munshi
Feb. 16 (Bloomberg) -- Copper fell in New York, snapping a three-day rally, on signs production of the metal used in pipes and wires is outpacing consumption.
Output from mines and scrap yards exceeded demand by 108,000 metric tons in the 11 months ended November, compared with a shortfall a year earlier, the International Copper Study Group said today in a report. Prices have dropped 34 percent from a record $4.04 a pound in May, partly because a U.S. housing slump curtailed usage.
``Consumption is growing more slowly than before, and much more slowly than world output,'' John Kemp, an analyst at Sempra Metals Ltd., said in a report.
Copper futures for May delivery fell 2 cents, or 0.8 percent, to $2.659 a pound on the Comex division of the New York Mercantile Exchange. Prices still gained 5.6 percent this week, the most since late July.
``We've rallied all week, so it's expected people are going to take some money off the table today,'' said Darren Stoody, futures trading director at Omnisource Inc. in Fort Wayne, Indiana.
Stockpiles in warehouse monitored by exchanges in London, New York and Shanghai have gained 13 percent this year, reaching the highest in 32 months, while prices have dropped 7.4 percent.
Homebuilders in the U.S. started work last month on the smallest number of new houses since August 1997 as a glut of unsold home and colder weather discouraged new projects.
The report suggests ``a slowdown in construction activity over the next two to four months,'' Kemp of Sempra said.
Builders are the biggest consumers of copper. The average U.S. home has 400 pounds of the metal.
The three-day rally was been driven by signs that demand will pick up in China, the worlds' biggest consumer of the metal. Chinese imports of copper and related products jumped 44 percent in January from a year earlier, customs data showed Feb. 12,
Chinese demand for raw materials will grow by an average 8 percent a year for the next 15 to 20 years, Robin Bhar, a base- metals strategist at UBS AG, said yesterday.
``It's not the mature, developed world that will drive base metals,'' Bhar said. ``It's the developing world.''
On the London Metal Exchange, copper for delivery in three months fell $40, or 0.7 percent, to $5,810 a metric ton. Prices still have gained 21 percent in the past year.
A futures contract is an obligation to buy or sell a commodity at a fixed price for delivery by a specific date.
Friday, February 16, 2007
Oil
Oil prices settle above $59 per barrelNEW YORK (AP) - Oil prices jumped more than $1 per barrel Friday, led by gains for heating fuels, in another volatile trading day for crude.Light, sweet crude for March delivery rose $1.40 to settle at $59.39 a barrel on the New York Mercantile Exchange after dipping as low as $57.59 earlier in the session.Helping to push up prices was a U.S. warning that Nigerian militants may be planning to expand their activities beyond the restive southern petroleum-producing regions.The Lagos-based consulate said possible targets could include expatriate personnel, Western businesses or facilities and locales visited by tourists and foreigners.Citigroup Futures Research energy analyst Tim Evans said traders were also taking a second look at natural-gas inventory numbers released Thursday, which helped boost heating fuel prices.Last week's withdrawal of 259 billion cubic feet from underground storage was short of some analysts' expectations, but it was the biggest since 1997, he said.Natural gas prices rose 21.1 cents to $7.503 per 1,000 cubic feet, and heating oil prices rose 4.63 cents to $1.6734 a gallon, helping to lead up crude prices.Brent crude rose $1.35 to $58.95 on London's ICE futures exchange.Phil Flynn of Alaron Trading Corp. said traders also may have been skeptical about forecasts for warmer weather for the U.S. Northeast, the world's largest heating oil market.The U.S. National Oceanic and Atmospheric Administration said it expects above-normal temperatures next week to end a spate of freezing weather in the U.S. Northeast, which accounts for 80 percent of the nation's heating oil demand.Oil price swings have become the norm recently, as 11 of the prior 16 sessions saw daily moves of more than $1, Cameron Hanover's Peter Beutel wrote in a research report. On Thursday, prices dropped more than $1 before settling down just a penny.Analysts said the upcoming three-day weekend, with the Nymex closed on President's Day, and the March oil contract's expiring on Tuesday may also have pushed up volatility.In other Nymex trading, gasoline futures rose 4.81 cents to $1.6453 per gallon.
LME REVIEW
LONDON (Dow Jones)--London Metal Exchange lead surged to a fresh record high Friday before coming under slight pressure along with the rest of the complex, but traders expect volatility Monday with the U.S. out on holiday.
"Many of the base metals came off Friday but not by very much," said one LME analyst in New York. "It's been a relatively quiet day."
U.S. traders squaring positions ahead of the long weekend have also added to price pressure, said another trader in London. Monday, the markets might see some volatility as traders try to move prices while the U.S. is out on holiday, the trader added. The U.S. marks President's Day Monday.
Three-month lead surged to a new record high of $1,805 a metric ton, driven by technical and systematic buying, a continual drawdown in LME inventories and ongoing supply concerns. The metal rose to a PM kerb of $1,785 a metric ton, up roughly 1% from Thursday.
LME lead stocks fell 900 tons to 33,300 tons Friday. Lead inventories have fallen over 20% since the start of 2007.
News earlier this week that Xstrata PLC declared force majeure at its Northfleet lead refinery in the U.K. following reduced supplies from its Mount Isa smelter in Australia, provided further upside momentum.
Northfleet produced around 161,350 tons of lead last year, using feedstock from Mount Isa.
In other metals, three-month aluminum fell nearly 1% to a PM kerb of $2,793/ton on news that Alcoa said a partial restart of production is in progress at the CBG bauxite operations in Guinea.
Bauxite is the raw ingredient to make alumina, which is in turn refined to make aluminum and Guinea is the world's largest exporter of bauxite.
However, Alcoa was unable to say whether bauxite shipments had resumed. Shipping companies told Dow Jones Newswires earlier that vessels to transport bauxite from Guinea remain outside the port and aren't expected to be able to return to next week at the earliest.
Nevertheless, aluminum prices didn't fall sharply on the news because the ongoing tightness in the nearby spreads is underpinning prices, said the New York analyst.
Earlier Friday, three-month tin surged to a record high of $13,300/ton before retreating to a PM kerb of $13,140/ton. Support was driven by ongoing supply problems in Indonesia and declining stocks.
Earlier Friday, an Indonesian trade official said state-owned tin producer PT Timah Tbk. can no longer legally export tin as it hasn't been reissued with an export license under new regulations.
Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located.
Indonesia's PT Koba Tin - a key industry player - said recently that it is still allowed to mine and smelt tin from Bangka-Belitung province while it is under police investigation. Industry sources say Koba, which produces around 24,000 tons of tin a year, is only shipping about 20% of its normal amount.
A decline in tin stocks by 20 tons to 10,225 tons Friday added to price support. Tin inventories have fallen by roughly 20% since the start of 2007.
Three-month nickel prices fell to a PM kerb of $38,900/ton, down over 1% from Thursday on trade selling. Adding to price pressure, nickel stocks rose by 162 metric tons to 4,152 tons Friday.
However, with canceled warrants - or material accounted for and to be drawn down at a later date - at 52% Friday, available stocks comprise less than half a day's worth of global nickel consumption. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Thursday PM kerb
Copper 5805.0-5810.0 Dn 35
Lead 1785.0-1790.0 Up 30
Zinc 3380.0-3385.0 Dn 45
Aluminum 2793.0-2795.0 Dn 21
Nickel 38900.0-39000.0 Dn 600
Tin 13140.0-13145.0 Up 65
Aluminum Alloy 2210.0-2230.0 N/A
Aluminum Alloy 2180.0-2200.0 Dn 20
"Many of the base metals came off Friday but not by very much," said one LME analyst in New York. "It's been a relatively quiet day."
U.S. traders squaring positions ahead of the long weekend have also added to price pressure, said another trader in London. Monday, the markets might see some volatility as traders try to move prices while the U.S. is out on holiday, the trader added. The U.S. marks President's Day Monday.
Three-month lead surged to a new record high of $1,805 a metric ton, driven by technical and systematic buying, a continual drawdown in LME inventories and ongoing supply concerns. The metal rose to a PM kerb of $1,785 a metric ton, up roughly 1% from Thursday.
