Oil fell, capping the biggest two- day drop in almost 11 months, after the International Energy Agency and International Monetary Fund said that prices above $100 a barrel are starting to hurt the global economy and Goldman Sachs Group Inc. forecast a “substantial” correction.
Oil plunged 3.3 percent after the IEA reported signs of an oil-demand “slowdown” in its monthly Oil Market Report today. The IMF cut its growth forecasts yesterday for the U.S. and Japan, two of the top three oil-consuming countries. Brent oil may drop more than $15 to $105 a barrel, Goldman said in a note to clients today.
“Right now, we’re in free-fall range,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “We have a market condition that was way overbought, so now its length is getting stomped out of the market. There could be a ways to go in this selloff.”
Crude oil for May delivery fell $3.67 to $106.25 a barrel on the New York Mercantile Exchange, the lowest settlement since March 30. Prices have tumbled 5.8 percent since April 8, the biggest two-day retreat since May 14 and 17, 2010. Futures have risen 26 percent in the past year.
Prices declined from the settlement after the American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles rose 1.19 million barrels to 355.5 million. May oil was down $3.90, or 3.6 percent, to $106.02 a barrel in electronic trading at 4:33 p.m.
‘The Surest Remedy’
“There are real risks that a sustained $100-plus price environment will prove incompatible with the currently expected pace of economic recovery,” the Paris-based IEA said. “The surest remedy for high prices may ultimately prove to be high prices themselves.”
The U.S. today boosted its crude-oil price forecast for 2011 to an average $106.38 a barrel from $101.77 a barrel last month, according to the Energy Department’s Short-Term Energy Outlook. It left its global consumption forecast unchanged at 88.2 million barrels a day.
Yesterday, the Paris-based IEA said worldwide oil demand will rise by 1.4 million barrels, or 1.6 percent, this year to average 89.4 million a day. The forecast was unchanged from March.
The U.S., the world’s largest economy, will expand 2.8 percent this year, down from 2.9 percent last year and a 3 percent growth rate for 2011 forecast in January, the IMF said yesterday. It cut Japan’s 2011 growth forecast to 1.4 percent from 1.6 percent in a January forecast.
Confirming Suspicions
“Yesterday’s IMF statement that the U.S. and Japan economies are being hurt by higher energy prices confirmed everybody’s suspicions,” said Sarah Emerson, managing director of Energy Security Analysis Inc. in Wakefield, Massachusetts. “We’ll move back to the $104-$105 level where we’ve got some technical support.”
Brent oil for May settlement fell $3.06, or 2.5 percent, to end the session at $120.92 a barrel on the London-based ICE Futures Europe exchange.
The oil market will pull back toward a $105-a-barrel near- term target for Brent, David Greely in New York and Jeffrey Currie in London said in the Goldman report. They cited high inventories and spare production capacity.
“There’s fundamental support for the market, just at a lower level than prices had risen,” Greely, head of energy research at Goldman Sachs, said in a telephone interview. “There’s support longer term, particularly in 2012. Prices simply rose sooner than the physical market supports.”
U.S. crude oil stockpiles probably increased 1 million barrels last week, according to a survey of 16 analysts before an Energy Department report tomorrow.
Commodity Basket
Yesterday, oil tumbled from a 30-month high of $112.79 a barrel as Goldman Sachs ended a recommendation to buy a basket of commodities including crude oil, copper, cotton and platinum, saying the risks outweigh any further potential gain. The basket of raw materials was first recommended by Currie on Dec. 1. It had gained 25 percent since then.
“The Goldman thing is probably one of the bigger factors,” said Kyle Cooper, director of research for IAF Advisors in Houston. “A whole lot of the market is still dictated by money flow. You’ve got a situation where Goldman decided to take profits.”
The so-called CCCP basket had a 40 percent weighting in oil, 20 percent in copper, 10 percent in soybeans, 10 percent cotton and 20 percent platinum.
Japanese Nuclear Crisis
Oil also fell today after Japan’s Nuclear and Industrial Safety Agency raised the severity rating of its nuclear crisis at the Fukushima Dai-Ichi station to the highest level, matching the severity of the 1986 Chernobyl disaster and boosting concern that the crisis will curb Japanese demand.
The accident at the plant followed a record earthquake and tsunami on March 11.
“No matter how much oil people think they’re going to export to Japan to make up for the nuclear loss, we’re going to see that economy take a turn for the worse,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. “If Japan really starts to deteriorate, its biggest trade partner is China, and they’re going to feel it next.”
China is the second-biggest oil-consuming country.
Oil volume in electronic trading on the Nymex was 993,886 contracts as of 4:33 p.m. in New York. Volume totaled 747,902 contracts yesterday, 6.3 percent below the average of the past three months and the highest level since March 16. Open interest was 1.57 million contracts.
