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
Tuesday, February 20, 2007
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
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