LME lead stocks fell 900 tons to 33,300 tons Friday. Lead inventories have fallen over 20% since the start of 2007.
News earlier this week that Xstrata PLC declared force majeure at its Northfleet lead refinery in the U.K. following reduced supplies from its Mount Isa smelter in Australia, provided further upside momentum.
Northfleet produced around 161,350 tons of lead last year, using feedstock from Mount Isa.
In other metals, three-month aluminum fell nearly 1% to a PM kerb of $2,793/ton on news that Alcoa said a partial restart of production is in progress at the CBG bauxite operations in Guinea.
Bauxite is the raw ingredient to make alumina, which is in turn refined to make aluminum and Guinea is the world's largest exporter of bauxite.
However, Alcoa was unable to say whether bauxite shipments had resumed. Shipping companies told Dow Jones Newswires earlier that vessels to transport bauxite from Guinea remain outside the port and aren't expected to be able to return to next week at the earliest.
Nevertheless, aluminum prices didn't fall sharply on the news because the ongoing tightness in the nearby spreads is underpinning prices, said the New York analyst.
Earlier Friday, three-month tin surged to a record high of $13,300/ton before retreating to a PM kerb of $13,140/ton. Support was driven by ongoing supply problems in Indonesia and declining stocks.
Earlier Friday, an Indonesian trade official said state-owned tin producer PT Timah Tbk. can no longer legally export tin as it hasn't been reissued with an export license under new regulations.
Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located.
Indonesia's PT Koba Tin - a key industry player - said recently that it is still allowed to mine and smelt tin from Bangka-Belitung province while it is under police investigation. Industry sources say Koba, which produces around 24,000 tons of tin a year, is only shipping about 20% of its normal amount.
A decline in tin stocks by 20 tons to 10,225 tons Friday added to price support. Tin inventories have fallen by roughly 20% since the start of 2007.
Three-month nickel prices fell to a PM kerb of $38,900/ton, down over 1% from Thursday on trade selling. Adding to price pressure, nickel stocks rose by 162 metric tons to 4,152 tons Friday.
However, with canceled warrants - or material accounted for and to be drawn down at a later date - at 52% Friday, available stocks comprise less than half a day's worth of global nickel consumption. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Thursday PM kerb
Copper 5805.0-5810.0 Dn 35
Lead 1785.0-1790.0 Up 30
Zinc 3380.0-3385.0 Dn 45
Aluminum 2793.0-2795.0 Dn 21
Nickel 38900.0-39000.0 Dn 600
Tin 13140.0-13145.0 Up 65
Aluminum Alloy 2210.0-2230.0 N/A
Aluminum Alloy 2180.0-2200.0 Dn 20
Oil
Oil prices rise above $58 per barrel NEW YORK (AP) - Oil prices rose above $58 per barrel Friday led by gains in heating fuel prices, erasing earlier losses in another volatile trading day for crude.Light, sweet crude for March delivery rose 73 cents to $58.72 a barrel in morning trading on the New York Mercantile Exchange. The contract earlier dipped as low as $57.59.Such swings have become the norm recently, as 11 of the past 16 sessions have seen daily moves of more than $1, Cameron Hanover's Peter Beutel wrote in a research report. On Thursday, prices dropped more than $1 before settling down just a penny."If we had been looking for closure, for some type of conclusion yesterday, we did not get it," Beutel wrote. "Yesterday's final move was negligible, and does not help us solve the problem of where this may be headed next."Brent crude rose 71 cents to $58.31 on London's ICE futures exchange.Leading oil prices higher were increases for heating oil and natural gas. Heating oil prices rose 2.17 cents to $1.6488 a gallon, while natural gas added 20.6 cents to $7.498 per 1,000 cubic feet.Phil Flynn of Alaron Trading Corp. said some traders may be skeptical of forecasts for warmer weather for the U.S. Northeast, the world's largest heating oil market.The U.S. National Oceanic and Atmospheric Administration said it expects above-normal temperatures next week to end a spate of freezing weather in the U.S. Northeast, which accounts for 80 percent of the nation's heating oil demand. But the bitter cold of recent weeks hasn't resulted in as sharp a drawdown of heating oil stockpiles as market analysts expected.Traders were also digesting news from the Organization of Petroleum Exporting Countries that said crude output from its 10 quota-bound members fell 112,000 barrels a day in January to 26.759 million barrels a day.The decline was broadly in line with recent industry surveys and left the 10 members overshooting their production target by 459,000 barrels a day.OPEC oil exports in the four weeks ending March 3 are seen falling 160,000 barrels per day from a month ago, according to a report by U.K.-based tanker-tracking consultants Oil Movements.In other Nymex trading, gasoline futures rose 1.39 cents to $1.6111 per gallon.
COMEX COPPER
1403 GMT [Dow Jones] - Profit-taking after a recent run-up, plus a weak U.S. housing-starts report, have left Comex copper under pressure in early trading. "We've had a nice move in there," says Frank Lesh, broker and futures analyst with Future Path Trading. The March futures ran up from a low of $2.3855 on Feb. 8 to a high of $2.6900 Thursday. "It looks like people are taking some money out of the market," says Lesh. Meanwhile, January housing starts fell 14.3% to an annual rate of 1.408 million when 1.6 million had been forecast. "What does that say about demand for copper in the spring?" asks Lesh rhetorically. March copper is down 4.40 cents to $2.6200 and hit its $2.6170 low for the day about the time that housing starts and as-expected PPI were being released. (ALS)
Aluminum
1347 GMT [Dow Jones] London Metal Exchange aluminum is down on unconfirmed reports that production has resumed at the CBG operations in the Republic of Guinea, a broker says. Reports suggest bauxite mining and deliveries to Guinea's Kamsar port have resumed after the government lifted martial law in the area. Bauxite makes alumina which in turn produces aluminum. LME aluminum trades last at $2795 a metric ton, down 1% on the day.(ADH)
US HOUSING DATA
BULLET: [Jan US housing starts -14.3% to 1.408m rate, -2.8%..[Jan US housing starts -14.3% to 1.408m rate, permits -2.8% to 1.568m]. Starts lowest level since Aug 1997. Forecasters had expected 1.6m rate. Two prev. mos barely revised. 1-fam starts plunged 11.2%, to lowest lvlsince Aug '97, while multi-units -24.1%. West -28.5% (10-yr low lvl), MW -15.2% (low lvl since Jan 1991), South -11.8% had big drops. NE +8.9%.Total permits lvl was lower in Nov, Oct but Jan 1-fam permits lvl 1.121m lowest since Dec 1997. Jan. total permits -28.6% yoy. Jan. completions -1.2% to 1.880m. Jan. unadj number of homes permitted but not started +2.9% vs. Dec.
LME MIDDAY
LONDON (Dow Jones)--Traders expect further gains for London Metal Exchange tin Friday after the metal hit a record high earlier due to ongoing supply uncertainties in Indonesia.
Three-month tin reached an all-time high of $13,300 a metric ton at 1030 GMT, up roughly 1.5% from Thursday due to Indonesian problems, said brokers.
Earlier Friday, an Indonesian trade official said state-owned tin producer PT Timah Tbk. can no longer legally export tin, as it hasn't been reissued an export license under new regulations.
Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located.
Indonesia's PT Koba Tin - a key industry player - said recently that it is still allowed to mine and smelt tin from Bangka-Belitung province while it is under police investigation. Industry sources say Koba, which produces around 24,000 tons of tin a year, is only shipping about 20% of its normal amount.
At the same time, uncertainty over the fate of Bolivia's Vinto smelter since it was seized from Switzerland's Glencore International AG and renationalized provided underlying price support.
In addition, a decline in tin stocks by 20 tons to 10,225 tons Friday has provided a price boost. Inventories have fallen roughly 20% since the start of 2007.
In other metals, three-month nickel traded just off Thursday's record high of $39,501/ton due to trade selling, said a base metals trader. Adding to price pressure, nickel stocks rose by 162 tons to 4,152 tons Friday.
However, with canceled warrants - or material accounted for and to be drawn down at a later date - at 52% Friday, available stocks comprise less than half a day's worth of global nickel consumption.