Source.
Wednesday, April 13, 2011
Tuesday, April 12, 2011
Oil prices up again, 12th time this year
MANILA, Philippines—Even before the promised fuel subsidy for public utility jeepneys and tricycles could be implemented, local oil companies have again raised the prices of gasoline and diesel by P1.50 to P1.75 a liter and kerosene by P1.40 a liter.
Chevron (formerly Caltex), Pilipinas Shell Petroleum Corp., Petron Corp. and Total Philippines enforced the price increases starting Tuesday, saying it reflected the rise in the global prices of petroleum products.
According to a report from the Department of Energy (DoE), the latest increase brought the price of diesel to P46.45 to P49 a liter, and the price of gasoline to P53.60 and P60.81 a liter—breaching record high levels in 2008.
This is the 12th time that local oil companies raised their prices since the beginning of 2011. The total increases now amount to P9.60 a liter for gasoline and P9.85 a liter for diesel; the total reductions remain marginal at P1.75 a liter for gasoline and 25 centavos for diesel.
Right to peaceful assembly
The militant transport group Pinagkaisang Samahan ng Tsuper at Operator Nationwide (Piston) said it would mount fresh protests, including transport strikes, in May if the government failed to address the spiraling costs of fuel.
Piston, which Tuesday picketed Shell’s headquarters in Makati City to protest the latest fuel price increases, also chided President Benigno Aquino III for his spokesperson Edwin Lacierda’s apparent threat against the group.
“Our sincere advice to the President is not to look at our actions as disruptions to the riding public,” Piston secretary general George San Mateo said in a statement, adding that the right of Filipinos to hold peaceful mass actions to “seek redress to grievances” was protected by the Constitution.
Lacierda had earlier warned Piston to ensure that its protest actions against fuel price increases would not “affect the riding public,” or it would have to “face the consequences.”
Wrong advice
In a statement, the militant Bagong Alyansang Makabayan (Bayan) pointed out that the latest price increases had wiped out the government’s planned fuel subsidy Pantawid Pasada even before it could be implemented.
It challenged the President to fire his economic managers for giving him “wrong advice.”
With the P1.50 per liter increase in the price of diesel, the daily fuel cost of jeepney drivers has again risen by P45 based on their average daily consumption of 30 liters, Bayan said. On the other hand, Pantawid Pasada will provide a monthly subsidy of only P35 a day, and will not even be available until next month, it said.
Under the fuel assistance program, jeepney drivers will be given smart cards worth P1,050 (P35 a day) which they can use to buy fuel or avail themselves of discounts on a staggered basis. The cards will be distributed starting May 2.
Tricycle drivers will receive P150 (P5 a day).
Bayan secretary general Renato Reyes noted that Mr. Aquino’s presidency was nearing its one-year mark. “But in terms of economic policies, we have not seen a substantial change from the anti-people and dole-out programs of the Arroyo administration,” he said.
Reyes said “a case in point” was the escalating oil prices and Mr. Aquino’s decision, “on the advice of his economic managers, to implement a Pantawid Pasada instead of addressing the more important issues of price deregulation, value-added tax (VAT) and profiteering of the oil firms.”
The Land Transportation Franchising and Regulatory Board (LTFRB) had also said public transport operators who would join strikes risked the cancellation of their franchises for failing to do their duty of providing mass transportation services to commuters.
But Piston’s San Mateo said that if the government failed to stop the fuel price hikes, the group would have no choice but to go on strike.
“We are not afraid of Malacañang’s threat because the Filipino people, including ordinary consumers and commuters, are on our side,” San Mateo said. “We will wait until May 1 for the government’s answer.”
He said Piston was preparing for a second round of nationwide protests that could include transport strikes in key areas including Metro Manila.
Echoing Bayan’s Reyes, San Mateo said the effect of Pantawid Pasada was wiped out by the latest rise in fuel prices even before the first peso was even handed out.
Bayan, along with other groups, had been campaigning for the scrapping of the Oil Deregulation Law so as to give the government teeth to curb spikes in fuel prices.
Various groups have since been lobbying for the removal of the 12-percent VAT on oil to immediately bring down pump prices by P7 per liter or more.
Reyes said Mr. Aquino’s economic managers preferred “dole-out measures” and “feared the loss of government revenues from the VAT.”
“If this is indeed a new government, then it should find ways to generate revenues without burdening the people. If it is serious and effective in fighting corruption and tax evasion, then there will be no need for the VAT on oil,” he said.
‘No overcharging’
Elsewhere, the Provincial Bus Operators Association of the Philippines denied reports that its member-companies were overcharging passengers in time for the summer season, when demand is highest.