Nickel eyes $40,000 a ton in the near-term, said the trader. At 1030 GMT, nickel traded at $39,200/ton, down 0.7% from Thursday.
Meanwhile, three-month copper consolidated after Thursday's run-up. At 1030 GMT, copper traded at $5,832/ton, down 0.3% from Thursday.
A sharp drawdown in lead stocks by 900 tons to 33,300 tons Friday bolstered lead prices up to a two-month high. Lead inventories have fallen over 20% from the start of 2007. At 1030 GMT, lead traded at $1,760/ton, up 0.3% from Thursday.
At 1030 GMT, three-month aluminum traded at $2,809/ton, down roughly 0.2% from Thursday while three-month zinc traded at $3,405/ton, down 0.7% from Thursday.
Three-month tin reached an all-time high of $13,300 a metric ton at 1030 GMT, up roughly 1.5% from Thursday due to Indonesian problems, said brokers.
Earlier Friday, an Indonesian trade official said state-owned tin producer PT Timah Tbk. can no longer legally export tin, as it hasn't been reissued an export license under new regulations.
Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located.
Indonesia's PT Koba Tin - a key industry player - said recently that it is still allowed to mine and smelt tin from Bangka-Belitung province while it is under police investigation. Industry sources say Koba, which produces around 24,000 tons of tin a year, is only shipping about 20% of its normal amount.
At the same time, uncertainty over the fate of Bolivia's Vinto smelter since it was seized from Switzerland's Glencore International AG and renationalized provided underlying price support.
In addition, a decline in tin stocks by 20 tons to 10,225 tons Friday has provided a price boost. Inventories have fallen roughly 20% since the start of 2007.
In other metals, three-month nickel traded just off Thursday's record high of $39,501/ton due to trade selling, said a base metals trader. Adding to price pressure, nickel stocks rose by 162 tons to 4,152 tons Friday.
However, with canceled warrants - or material accounted for and to be drawn down at a later date - at 52% Friday, available stocks comprise less than half a day's worth of global nickel consumption.
Nickel eyes $40,000 a ton in the near-term, said the trader. At 1030 GMT, nickel traded at $39,200/ton, down 0.7% from Thursday.
Meanwhile, three-month copper consolidated after Thursday's run-up. At 1030 GMT, copper traded at $5,832/ton, down 0.3% from Thursday.
A sharp drawdown in lead stocks by 900 tons to 33,300 tons Friday bolstered lead prices up to a two-month high. Lead inventories have fallen over 20% from the start of 2007. At 1030 GMT, lead traded at $1,760/ton, up 0.3% from Thursday.
At 1030 GMT, three-month aluminum traded at $2,809/ton, down roughly 0.2% from Thursday while three-month zinc traded at $3,405/ton, down 0.7% from Thursday.
LME MIDDAY
LONDON (Dow Jones)--Traders expect further gains for London Metal Exchange tin Friday after the metal hit a record high earlier due to ongoing supply uncertainties in Indonesia.
Three-month tin reached an all-time high of $13,300 a metric ton at 1030 GMT, up roughly 1.5% from Thursday due to Indonesian problems, said brokers.
Earlier Friday, an Indonesian trade official said state-owned tin producer PT Timah Tbk. can no longer legally export tin, as it hasn't been reissued an export license under new regulations.
Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located.
Indonesia's PT Koba Tin - a key industry player - said recently that it is still allowed to mine and smelt tin from Bangka-Belitung province while it is under police investigation. Industry sources say Koba, which produces around 24,000 tons of tin a year, is only shipping about 20% of its normal amount.
At the same time, uncertainty over the fate of Bolivia's Vinto smelter since it was seized from Switzerland's Glencore International AG and renationalized provided underlying price support.
In addition, a decline in tin stocks by 20 tons to 10,225 tons Friday has provided a price boost. Inventories have fallen roughly 20% since the start of 2007.
In other metals, three-month nickel traded just off Thursday's record high of $39,501/ton due to trade selling, said a base metals trader. Adding to price pressure, nickel stocks rose by 162 tons to 4,152 tons Friday.
However, with canceled warrants - or material accounted for and to be drawn down at a later date - at 52% Friday, available stocks comprise less than half a day's worth of global nickel consumption.
Nickel eyes $40,000 a ton in the near-term, said the trader. At 1030 GMT, nickel traded at $39,200/ton, down 0.7% from Thursday.
Meanwhile, three-month copper consolidated after Thursday's run-up. At 1030 GMT, copper traded at $5,832/ton, down 0.3% from Thursday.
A sharp drawdown in lead stocks by 900 tons to 33,300 tons Friday bolstered lead prices up to a two-month high. Lead inventories have fallen over 20% from the start of 2007. At 1030 GMT, lead traded at $1,760/ton, up 0.3% from Thursday.
At 1030 GMT, three-month aluminum traded at $2,809/ton, down roughly 0.2% from Thursday while three-month zinc traded at $3,405/ton, down 0.7% from Thursday.
Three-month tin reached an all-time high of $13,300 a metric ton at 1030 GMT, up roughly 1.5% from Thursday due to Indonesian problems, said brokers.
Earlier Friday, an Indonesian trade official said state-owned tin producer PT Timah Tbk. can no longer legally export tin, as it hasn't been reissued an export license under new regulations.
Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located.
Indonesia's PT Koba Tin - a key industry player - said recently that it is still allowed to mine and smelt tin from Bangka-Belitung province while it is under police investigation. Industry sources say Koba, which produces around 24,000 tons of tin a year, is only shipping about 20% of its normal amount.
At the same time, uncertainty over the fate of Bolivia's Vinto smelter since it was seized from Switzerland's Glencore International AG and renationalized provided underlying price support.
In addition, a decline in tin stocks by 20 tons to 10,225 tons Friday has provided a price boost. Inventories have fallen roughly 20% since the start of 2007.
In other metals, three-month nickel traded just off Thursday's record high of $39,501/ton due to trade selling, said a base metals trader. Adding to price pressure, nickel stocks rose by 162 tons to 4,152 tons Friday.
However, with canceled warrants - or material accounted for and to be drawn down at a later date - at 52% Friday, available stocks comprise less than half a day's worth of global nickel consumption.
Nickel eyes $40,000 a ton in the near-term, said the trader. At 1030 GMT, nickel traded at $39,200/ton, down 0.7% from Thursday.
Meanwhile, three-month copper consolidated after Thursday's run-up. At 1030 GMT, copper traded at $5,832/ton, down 0.3% from Thursday.
A sharp drawdown in lead stocks by 900 tons to 33,300 tons Friday bolstered lead prices up to a two-month high. Lead inventories have fallen over 20% from the start of 2007. At 1030 GMT, lead traded at $1,760/ton, up 0.3% from Thursday.
At 1030 GMT, three-month aluminum traded at $2,809/ton, down roughly 0.2% from Thursday while three-month zinc traded at $3,405/ton, down 0.7% from Thursday.
LME INVENTORY REPORT
Copper down 1,500 tonnes at 213,800 tonnesLead down 900 tonnes at 33,300 tonnesNickel up 162 tonnes at 4,152 tonnes Aluminium down 950 tonnes at 761,825 tonnesTin down 20 tonnes at 10,225 tonnesZinc up 50 tonnes at 97,025 tonnes
China CB decision weighs down miners
China central bank hikes bank reserve requirementBEIJING (XFN-ASIA) - The People's Bank of China said it has hiked bank reserve requirements, to take effect on Feb 25.The central bank said reserve requirements have been raised by 50 basis points, which would bring the reserves most banks would have to maintain up to 10 pct.
ZINC
0843 GMT [Dow Jones] Zinc's recent move through the psychologically important $3400 a metric ton level is attracting fresh money to the London Metal Exchange market and will likely trigger further gains, a broker notes. Short covering and technical buying adds to the momentum, with prices holding either side of $3400/ton in early trade. LME zinc trades last at $3395/ton, up from $3380/ton overnight and a gain of 10% on the week. (ADH)
Shanghai copper
SHANGHAI (Dow Jones)--Copper futures traded on the Shanghai Futures Exchange settled up Friday for the third consecutive session, as investors expect more gains in three-month London Metal Exchange copper in the coming week.
The benchmark April 2007 contract gained CNY640 to settle at CNY55,500 a metric ton, after trading between CNY55,210/ton and CNY55,960/ton.
Turnover for all Shanghai copper futures fell to 50,888 lots from 92,222 lots Thursday. One lot equals five tons.
"Charts indicate three-month LME copper will likely test higher (levels) in the coming week, when markets are closed here," said Gu Yuan, an analyst at Jinpeng Futures Co.
"Psychological resistance at $6,000 still looks strong," but positive sentiment point to room for further gains, Gu said.
Shanghai's benchmark April contract rose 8.7% this week, while three-month LME copper gained 4.7% this week by Thursday's PM kerb.
Three-month LME copper rose $120 to end the late kerb Thursday at $5,840/ton. It was quoted higher at $5,865/ton around 0700 GMT, when the Shanghai market closed.
At the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, copper was quoted at CNY56,000-CNY56,200/ton, almost unchanged from Thursday.
Meanwhile, copper stocks at exchange-monitored warehouses rose 4,355 tons from a week ago to 31,007 tons as of Friday, the exchange said after the session closed.
Analysts said market participants had expected the rise due to slower buying ahead of the holiday, which weighed on near-month contracts Thursday and Friday.
Markets in China will be closed next week for the Lunar New Year holiday.
Shanghai's aluminum futures settled higher.
The benchmark May 2007 contract settled CN100 higher at CNY19,800/ton.
China's futures markets are off-limits to foreign investors.
Friday's closing prices in yuan a metric ton versus LME late kerb prices from Thursday in dollars a metric ton:
Copper Change Aluminum Change
Shanghai Apr 55,500 Up 640 May 19,800 Up 100
LME 3Mo $5,840 Up$120 3Mo $2,814 Dn $14
The benchmark April 2007 contract gained CNY640 to settle at CNY55,500 a metric ton, after trading between CNY55,210/ton and CNY55,960/ton.
Turnover for all Shanghai copper futures fell to 50,888 lots from 92,222 lots Thursday. One lot equals five tons.
"Charts indicate three-month LME copper will likely test higher (levels) in the coming week, when markets are closed here," said Gu Yuan, an analyst at Jinpeng Futures Co.
"Psychological resistance at $6,000 still looks strong," but positive sentiment point to room for further gains, Gu said.
Shanghai's benchmark April contract rose 8.7% this week, while three-month LME copper gained 4.7% this week by Thursday's PM kerb.
Three-month LME copper rose $120 to end the late kerb Thursday at $5,840/ton. It was quoted higher at $5,865/ton around 0700 GMT, when the Shanghai market closed.
At the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, copper was quoted at CNY56,000-CNY56,200/ton, almost unchanged from Thursday.
Meanwhile, copper stocks at exchange-monitored warehouses rose 4,355 tons from a week ago to 31,007 tons as of Friday, the exchange said after the session closed.
Analysts said market participants had expected the rise due to slower buying ahead of the holiday, which weighed on near-month contracts Thursday and Friday.
Markets in China will be closed next week for the Lunar New Year holiday.
Shanghai's aluminum futures settled higher.
The benchmark May 2007 contract settled CN100 higher at CNY19,800/ton.
China's futures markets are off-limits to foreign investors.
Friday's closing prices in yuan a metric ton versus LME late kerb prices from Thursday in dollars a metric ton:
Copper Change Aluminum Change
Shanghai Apr 55,500 Up 640 May 19,800 Up 100
LME 3Mo $5,840 Up$120 3Mo $2,814 Dn $14
Thursday, February 15, 2007
Oil
Oil prices finish little changedNEW YORK (AP) - Oil prices finished little changed Thursday, paring an earlier drop of more than $1 a barrel prompted by expectations for warmer weather in the U.S. Northeast, a major consumer of heating oil.Light, sweet crude for March delivery lost a penny to settle at $57.99 a barrel on the New York Mercantile Exchange.Brent crude at London's ICE Futures exchange rose 17 cents to close at $57.60 a barrel.With little breaking news to spark action in either direction Thursday, analysts said the market weighed a a forecast for warmer weather and continued to mull over inventory data from a day earlier.The U.S. National Oceanic and Atmospheric Administration said it expects above-normal temperatures next week to end a spate of freezing weather in the Northeast, which accounts for 80 percent of the nation's heating oil demand. But the bitter cold of recent weeks hasn't resulted in as sharp a drawdown of heating oil stockpiles as market analysts expected.Oil prices tumbled more than $1 on Wednesday after the Energy Information Administration reported that distillate fuel stocks -- which include diesel fuel and heating oil -- fell by 3 million barrels last week. Analysts had expected a bigger pull of 4.3 million barrels, according to a survey by Dow Jones Newswires."With less than six weeks left to go until spring begins, the winter window is rapidly closing in on the bulls," which could pressure crude prices closer to $50 than $60 a barrel, said Man Financial analyst Edward Meir, in a report.Except for a bounce higher on Tuesday, oil prices have been on the decline all week.The day's earlier drop as low as $56.65 a barrel was due in part to some liquidation of the March crude oil contract ahead of Tuesday's upcoming expiration, said Tim Evans, an energy analyst with Citigroup Futures Research.Otherwise, it was a "pretty dull" trading day, he said.The market stemmed its earlier losses on an indicator of increased demand, as the Organization of Petroleum Exporting Countries revised up its estimate how much supply from OPEC will be needed this year by 150,000 barrels per day to 30.25 million barrels per day, according to a Dow Jones Newswires report Thursday.OPEC oil exports in the four weeks ending March 3 are seen falling 160,000 barrels per day from a month ago, according to a report by tanker-tracking consultants Oil Movements.The report got a mixed reaction from traders, Evans said. The bears maintained that it still indicates poor compliance with OPEC's promised production cuts, agreed upon last fall.Evans took the bullish stance: "It's still more barrels being taken out of the market," he said. "At some point OPEC production will decline to the point where it does pinch."Elsewhere, an EIA report on natural gas inventories for the week ended Feb. 9 showed a withdrawal of 259 billion cubic feet from underground storage -- a substantial drawdown but one that leaves stocks still well above the five-year average for this time of year.Nymex natural gas prices rose 5.1 cents to $7.292 per 1,000 cubic feet, while heating oil futures fell about a penny to $1.6271 a gallon. Gasoline futures dipped 1.9 cents to settle at $1.5972 a gallon.
Oil
BULLET: OIL: NYMEX March light sweet crude oil futures at....OIL: NYMEX March light sweet crude oil futures closed at $57.99 per barrel, down from Wednesday's settlement at $58.00 and Tuesday's settlement at $59.06. The March contract will terminate February 20 (next Tues) and then April will become the front month.
LME REVIEW
LONDON (Dow Jones)-- London Metal Exchange tin and nickel surged to fresh record highs Thursday driven by supply concerns and low inventories, with traders growing wary of possible profit-taking at such high levels.
Roughly 20 minutes ahead of the London afternoon kerb, three-month nickel rose more than 2.5% to a record high of $39,350 a metric ton due to options-related short-covering, said a broker. The metal jumped over 4% to a PM kerb of $39,500/ton from Wednesday.
The sudden jump built upon earlier strength triggered by a large cancelation in warrants. Canceled warrants - or material accounted for and to be drawn down at a later date - maintained the recent large figure at 52% Thursday following Wednesday's 54%, and leaving less than one day's worth of world nickel consumption.
Meanwhile, three-month tin jumped to a record high of $13,200 a ton Thursday before retreating to a PM kerb of $13,075/ton. Supply uncertainties over key producers Indonesia and Bolivia continues to provide underlying price support.
Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located.
Indonesia's PT Koba Tin - a key industry player - declared force majeure on its tin shipments Monday, after police arrested three senior officials Saturday and sealed the company's warehouses and an accounting section in Bangka-Belitung province. However, the company said it is still allowed to mine and smelt tin from Bangka-Belitung while it is under police investigation.