The group said its member-companies were simply implementing fare rate adjustments approved by the LTFRB in 2008.
“Our member-companies have been operating without relief from government despite the recent fuel price surges and increases in labor and toll fee rates,” said the association president Alex Yague.
“Instead of imposing punitive measures on us, the government should instead appreciate the provincial bus operators’ consistent fulfillment of their public service function and their decision not to burden the riding public with what is justifiably a new fare rate hike increase,” he said.
Yague also said that the member-companies had voluntarily cut fares after operating costs stabilized in 2009, and that the fares they charged were lower than what were allowed under the May 2008 fare rates.
He said the fare reduction made in 2009 was done voluntarily because of the drop in fuel costs at the time.
“Instead of punishing us, the national government should come to our succor and review both the incentives and regulatory structure that govern the industry,” he said.
Oil prices have been rising unrelentingly, hitting another new two-and-a-half-year high last seen in September 2008, according to the DoE oil monitor report.
The DoE cited “a variety of potential reasons for the continued spike in oil … including another earthquake of 7.1-magnitude that occurred Thursday near the same location [as that on March 11] off the coast of Japan that supported the argument for even more use of traditional fuels for power.”
Source.
Chevron (formerly Caltex), Pilipinas Shell Petroleum Corp., Petron Corp. and Total Philippines enforced the price increases starting Tuesday, saying it reflected the rise in the global prices of petroleum products.
According to a report from the Department of Energy (DoE), the latest increase brought the price of diesel to P46.45 to P49 a liter, and the price of gasoline to P53.60 and P60.81 a liter—breaching record high levels in 2008.
This is the 12th time that local oil companies raised their prices since the beginning of 2011. The total increases now amount to P9.60 a liter for gasoline and P9.85 a liter for diesel; the total reductions remain marginal at P1.75 a liter for gasoline and 25 centavos for diesel.
Right to peaceful assembly
The militant transport group Pinagkaisang Samahan ng Tsuper at Operator Nationwide (Piston) said it would mount fresh protests, including transport strikes, in May if the government failed to address the spiraling costs of fuel.
Piston, which Tuesday picketed Shell’s headquarters in Makati City to protest the latest fuel price increases, also chided President Benigno Aquino III for his spokesperson Edwin Lacierda’s apparent threat against the group.
“Our sincere advice to the President is not to look at our actions as disruptions to the riding public,” Piston secretary general George San Mateo said in a statement, adding that the right of Filipinos to hold peaceful mass actions to “seek redress to grievances” was protected by the Constitution.
Lacierda had earlier warned Piston to ensure that its protest actions against fuel price increases would not “affect the riding public,” or it would have to “face the consequences.”
Wrong advice
In a statement, the militant Bagong Alyansang Makabayan (Bayan) pointed out that the latest price increases had wiped out the government’s planned fuel subsidy Pantawid Pasada even before it could be implemented.
It challenged the President to fire his economic managers for giving him “wrong advice.”
With the P1.50 per liter increase in the price of diesel, the daily fuel cost of jeepney drivers has again risen by P45 based on their average daily consumption of 30 liters, Bayan said. On the other hand, Pantawid Pasada will provide a monthly subsidy of only P35 a day, and will not even be available until next month, it said.
Under the fuel assistance program, jeepney drivers will be given smart cards worth P1,050 (P35 a day) which they can use to buy fuel or avail themselves of discounts on a staggered basis. The cards will be distributed starting May 2.
Tricycle drivers will receive P150 (P5 a day).
Bayan secretary general Renato Reyes noted that Mr. Aquino’s presidency was nearing its one-year mark. “But in terms of economic policies, we have not seen a substantial change from the anti-people and dole-out programs of the Arroyo administration,” he said.
Reyes said “a case in point” was the escalating oil prices and Mr. Aquino’s decision, “on the advice of his economic managers, to implement a Pantawid Pasada instead of addressing the more important issues of price deregulation, value-added tax (VAT) and profiteering of the oil firms.”
The Land Transportation Franchising and Regulatory Board (LTFRB) had also said public transport operators who would join strikes risked the cancellation of their franchises for failing to do their duty of providing mass transportation services to commuters.
But Piston’s San Mateo said that if the government failed to stop the fuel price hikes, the group would have no choice but to go on strike.
“We are not afraid of Malacañang’s threat because the Filipino people, including ordinary consumers and commuters, are on our side,” San Mateo said. “We will wait until May 1 for the government’s answer.”
He said Piston was preparing for a second round of nationwide protests that could include transport strikes in key areas including Metro Manila.
Echoing Bayan’s Reyes, San Mateo said the effect of Pantawid Pasada was wiped out by the latest rise in fuel prices even before the first peso was even handed out.
Bayan, along with other groups, had been campaigning for the scrapping of the Oil Deregulation Law so as to give the government teeth to curb spikes in fuel prices.
Various groups have since been lobbying for the removal of the 12-percent VAT on oil to immediately bring down pump prices by P7 per liter or more.
Reyes said Mr. Aquino’s economic managers preferred “dole-out measures” and “feared the loss of government revenues from the VAT.”
“If this is indeed a new government, then it should find ways to generate revenues without burdening the people. If it is serious and effective in fighting corruption and tax evasion, then there will be no need for the VAT on oil,” he said.
‘No overcharging’
Elsewhere, the Provincial Bus Operators Association of the Philippines denied reports that its member-companies were overcharging passengers in time for the summer season, when demand is highest.
The group said its member-companies were simply implementing fare rate adjustments approved by the LTFRB in 2008.
“Our member-companies have been operating without relief from government despite the recent fuel price surges and increases in labor and toll fee rates,” said the association president Alex Yague.
“Instead of imposing punitive measures on us, the government should instead appreciate the provincial bus operators’ consistent fulfillment of their public service function and their decision not to burden the riding public with what is justifiably a new fare rate hike increase,” he said.
Yague also said that the member-companies had voluntarily cut fares after operating costs stabilized in 2009, and that the fares they charged were lower than what were allowed under the May 2008 fare rates.
He said the fare reduction made in 2009 was done voluntarily because of the drop in fuel costs at the time.
“Instead of punishing us, the national government should come to our succor and review both the incentives and regulatory structure that govern the industry,” he said.
Oil prices have been rising unrelentingly, hitting another new two-and-a-half-year high last seen in September 2008, according to the DoE oil monitor report.
The DoE cited “a variety of potential reasons for the continued spike in oil … including another earthquake of 7.1-magnitude that occurred Thursday near the same location [as that on March 11] off the coast of Japan that supported the argument for even more use of traditional fuels for power.”
Source.
Thursday, April 7, 2011
US oil price tops key $110 barrier
US oil prices hit their highest level since September 2008 Thursday as the IMF warned that demand is outpacing the growth of global supplies.
The New York benchmark West Texas Intermediate crude for May delivery closed at $110.30 a barrel, up $1.47 from Wednesday, after hitting an intraday high of $110.44 a barrel.
In London, Brent North Sea crude for May delivery picked up 37 cents to $122.67, still below its Wednesday high of $123.37 -- its best level since early August 2008.
"$110 was a very important technical level," said oil analyst John Kilduff of Again Capital.
"That's the number we've all been watching, not because it is a round number."
"It was the big action in 2008, the level that prices took off to the $147 level. And after they fell from there, it proved to be some support."
Kilduff also pointed to the ongoing rebellion in Libya "grinding to a standstill" that suggested Libya's valued light crude would remain off the market for longer than originally anticipated.
On Wednesday a Greek-owned tanker carrying $100-million worth of crude left a terminal in rebel-held territory near Tobruk.
The cargo was the first consignment of oil to leave Libya since UN-backed air strikes began on March 19 against strongman Moammar Gadhafi's crackdown on the rebels.
But there was no sign how much that could be sustained.
Meanwhile the International Monetary Fund warned that oil supply growth was slowing while demand was accelerating, pointing to sustained higher prices over the long term.
"The persistent increase in oil prices over the past decade suggests that global oil markets have entered a period of increased scarcity," the IMF said in a report on the global economy.
"If the tension intensifies, whether from stronger demand, traditional supply disruptions, or setbacks to capacity growth, market clearing could force price spikes, as in 2007-2008."
"After stagnating in recent years, oil supply will not return to the growth trends of the 1980s and 1990s," Thomas Helbling, the report's lead author, told reporters.
Source.
The New York benchmark West Texas Intermediate crude for May delivery closed at $110.30 a barrel, up $1.47 from Wednesday, after hitting an intraday high of $110.44 a barrel.
In London, Brent North Sea crude for May delivery picked up 37 cents to $122.67, still below its Wednesday high of $123.37 -- its best level since early August 2008.
"$110 was a very important technical level," said oil analyst John Kilduff of Again Capital.
"That's the number we've all been watching, not because it is a round number."
"It was the big action in 2008, the level that prices took off to the $147 level. And after they fell from there, it proved to be some support."
Kilduff also pointed to the ongoing rebellion in Libya "grinding to a standstill" that suggested Libya's valued light crude would remain off the market for longer than originally anticipated.
On Wednesday a Greek-owned tanker carrying $100-million worth of crude left a terminal in rebel-held territory near Tobruk.
The cargo was the first consignment of oil to leave Libya since UN-backed air strikes began on March 19 against strongman Moammar Gadhafi's crackdown on the rebels.