At the same time, uncertainty over the fate of Bolivia's Vinto smelter since it was seized from Switzerland's Glencore International AG and renationalized added to upside price momentum.
In other metals, three-month copper pushed sharply higher due to technical-related buying and short covering mainly from Chinese buyers, said a broker in London. Stronger buying interest from China and expectations of more to come have also added to bullish market sentiment, the broker said.
Copper jumped roughly 2% to a PM kerb of $5,840/ton from Wednesday.
As an exception, three-month aluminum fell roughly 0.8% to a PM kerb of $2,814/ton.
"Market participants continued in their attempt to push prices through the $2,850/ton key level but strong technical selling kept prices from moving above that level," said one aluminum trader in New York. If $2,850/ton is broken, prices will push up to $3,000/ton in a hurry, he said, adding, however, that the next level of support is near $2,740/ton.
Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Wednesday PM kerb
Copper 5840.0-5850.0 Up 120
Lead 1755.0-1760.0 Up 55
Zinc 3425.0-3430.0 Up 115
Aluminum 2814.0-2815.0 Dn 14
Nickel 39500.0-39600.0 Up 2025
Tin 13075.0-13100.0 Up 380
Aluminum Alloy N/A - N/A N/A
Aluminum Alloy 2200.0-2201.0 Unch
Roughly 20 minutes ahead of the London afternoon kerb, three-month nickel rose more than 2.5% to a record high of $39,350 a metric ton due to options-related short-covering, said a broker. The metal jumped over 4% to a PM kerb of $39,500/ton from Wednesday.
The sudden jump built upon earlier strength triggered by a large cancelation in warrants. Canceled warrants - or material accounted for and to be drawn down at a later date - maintained the recent large figure at 52% Thursday following Wednesday's 54%, and leaving less than one day's worth of world nickel consumption.
Meanwhile, three-month tin jumped to a record high of $13,200 a ton Thursday before retreating to a PM kerb of $13,075/ton. Supply uncertainties over key producers Indonesia and Bolivia continues to provide underlying price support.
Indonesia recently shut down its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located.
Indonesia's PT Koba Tin - a key industry player - declared force majeure on its tin shipments Monday, after police arrested three senior officials Saturday and sealed the company's warehouses and an accounting section in Bangka-Belitung province. However, the company said it is still allowed to mine and smelt tin from Bangka-Belitung while it is under police investigation.
At the same time, uncertainty over the fate of Bolivia's Vinto smelter since it was seized from Switzerland's Glencore International AG and renationalized added to upside price momentum.
In other metals, three-month copper pushed sharply higher due to technical-related buying and short covering mainly from Chinese buyers, said a broker in London. Stronger buying interest from China and expectations of more to come have also added to bullish market sentiment, the broker said.
Copper jumped roughly 2% to a PM kerb of $5,840/ton from Wednesday.
As an exception, three-month aluminum fell roughly 0.8% to a PM kerb of $2,814/ton.
"Market participants continued in their attempt to push prices through the $2,850/ton key level but strong technical selling kept prices from moving above that level," said one aluminum trader in New York. If $2,850/ton is broken, prices will push up to $3,000/ton in a hurry, he said, adding, however, that the next level of support is near $2,740/ton.
Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Wednesday PM kerb
Copper 5840.0-5850.0 Up 120
Lead 1755.0-1760.0 Up 55
Zinc 3425.0-3430.0 Up 115
Aluminum 2814.0-2815.0 Dn 14
Nickel 39500.0-39600.0 Up 2025
Tin 13075.0-13100.0 Up 380
Aluminum Alloy N/A - N/A N/A
Aluminum Alloy 2200.0-2201.0 Unch
NAT GAS REPORT
BULLET: Energy: US EIA nat gas data for Feb 9: "Working gas..Energy: US EIA nat gas data for Feb 9: "Working gas in storage was 2,088 Bcf as of Friday, February 9, 2007, according to EIA estimates. This represents a net decline of 259 Bcf from the previous week. Stocks were 193 Bcf less than last year at this time and 268 Bcf above the 5-year average of 1,820 Bcf. In the East Region, stocks were 151 Bcf above the 5-year average following net withdrawals of 179 Bcf. Stocks in the Producing Region were 109 Bcf above the 5-year average of 567 Bcf after a net withdrawal of 68 Bcf. Stocks in the West Region were 8 Bcf above the 5-year average after a net drawdown of 12 Bcf. At 2,088 Bcf, total working gas is within the 5-year historical range.
Copper surging
DJ Comex Copper Surges On Chinese Interest, Chart-Based Factors
By Allen Sykora
Of DOW JONES NEWSWIRES
A combination of fundamental and technical influences has pushed copper futures sharply higher in early trading Thursday.
At 9:03 a.m. EST, March copper was up 10 cents to $2.6770 a pound on the Comex division of the New York Mercantile Exchange. It has peaked at $2.69, its strongest level since the $2.70 high of Jan. 11 that some analysts have cited as the next chart resistance.
"The market has been turning around technically as well as fundamentally," said a trader. "We're stopping people out. Some of it is short covering.
"Some of it is the fact that the Chinese are back in. There has been tremendous Chinese buying, apparently, in the scrap and probably the refined as well. This market seems to have found a bottom and has turned higher."
Man Financial analyst Edward Meir, in his daily research report, also pointed to improving Chinese demand. In particular, he cited data showing that China's January imports of refined copper and copper alloy were up 70% from the same month a year ago.
"Commodities are also benefiting from a positive macro environment, as evidenced by Fed Chairman Ben Bernanke's testimony (on the economy) to Congress yesterday," added Meir.
Yet another factor supporting the metal, London-based analysts have said, was short covering in the Chinese market overnight ahead of weeklong Chinese New Year celebrations next week.
By Allen Sykora
Of DOW JONES NEWSWIRES
A combination of fundamental and technical influences has pushed copper futures sharply higher in early trading Thursday.
At 9:03 a.m. EST, March copper was up 10 cents to $2.6770 a pound on the Comex division of the New York Mercantile Exchange. It has peaked at $2.69, its strongest level since the $2.70 high of Jan. 11 that some analysts have cited as the next chart resistance.
"The market has been turning around technically as well as fundamentally," said a trader. "We're stopping people out. Some of it is short covering.
"Some of it is the fact that the Chinese are back in. There has been tremendous Chinese buying, apparently, in the scrap and probably the refined as well. This market seems to have found a bottom and has turned higher."
Man Financial analyst Edward Meir, in his daily research report, also pointed to improving Chinese demand. In particular, he cited data showing that China's January imports of refined copper and copper alloy were up 70% from the same month a year ago.
"Commodities are also benefiting from a positive macro environment, as evidenced by Fed Chairman Ben Bernanke's testimony (on the economy) to Congress yesterday," added Meir.
Yet another factor supporting the metal, London-based analysts have said, was short covering in the Chinese market overnight ahead of weeklong Chinese New Year celebrations next week.
LME COPPER
DJ MARKET TALK: LME Copper Up As Chinese Buyers Cover Shorts
1337 GMT [Dow Jones] Short covering driven by mainly Chinese buyers pushes LME copper higher with the $6,000/ton level looking in sight for the first time since the start of the year, a broker notes. US dollar weakeness is also adding to the gains, he notes. LME copper trades last at $5,920/ton, up 3% on the day. (ADH)
1337 GMT [Dow Jones] Short covering driven by mainly Chinese buyers pushes LME copper higher with the $6,000/ton level looking in sight for the first time since the start of the year, a broker notes. US dollar weakeness is also adding to the gains, he notes. LME copper trades last at $5,920/ton, up 3% on the day. (ADH)
COMEX COPPER
NEW YORK (Dow Jones)--High-grade copper futures in New York are called to open 540 points higher Thursday, traders said, following a higher London copper market.
In London overnight, three-month copper traded to a high of $5,847 a metric ton. It is currently up $105 at $5,830.00.
In other markets, the dollar is trading lower while the euro is a touch higher. The Nybot U.S. dollar index is trading at 84.16 from a previous close of 84.20. The euro is at $1.3135 from a Wednesday close of $1.3129.