But there was no sign how much that could be sustained.
Meanwhile the International Monetary Fund warned that oil supply growth was slowing while demand was accelerating, pointing to sustained higher prices over the long term.
"The persistent increase in oil prices over the past decade suggests that global oil markets have entered a period of increased scarcity," the IMF said in a report on the global economy.
"If the tension intensifies, whether from stronger demand, traditional supply disruptions, or setbacks to capacity growth, market clearing could force price spikes, as in 2007-2008."
"After stagnating in recent years, oil supply will not return to the growth trends of the 1980s and 1990s," Thomas Helbling, the report's lead author, told reporters.
Source.
Wednesday, April 6, 2011
China Raises Fuel Prices After Crude Advances to 30-Month High
China raised retail fuel prices for the second time this year after oil’s advance to a 30-month high undermined government efforts to cap costs and cool inflation in the world’s second-largest economy.
Prices will rise by as much as 5.8 percent today, with gasoline increasing by 500 yuan ($76) a metric ton and diesel by 400 yuan, the National Development and Reform Commission said in a statement yesterday.
Crude fell on concern higher prices will reduce demand in the world’s second-largest oil consumer, while shares of China’s biggest refiner gained. The fuel-price increase came two days after the Chinese central bank raised interest rates for the fourth time since October to tame inflation that exceeded the government’s target.
“China has reluctantly raised domestic gasoline and diesel prices to record highs,” said Gordon Kwan, head of regional energy search at Mirae Asset Securities in Hong Kong. “The move is like pulling teeth with the government amid the anti- inflation campaign.”
China last raised fuel tariffs by as much as 4.6 percent on Feb. 20, based on a mechanism introduced in December 2008 that allows adjustments when crude costs change more than 4 percent over 22 working days. Consumer prices rose at an annual 4.9 percent pace in February, surpassing the government’s target of 4 percent for 2011.
China Petroleum & Chemical Corp., the country’s largest refiner, gained 0.9 percent to HK$8.09 in Hong Kong trading at 11:11 a.m. local time. PetroChina Co. fell 0.5 percent to HK$12.16. The Hang Seng Index declined 0.1 percent.
‘Into a Corner’
Crude climbed to $108.83 a barrel in New York yesterday, the highest settlement since Sept. 22, 2008, on concerns that conflict in Africa and the Middle East may curtail supplies.
“As much as the government wants to not raise prices, events in the Middle East have forced China into a corner,” Ben Simpfendorfer, publisher of China Insider and former chief economist at Royal Bank of Scotland Group Plc, said by mobile phone. “It’s a minor setback” in the fight against inflation.
The benchmark retail price of gasoline will increase by 0.37 yuan a liter and that of diesel by 0.34 yuan, the NDRC said.
After the adjustment, gasoline in China will retail at $1.05 a liter on average, according to Bloomberg calculations based on prices set by the NDRC for the country’s provinces and regions. That compares with $2.17 a liter in the U.K. and 97 cents a liter in the U.S.
China will continue subsidizing industries including farming, fishing and public transport, the NDRC said yesterday.
“Global crude oil prices may remain high,” the country’s top economic planner said. “Adjusting fuel prices will help curb excessive use of oil and contribute to energy saving.”
Crude has advanced 29 percent in New York since Feb. 15, when unrest in North Africa and the Middle East spread to Libya, formerly Africa’s third-biggest oil producer. Futures fell 0.4 percent to $108.44 a barrel in electronic trading at 11:03 a.m. Singapore time.
Source.
Prices will rise by as much as 5.8 percent today, with gasoline increasing by 500 yuan ($76) a metric ton and diesel by 400 yuan, the National Development and Reform Commission said in a statement yesterday.
Crude fell on concern higher prices will reduce demand in the world’s second-largest oil consumer, while shares of China’s biggest refiner gained. The fuel-price increase came two days after the Chinese central bank raised interest rates for the fourth time since October to tame inflation that exceeded the government’s target.
“China has reluctantly raised domestic gasoline and diesel prices to record highs,” said Gordon Kwan, head of regional energy search at Mirae Asset Securities in Hong Kong. “The move is like pulling teeth with the government amid the anti- inflation campaign.”
China last raised fuel tariffs by as much as 4.6 percent on Feb. 20, based on a mechanism introduced in December 2008 that allows adjustments when crude costs change more than 4 percent over 22 working days. Consumer prices rose at an annual 4.9 percent pace in February, surpassing the government’s target of 4 percent for 2011.
China Petroleum & Chemical Corp., the country’s largest refiner, gained 0.9 percent to HK$8.09 in Hong Kong trading at 11:11 a.m. local time. PetroChina Co. fell 0.5 percent to HK$12.16. The Hang Seng Index declined 0.1 percent.
‘Into a Corner’
Crude climbed to $108.83 a barrel in New York yesterday, the highest settlement since Sept. 22, 2008, on concerns that conflict in Africa and the Middle East may curtail supplies.
“As much as the government wants to not raise prices, events in the Middle East have forced China into a corner,” Ben Simpfendorfer, publisher of China Insider and former chief economist at Royal Bank of Scotland Group Plc, said by mobile phone. “It’s a minor setback” in the fight against inflation.
The benchmark retail price of gasoline will increase by 0.37 yuan a liter and that of diesel by 0.34 yuan, the NDRC said.
After the adjustment, gasoline in China will retail at $1.05 a liter on average, according to Bloomberg calculations based on prices set by the NDRC for the country’s provinces and regions. That compares with $2.17 a liter in the U.K. and 97 cents a liter in the U.S.
China will continue subsidizing industries including farming, fishing and public transport, the NDRC said yesterday.
“Global crude oil prices may remain high,” the country’s top economic planner said. “Adjusting fuel prices will help curb excessive use of oil and contribute to energy saving.”
Crude has advanced 29 percent in New York since Feb. 15, when unrest in North Africa and the Middle East spread to Libya, formerly Africa’s third-biggest oil producer. Futures fell 0.4 percent to $108.44 a barrel in electronic trading at 11:03 a.m. Singapore time.
Source.
Monday, April 4, 2011
Brent oil tops $120 a barrel on Libya unrest
NEW YORK—Oil prices surged to new heights Monday, with Brent crude topping $120 a barrel for the first time since August 22, 2008, as traders eyed a raging rebellion in oil-exporter Libya.
New York's main contract, light sweet crude for delivery in May, closed at $108.47 a barrel, a gain of 53 cents from Friday.
In London, Brent North Sea crude for May delivery leaped $2.36 to settle at $121.06, after topping at $121.29 just before the session close.
The market kept a focus on fighting that continued Monday in Libya between rebels and forces loyal to leader Moammar Gadhafi.
Rebel fighters made a new attempt to recapture Brega, advancing to the outskirts of the oil refinery town only to be forced back under artillery fire.
Before the crisis, Libya exported 1.3 million barrels a day of crude oil, more than 1.5 percent of global demand, in large part to Europe. Those exports have dwindled to a trickle amid the uprising.
That makes Brent crude futures, the European benchmark contract, more sensitive to the situation in Libya than the US market, where crude oil reserves are abundant.
"The longer these battles are going on, the more the market is realizing the supply is going to be offline," said Matt Smith of Summit Energy.
Unrest in other parts of the Arab world also contributed to the rise in oil prices, he said.
"Yemen is such a big threat at the moment because of the proximity" with Saudi Arabia, the biggest oil producer in the OPEC cartel, he said.
"Things in Bahrain have calmed down a little bit but any further unrest could press prices higher."
In Gabon, sub-Saharan Africa's fourth-largest oil producer, a strike by oil-sector employees had halted almost all oil production.
Gabon's oil daily output normally ranges from 220,000 to 240,000 barrels.
"It is not a lot of oil but given the current situation we can't afford any more outages, so all the barrels are important," Kilduff said.
Source.
New York's main contract, light sweet crude for delivery in May, closed at $108.47 a barrel, a gain of 53 cents from Friday.
In London, Brent North Sea crude for May delivery leaped $2.36 to settle at $121.06, after topping at $121.29 just before the session close.
The market kept a focus on fighting that continued Monday in Libya between rebels and forces loyal to leader Moammar Gadhafi.
Rebel fighters made a new attempt to recapture Brega, advancing to the outskirts of the oil refinery town only to be forced back under artillery fire.
Before the crisis, Libya exported 1.3 million barrels a day of crude oil, more than 1.5 percent of global demand, in large part to Europe. Those exports have dwindled to a trickle amid the uprising.
That makes Brent crude futures, the European benchmark contract, more sensitive to the situation in Libya than the US market, where crude oil reserves are abundant.
"The longer these battles are going on, the more the market is realizing the supply is going to be offline," said Matt Smith of Summit Energy.
Unrest in other parts of the Arab world also contributed to the rise in oil prices, he said.
"Yemen is such a big threat at the moment because of the proximity" with Saudi Arabia, the biggest oil producer in the OPEC cartel, he said.
"Things in Bahrain have calmed down a little bit but any further unrest could press prices higher."
In Gabon, sub-Saharan Africa's fourth-largest oil producer, a strike by oil-sector employees had halted almost all oil production.
Gabon's oil daily output normally ranges from 220,000 to 240,000 barrels.