On the economic front, data on import prices, NY Fed Manufacturing Index and jobless claims will be released at 8:30 a.m. EST (1330 GMT). Treasury capital flows will be out at 9 a.m. EST (1400 GMT)followed by capacity utilization and industrial production at 9:15 a.m. EST (1415 GMT).
At 10 a.m. EST (1500 GMT) will be the release of the DJ-BTMU business barometer and Fed Chairman Ben Bernanke's testimony before the House Financial Services Committee on the U.S. economic outlook.
The U.S. Energy Department will release data on natural gas stocks at 10:30 a.m. EST (1530 GMT) then the Philadelphia Fed Business Index will be out at 12 p.m. EST (1700 GMT). The NAHB Housing Index will be released at 1 p.m. EST (1800 GMT).
In New York on Wednesday, Comex copper futures settled lower after the metal hit a two-week high then eased amid a lack of direction and upside momentum.
At settlement, most-active March copper is down 75 points at $2.5770 per pound. At the open, the contract dipped amid an increase in London Metal Exchange copper stocks but later hit its highest level since Jan. 29 at $2.62.
Inventories of copper in London Metal Exchange warehouses rose 450 metric tons to 215,350, authorities reported early Thursday. The most recent Comex stocks data, released late Wednesday afternoon, were down 22 short tons at 35,881.
In London overnight, three-month copper traded to a high of $5,847 a metric ton. It is currently up $105 at $5,830.00.
In other markets, the dollar is trading lower while the euro is a touch higher. The Nybot U.S. dollar index is trading at 84.16 from a previous close of 84.20. The euro is at $1.3135 from a Wednesday close of $1.3129.
On the economic front, data on import prices, NY Fed Manufacturing Index and jobless claims will be released at 8:30 a.m. EST (1330 GMT). Treasury capital flows will be out at 9 a.m. EST (1400 GMT)followed by capacity utilization and industrial production at 9:15 a.m. EST (1415 GMT).
At 10 a.m. EST (1500 GMT) will be the release of the DJ-BTMU business barometer and Fed Chairman Ben Bernanke's testimony before the House Financial Services Committee on the U.S. economic outlook.
The U.S. Energy Department will release data on natural gas stocks at 10:30 a.m. EST (1530 GMT) then the Philadelphia Fed Business Index will be out at 12 p.m. EST (1700 GMT). The NAHB Housing Index will be released at 1 p.m. EST (1800 GMT).
In New York on Wednesday, Comex copper futures settled lower after the metal hit a two-week high then eased amid a lack of direction and upside momentum.
At settlement, most-active March copper is down 75 points at $2.5770 per pound. At the open, the contract dipped amid an increase in London Metal Exchange copper stocks but later hit its highest level since Jan. 29 at $2.62.
Inventories of copper in London Metal Exchange warehouses rose 450 metric tons to 215,350, authorities reported early Thursday. The most recent Comex stocks data, released late Wednesday afternoon, were down 22 short tons at 35,881.
GOLD
NEW YORK (AP) - Demand for gold jewelry dropped sharply in 2006 in a roller coaster market that saw record price spikes, but investor appetite for gold remained robust, according to a report by the World Gold Council released Thursday.Gold jewelry demand slackened 16 percent worldwide to about 2,499 tons last year. Despite lower volume, the dollar value of all gold purchased in 2006 climbed 14 percent to $44 billion, as buyers of gold jewelry paid considerably more due to peak market prices.The price of gold settled at a 25-year high near $720 in May.George Milling-Stanley, a spokesman for the World Gold Council, called last year's market volatility "exceptional in historical terms." The price of gold has climbed $100 a year for five years, he said. But in 2006, the move from $600 to $725 took just 18 consecutive trading days."It's the volatility in the price that cuts demand off," he said.Investors weren't so easily swayed by gold's pendular price swings.Investment demand rose 7 percent last year to roughly 702 tons, according to the report, and jumped 45 percent in dollar terms to $12.36 billion. The flow of money into exchange-traded funds -- those that track a commodity or a basket of commodities -- surged 73 percent in dollar terms.All told, gold demand totaled $65.26 billion in 2006, up 22 percent from the prior year.This year, the World Gold Council said it has seen jewelry demand rebound in January, while investor interest remained positive. Milling-Stanley said even if gold continues to trade near $650 an ounce, jewelry demand could continue to rise -- as long as the market moves calmly higher."What we've seen in the last four months has been incremental rises in the price," he said. "That gives jewelry consumers time to adjust to a higher price."But if the market returns to last year's level of volatility, he said, jewelry demand could again be choked by the uncertainty.
Copper
Copper is up over 2% @ $5830. Speculators have really bought into this story of Chinese demand pick up pencilled in for the Chinese new year! The momentum being triggered by reports of a 44% increase in Jan year on year demand for copper.
OPEC
LONDON (AFX) - OPEC kept its oil demand growth forecast broadly unchanged for this year, but warned if warmer weather returns over the coming weeks, it might have to reduce its forecast going forward.OPEC said while it sees 2007 oil demand growth at 1.2 mln bpd or 1.5 pct - broadly unchanged from its prior 1.25 mln bpd forecast - it has revised down its first-quarter demand growth forecast for OECD countries by 0.1 mln bpd.It added should warm weather return to the northern hemisphere over the next couple of weeks, it may have to reduce its forecast for world oil demand growth by a further 0.2 mln bpd."Consequently, the revised figure for total world oil demand growth may only reach 1 mln bpd," said OPEC. It added this would be the case despite healthy growth in China and improved growth in the Middle East.The cartel also kept its 2006 demand growth estimate unchanged at 0.8 mln bpd or 1 pct. However, it revised down its estimate for non-OPEC supply last year by 78,000 bpd to 49.5 mln bpd.For 2007, the cartel sees non-OPEC supply averaging 50.7 mln bpd, an increase of 1.2 mln bpd over the previous year but a downward revision of 173,000 bpd from the prior forecast.
OIL
LONDON (AFX) - Oil edged up as the market recovered from a steep fall yesterday that was driven by a much smaller-than-expected decline in US heating fuel stocks.At 10.35 am, front-month Brent North Sea crude contracts for April delivery were up 50 cents at 57.93 usd a barrel. Yesterday, oil settled down 1.35 usd at 57.43 usd.Meanwhile, front-month New York light sweet crude contracts for March delivery rose 27 cents to 58.84 usd a barrel, after closing down 1.06 usd at 58.00 usd yesterday.Veronica Smart, analyst at the UK-based Energy Information Centre, said market participants might be thinking yesterday's falls were slightly overdone."Stock draws in the US which normally means prices go up," she noted, but added yesterday's declines were not as significant as people had expected.US government data released yesterday showed distillate stocks, which include heating oil, fell by 3 mln barrels last week, well short of the 4.9 mln barrel drop predicted.The data also showed a drop in crude and gasoline stocks, which went against market expectations for a rise. The drops helped temper the declines in oil prices.However, the market was hinged on the distillates number, as some players had been hoping the recent freezing temperatures in the US Northeast would have taken their toll on stock levels."With less than six weeks left to go until spring begins, the winter window is rapidly closing in on the bulls," noted Man Financial analyst Ed Meir.He added that "with OPEC acting non-committal at this stage on the issue of further cuts, we may start to see crude values come off from here to test the lower end of the 50-60 usd range they seem to be in".Saudi Arabia's oil minister, Ali al-Naimi, said Monday the cartel might keep its output levels unchanged at its mid-March meeting if current market conditions remain as they are.His comments sent oil prices sharply lower, although they recovered a day later after the International Energy Agency upped its forecast for oil demand this year, citing an expected increase in demand from China.Smart said the IEA forecast was significant, especially as it was the first time the global energy watchdog had raised its 2007 forecast.She added market participants will now be looking to the OPEC report, scheduled for release around midday today, to see if the cartel's forecasts line up with those of the IEA.
LME MIDDAY
LONDON (Dow Jones)--London Metal Exchange tin hits a new record high Thursday morning amidst a general bullish tone across all base metals, with further upside expected when the U.S. enters the market, said traders.