"It is not a lot of oil but given the current situation we can't afford any more outages, so all the barrels are important," Kilduff said.
Source.
The good oil on Bakken barrels
It'S 60 years today since oil was discovered south of Tioga (present population: 1127) in North Dakota.
So what, we hear you cry.
Well, that hole drilled by Amerada Petroleum of Tulsa, Oklahoma, led to the discovery of the Williston Basin and the much bigger hydrocarbon province now known as the Bakken formation lying under North Dakota and Montana, which was estimated by the US Geological Survey in 2008 to contain 4.3 billion barrels of what it called "technically recoverable oil".
Despite the discovery on April 4, 1951, the Bakken was not a big drawcard. There was seen to be plenty of oil elsewhere and more easily recovered than crude trapped in shale, and the big falls in oil prices made the technology cost too great.
But now it is changing. Oil production in the Bakken went from 3000 barrels a day in 2005 to 225,000 last year and some say it will be yielding 1 million barrels a day by 2020.
And we are never going to see oil at $US10 a barrel as we did in the 1990s. Light crude closed in New York on Friday at $US108.31.
Hartley oil analyst Dave Wall has a "buy" on Samson Oil & Gas (SSN), which has a play in the Bakken and in the Williston Basin in particular. It's not a big call, with a three-month price target of 21c, against Friday's close at 18c.
Samson has a maximum flow rate of 1320 barrels a day from the Bakken with its Rodney 1-14 well in North Dakota.
Work has not finished, though, and 15 plugs in the well, which effectively choke back the potential flow of the well, are expected to be drilled out this week. We should get a more reliable oil flow figure after that.
Today the company will start fracture stimulation (which involves injecting water, sand and chemicals to release trapped oil and gas) at its nearby Earl 1-13H well.
Wall says 30 recent wells by various companies into the shale have achieved average daily production of 678 barrels each and that, if Samson could emulate those results, he calculates an upside potential of 36c for the share price.
Overall, though, the record of Australian juniors looking for oil and gas in the US has, with some exceptions, been fairly dismal to judge by present share prices.
Among the latest news, Entek Energy (ETE) - Friday close at 13c - had added to its Gulf of Mexico acreage. The junior has also teamed up with Emerald Oil & Gas (EMR) - Friday close at 4.5c - to explore ground in the Green River Basin, a huge shale formation that extends through Wyoming, Utah and Colorado.
Grand Gulf Energy (GGE) - Friday close at 0.6c and a day-traders' delight - has papered the walls with another 364 million shares issued at 0.5c to raise about $1.8 million.
This junior owns a stake in Louisiana's Napoleonville salt dome project which, the company says, has the potential to contain 520 billion cubic feet of gas and 4.5 million barrels of oil.
Pure Speculation reported on the acquisition in mid-2007. As the story still seems to be all about potential rather than reserves, we'll check back in 2015.
A little more advanced is Sundance Energy (SEA) - Friday close at 94c - which has interests in five US states, including four Bakken plays in the Williston Basin. The company has just announced a 202 per cent increase in its 2P (proved plus probable) reserves and will have a 3P (proved, probable and possible) reserve estimate in September.
Kyrgyzstan or bust
NOTHING quite like laying off a bit of your political risk weighting.
Kentor Gold (KGL) has had its ups and downs depending on the situation in Kyrgyzstan but seems on track there for its Andash project to produce 70,000 ounces of gold and 7400 tonnes of copper a year.
Obviously, Macquarie Bank thinks so, having last month lent Kentor $US50m. And the new government in Bishkek seems to be holding together, although cosying up to Moscow for support.
But the company, with access to $71m in the bank, has the ability to shell out $12.8m in cash to take over an unlisted public company and pay off its debt.
Jinka Minerals has the appealing factor of owning three projects, all of them reassuringly in Australia - the Burnakura gold project 50km south of Meekatharra, the nearby Gabanintha copper-gold deposit and the Jervois base metals project near Alice Springs.
Jinka has 1400 shareholders. You would have thought that such a company would have floated, but the main barrier to that has been the $4.9m Jinka owes MD Michael Ruane, who parted with the readies needed to buy Burnakura.
The debt is perfectly justifiable - directors from time to time lend their companies money - but it is hard to sell an IPO when a chunk of the proceeds will be used to pay debt, no matter that it may have been money well spent.
Meanwhile, Kentor has begun talking to the locals in Kyrgyzstan. Most of the people are on board, the main opposition coming from the wealthiest families in the area.
They are opposed to the mine because they fear it will deprive them of cheap farm labour.
The workers tending crops and herds get paid between $60 and $80 a month, while Kentor is planning to offer about $450 a month.
Kentor is trying to get the top landowners onside by offering contracts for them to supply the mining village with meat and build fences and pipelines.