Tin prices jumped to $13,000 a metric ton on consumer buying and a lack of selling amid very illiquid conditions, according to an LME trader. At 1130 GMT, three-month tin traded at $12,900/ton.
Uncertainty over key producers Indonesia and Bolivia continues to provide underlying price support.
Indonesia recently shutdown its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located.
Indonesia's PT Koba Tin - a key industry player - declared force majeure on its tin shipments Monday, after police arrested three senior officials Saturday and sealed the company's warehouses and an accounting section in Bangka-Belitung province.
The company said it is still allowed to mine and smelt tin from Bangka-Belitung while it is under police investigation.
Meanwhile, uncertainty over the fate of Bolivia's Vinto smelter since it was seized from Switzerland's Glencore International AG and renationalized adds to upside price momentum, an LME broker noted.
Glencore recently demanded compensation from Bolivia's government for nationalizing its tin smelter as part of President Evo Morales' declared ambition to gain greater control of the country's mineral wealth and refineries.
Since the start of the year, the smaller liquidity metal has climbed roughly 33% while stocks have decreased roughly 20%.
In other metals, three-month nickel surged to $38,400/ton at 1130 GMT, up over 2% from Wednesday triggered by a large cancelation in warrants.
Canceled warrants - or material accounted for and to be drawn down at a later date - maintained its recently large figure at 52% Thursday following Wednesday's 54%, leaving less than one day's worth of world nickel consumption.
Meanwhile, three-month aluminum rose roughly 1% to $2,852/ton at 1130 GMT amid steady technical buying as political uncertainty in Guinea continued. Guinea is a leading producer of bauxite, an essential component in producing aluminum.
Guinean President Lansana Conte has imposed martial law until Feb. 23 after days of violent protests. The demonstrations were triggered over the weekend following Conte's appointment of a close ally from his Cabinet as prime minister, a move the opposition said sidestepped a power-sharing agreement.
However, an increase in aluminum stocks by 3,725 tons to 762,775 tons Thursday capped the upside momentum. Aluminum inventories have climbed roughly 10% since the start of 2007.
Three-month copper traded at $5,840/ton at 1130 GMT, up 2% from Wednesday following momentum seen in overnight trading.
"In Asian trading on Thursday copper posted a decent bounce as traders covered short positions ahead of Chinese New Year although volumes were not really impressive," said John Reade of UBS.
Tin prices jumped to $13,000 a metric ton on consumer buying and a lack of selling amid very illiquid conditions, according to an LME trader. At 1130 GMT, three-month tin traded at $12,900/ton.
Uncertainty over key producers Indonesia and Bolivia continues to provide underlying price support.
Indonesia recently shutdown its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located.
Indonesia's PT Koba Tin - a key industry player - declared force majeure on its tin shipments Monday, after police arrested three senior officials Saturday and sealed the company's warehouses and an accounting section in Bangka-Belitung province.
The company said it is still allowed to mine and smelt tin from Bangka-Belitung while it is under police investigation.
Meanwhile, uncertainty over the fate of Bolivia's Vinto smelter since it was seized from Switzerland's Glencore International AG and renationalized adds to upside price momentum, an LME broker noted.
Glencore recently demanded compensation from Bolivia's government for nationalizing its tin smelter as part of President Evo Morales' declared ambition to gain greater control of the country's mineral wealth and refineries.
Since the start of the year, the smaller liquidity metal has climbed roughly 33% while stocks have decreased roughly 20%.
In other metals, three-month nickel surged to $38,400/ton at 1130 GMT, up over 2% from Wednesday triggered by a large cancelation in warrants.
Canceled warrants - or material accounted for and to be drawn down at a later date - maintained its recently large figure at 52% Thursday following Wednesday's 54%, leaving less than one day's worth of world nickel consumption.
Meanwhile, three-month aluminum rose roughly 1% to $2,852/ton at 1130 GMT amid steady technical buying as political uncertainty in Guinea continued. Guinea is a leading producer of bauxite, an essential component in producing aluminum.
Guinean President Lansana Conte has imposed martial law until Feb. 23 after days of violent protests. The demonstrations were triggered over the weekend following Conte's appointment of a close ally from his Cabinet as prime minister, a move the opposition said sidestepped a power-sharing agreement.
However, an increase in aluminum stocks by 3,725 tons to 762,775 tons Thursday capped the upside momentum. Aluminum inventories have climbed roughly 10% since the start of 2007.
Three-month copper traded at $5,840/ton at 1130 GMT, up 2% from Wednesday following momentum seen in overnight trading.
"In Asian trading on Thursday copper posted a decent bounce as traders covered short positions ahead of Chinese New Year although volumes were not really impressive," said John Reade of UBS.
LME INVENTORY
Copper up 450 tonnes at 215,350 tonnesLead down 800 tonnes at 34,200 tonnesNickel up 66 tonnes at 3,990 tonnes Aluminium up 3,725 tonnes at 762,775 tonnesTin down 75 tonnes at 10,245 tonnesZinc down 100 tonnes at 96,975 tonnes
China copper
DJ China Copper Futures Settle Up On Pre-Holiday Short-Covering
SHANGHAI (Dow Jones)--Copper futures traded on the Shanghai Futures Exchange settled higher Thursday on short-covering as risk averse investors closed their positions ahead of the week-long holiday.
Analysts said bullish market sentiment largely due to expectations of increased Chinese buying in the coming spring will likely drive three-month London Metal Exchange copper higher during the Lunar New Year holiday.
The benchmark April 2007 contract settled CNY720 higher at CNY54,860 a metric ton, after trading between CNY54,100/ton and CNY55,390/ton.
Turnover for all Shanghai copper futures totaled 92,222 lots versus 9,214 lots Wednesday, when trading was halted after prices hit daily upper limits.
One lot equals five tons.
"SHFE copper looks much stronger than LME, but it might change after the holiday, weighed down by imports," said Li Rong, an analyst at Great Wall Futures Co.
Li said domestic cash premiums fell to zero Thursday from CNY700-CNY800 Wednesday due to lack of buyers as many have already gone on holiday.
Markets in China will be closed next week for the Chinese New Year holiday.
On the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, copper was quoted at CNY56,000-CNY56,300/ton Thursday, compared with Wednesday's CNY55,720-CNY55,920/ton.
"Looking at China, we might see price-supportive import data in coming months, but it's unwise to bet three-month LME copper prices will rise merely on Chinese buying," a trader in Shanghai said.
"It's been a bit unpredictable recently," he added, referring to LME copper futures.
Three-month LME copper fell $29 to end the late kerb Wednesday at $5,720/ton.
It was quoted higher at $5,790/ton around 0700 GMT.
Shanghai's aluminum futures settled almost unchanged. The benchmark May 2007 contract gained CN10 to settle at CNY19,700/ton.
China's futures markets are off-limits to foreign investors.
Thursday's closing prices in yuan a metric ton versus LME late kerb prices from Wednesday in dollars a metric ton:
SHANGHAI (Dow Jones)--Copper futures traded on the Shanghai Futures Exchange settled higher Thursday on short-covering as risk averse investors closed their positions ahead of the week-long holiday.
Analysts said bullish market sentiment largely due to expectations of increased Chinese buying in the coming spring will likely drive three-month London Metal Exchange copper higher during the Lunar New Year holiday.
The benchmark April 2007 contract settled CNY720 higher at CNY54,860 a metric ton, after trading between CNY54,100/ton and CNY55,390/ton.
Turnover for all Shanghai copper futures totaled 92,222 lots versus 9,214 lots Wednesday, when trading was halted after prices hit daily upper limits.
One lot equals five tons.
"SHFE copper looks much stronger than LME, but it might change after the holiday, weighed down by imports," said Li Rong, an analyst at Great Wall Futures Co.
Li said domestic cash premiums fell to zero Thursday from CNY700-CNY800 Wednesday due to lack of buyers as many have already gone on holiday.
Markets in China will be closed next week for the Chinese New Year holiday.
On the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, copper was quoted at CNY56,000-CNY56,300/ton Thursday, compared with Wednesday's CNY55,720-CNY55,920/ton.
"Looking at China, we might see price-supportive import data in coming months, but it's unwise to bet three-month LME copper prices will rise merely on Chinese buying," a trader in Shanghai said.
"It's been a bit unpredictable recently," he added, referring to LME copper futures.
Three-month LME copper fell $29 to end the late kerb Wednesday at $5,720/ton.
It was quoted higher at $5,790/ton around 0700 GMT.
Shanghai's aluminum futures settled almost unchanged. The benchmark May 2007 contract gained CN10 to settle at CNY19,700/ton.
China's futures markets are off-limits to foreign investors.
Thursday's closing prices in yuan a metric ton versus LME late kerb prices from Wednesday in dollars a metric ton:
Copper
0437 GMT [Dow Jones] LME copper bullish in short term, likely to target $6,000/ton, as recent China copper import data supportive, market expecting Chinese buying to strengthen after Lunar New Year, stock levels in Asia to become "very tight," says trader at Japanese house. But adds LME 3-month copper needs to break above $6,000 to confirm uptrend, trigger fresh short-covering; "if it's below $6,000 at the end of the Lunar New Year, it will return to below $5,500." LME 3-month copper +$60 vs London PM kerb at $5,780/ton, after falling $29 overnight on jump in LME copper stocks. (MWL)
Wednesday, February 14, 2007
Zinc
LME zinc jumps as a "fat-fingered" erroneous trade by one participant triggers stops and pushes the market above $3,300/ton, says a broker. Three-month zinc touches $3,379/ton, likely $100/ton higher than intended, the broker notes, and then slips immediately lower. "Brokers are temporarily confused as to where zinc's trading, and it's making the market volatile," the broker adds. LME zinc trades last at $3,305/ton, up 4% from overnight levels. (ADH)
LME REVIEW
LONDON (Dow Jones)--London Metal Exchange nickel took center stage Wednesday rising nearly 5% driven by falling inventories, but analysts say they will keep a close watch on whether Asia succumbs to major bouts of profit-taking.
Three-month nickel reached a more than one-week-old high at $37,800 a metric ton Wednesday triggered by an increase in canceled warrants and falling stock levels, said Michael Skinner of Standard Bank in London.
Canceled warrants - or material accounted for and to be drawn down at a later date - soared to 54% Wednesday from Tuesday's 15%, leaving just 1,806 tons available to the market. This is less than half a day's worth of global nickel consumption.
An owner of metal in LME warehouses holds a warrant. Some traders suggest that nickel warrants are tightly held by one particular market participant. This player can move its metal on and off warrant in warehouses and have some control over nickel stocks - and prices - as a result.
Profit-taking at the top of the price ranges is to be expected, said Skinner, but "we haven't seen as much selling overnight in Asia" and will have to see whether this continues.
Meanwhile, three-month aluminum prices rose roughly 1% to a PM kerb of $2,828/ton on technical buying as political uncertainty in Guinea continued.
Guinea is a leading producer of bauxite, an essential component in producing aluminum.
Guinean President Lansana Conte has imposed martial law until Feb. 23 after days of violent protests. The demonstrations were triggered over the weekend following Conte's appointment of a close ally from his Cabinet as prime minister, a move the opposition said sidestepped a power-sharing agreement.
However, an increase in aluminum stocks by 2,925 tons to 759,050 tons Wednesday capped gains. Aluminum inventories have climbed roughly 9% since the start of 2007.
In other metals, three-month copper traded down 0.5% to a PM kerb of $5,720/ton driven by a large increase in copper stocks by 1,650 tons Wednesday to 214,900 tons. Copper inventories have increased roughly 11% since the start of 2007.
Oil price weakness as well as easing strength in the euro added to copper price pressure.
Three-month zinc suddenly jumped in afternoon trade due to an erroneous trade by one participant, triggering stops and pushing prices sharply higher, according to one LME broker. Zinc rose roughly 2% to a PM kerb of $3,310/ton from Tuesday.
Earlier Wednesday, three-month tin prices hit a new record high of $12,800/ton before retreating modestly to a PM kerb of $12,695/ton.
"The main driver for prices continues to be uncertainty on the supply side stemming from Indonesia's Bangka island," said Kevin Norrish of Barclays Capital.
Indonesia recently shutdown its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located. Earlier this week, PT Koba Tin declared force majeure to its tin customers on shipments and deliveries of the metal.
Meanwhile, Switzerland's Glencore International AG Tuesday demanded compensation from Bolivia's government for nationalizing a tin smelter as part of President Evo Morales declared ambition to gain greater control of the country's mineral wealth and refineries. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Tuesday PM kerb
Copper 5720.0-5725.0 Dn 29
Lead 1700.0-1705.0 Up 30
Zinc 3310.0-3315.0 Up 90
Aluminum 2828.0-2830.0 Up 8
Nickel 37475.0-37500.0 Up 1475
Tin 12695.0-12700.0 Up 100
Aluminum Alloy 2240.0-2250.0 Dn 10
Aluminum Alloy 2220.0-2230.0 Dn 40
Three-month nickel reached a more than one-week-old high at $37,800 a metric ton Wednesday triggered by an increase in canceled warrants and falling stock levels, said Michael Skinner of Standard Bank in London.
Canceled warrants - or material accounted for and to be drawn down at a later date - soared to 54% Wednesday from Tuesday's 15%, leaving just 1,806 tons available to the market. This is less than half a day's worth of global nickel consumption.
An owner of metal in LME warehouses holds a warrant. Some traders suggest that nickel warrants are tightly held by one particular market participant. This player can move its metal on and off warrant in warehouses and have some control over nickel stocks - and prices - as a result.
Profit-taking at the top of the price ranges is to be expected, said Skinner, but "we haven't seen as much selling overnight in Asia" and will have to see whether this continues.
Meanwhile, three-month aluminum prices rose roughly 1% to a PM kerb of $2,828/ton on technical buying as political uncertainty in Guinea continued.
Guinea is a leading producer of bauxite, an essential component in producing aluminum.
Guinean President Lansana Conte has imposed martial law until Feb. 23 after days of violent protests. The demonstrations were triggered over the weekend following Conte's appointment of a close ally from his Cabinet as prime minister, a move the opposition said sidestepped a power-sharing agreement.
However, an increase in aluminum stocks by 2,925 tons to 759,050 tons Wednesday capped gains. Aluminum inventories have climbed roughly 9% since the start of 2007.
In other metals, three-month copper traded down 0.5% to a PM kerb of $5,720/ton driven by a large increase in copper stocks by 1,650 tons Wednesday to 214,900 tons. Copper inventories have increased roughly 11% since the start of 2007.
Oil price weakness as well as easing strength in the euro added to copper price pressure.
Three-month zinc suddenly jumped in afternoon trade due to an erroneous trade by one participant, triggering stops and pushing prices sharply higher, according to one LME broker. Zinc rose roughly 2% to a PM kerb of $3,310/ton from Tuesday.
Earlier Wednesday, three-month tin prices hit a new record high of $12,800/ton before retreating modestly to a PM kerb of $12,695/ton.
"The main driver for prices continues to be uncertainty on the supply side stemming from Indonesia's Bangka island," said Kevin Norrish of Barclays Capital.
Indonesia recently shutdown its private mining and smelting operations on Bangka island, where the country's largest tin reserve is located. Earlier this week, PT Koba Tin declared force majeure to its tin customers on shipments and deliveries of the metal.
Meanwhile, Switzerland's Glencore International AG Tuesday demanded compensation from Bolivia's government for nationalizing a tin smelter as part of President Evo Morales declared ambition to gain greater control of the country's mineral wealth and refineries. Prices in dollar a metric ton.
3 Months Metal Bid-Ask Change from
Tuesday PM kerb
Copper 5720.0-5725.0 Dn 29
Lead 1700.0-1705.0 Up 30
Zinc 3310.0-3315.0 Up 90
Aluminum 2828.0-2830.0 Up 8
Nickel 37475.0-37500.0 Up 1475
Tin 12695.0-12700.0 Up 100
Aluminum Alloy 2240.0-2250.0 Dn 10
Aluminum Alloy 2220.0-2230.0 Dn 40
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