Milestone at Dragon
SO many ASX announcements get scant attention except from the more enthusiastic shareholders, but we like to notice milestones when possible.
We didn't have space for the news several weeks ago from Dragon Mining (DRA) reaching a gold inventory of 1 million ounces, but the latest drilling result allows us to make amends.
The 1.12 million ounce resource was due mainly to the upgrade of resource at the Kuusamo project in Finland, where there is 383,500oz at an average 5.4 grams/tonne.
During the week, the company announced a very good result there, with the top half of a hole returning 34.9m at 9.3 grams/tonne.
There's 583,200oz at 5.7g/t at Vammala, also in Finland, and 158,200oz at the Svartliden gold mine in Sweden.
These figures are after depletion has been subtracted, these two operations producing 14,940oz between them in the December quarter.
Speewah ambitions
ONE to keep an eye on is Speewah Metals (SPM), which has an ambitious exploration program for this year.
That program, unveiled on Friday, is to target another two to five billion tonnes of ore at its vanadium-titanium project in the East Kimberley region.
The company says it has Australia's largest vanadium in magnetite deposit, with a resource of 3.16 billion tonnes at 0.3 per cent.
Speewah is doing metallurgical tests and other groundwork before either raising money for a bankable feasibility study and development or sale of the project.
Source
So what, we hear you cry.
Well, that hole drilled by Amerada Petroleum of Tulsa, Oklahoma, led to the discovery of the Williston Basin and the much bigger hydrocarbon province now known as the Bakken formation lying under North Dakota and Montana, which was estimated by the US Geological Survey in 2008 to contain 4.3 billion barrels of what it called "technically recoverable oil".
Despite the discovery on April 4, 1951, the Bakken was not a big drawcard. There was seen to be plenty of oil elsewhere and more easily recovered than crude trapped in shale, and the big falls in oil prices made the technology cost too great.
But now it is changing. Oil production in the Bakken went from 3000 barrels a day in 2005 to 225,000 last year and some say it will be yielding 1 million barrels a day by 2020.
And we are never going to see oil at $US10 a barrel as we did in the 1990s. Light crude closed in New York on Friday at $US108.31.
Hartley oil analyst Dave Wall has a "buy" on Samson Oil & Gas (SSN), which has a play in the Bakken and in the Williston Basin in particular. It's not a big call, with a three-month price target of 21c, against Friday's close at 18c.
Samson has a maximum flow rate of 1320 barrels a day from the Bakken with its Rodney 1-14 well in North Dakota.
Work has not finished, though, and 15 plugs in the well, which effectively choke back the potential flow of the well, are expected to be drilled out this week. We should get a more reliable oil flow figure after that.
Today the company will start fracture stimulation (which involves injecting water, sand and chemicals to release trapped oil and gas) at its nearby Earl 1-13H well.
Wall says 30 recent wells by various companies into the shale have achieved average daily production of 678 barrels each and that, if Samson could emulate those results, he calculates an upside potential of 36c for the share price.
Overall, though, the record of Australian juniors looking for oil and gas in the US has, with some exceptions, been fairly dismal to judge by present share prices.
Among the latest news, Entek Energy (ETE) - Friday close at 13c - had added to its Gulf of Mexico acreage. The junior has also teamed up with Emerald Oil & Gas (EMR) - Friday close at 4.5c - to explore ground in the Green River Basin, a huge shale formation that extends through Wyoming, Utah and Colorado.
Grand Gulf Energy (GGE) - Friday close at 0.6c and a day-traders' delight - has papered the walls with another 364 million shares issued at 0.5c to raise about $1.8 million.
This junior owns a stake in Louisiana's Napoleonville salt dome project which, the company says, has the potential to contain 520 billion cubic feet of gas and 4.5 million barrels of oil.
Pure Speculation reported on the acquisition in mid-2007. As the story still seems to be all about potential rather than reserves, we'll check back in 2015.
A little more advanced is Sundance Energy (SEA) - Friday close at 94c - which has interests in five US states, including four Bakken plays in the Williston Basin. The company has just announced a 202 per cent increase in its 2P (proved plus probable) reserves and will have a 3P (proved, probable and possible) reserve estimate in September.
Kyrgyzstan or bust
NOTHING quite like laying off a bit of your political risk weighting.
Kentor Gold (KGL) has had its ups and downs depending on the situation in Kyrgyzstan but seems on track there for its Andash project to produce 70,000 ounces of gold and 7400 tonnes of copper a year.
Obviously, Macquarie Bank thinks so, having last month lent Kentor $US50m. And the new government in Bishkek seems to be holding together, although cosying up to Moscow for support.
But the company, with access to $71m in the bank, has the ability to shell out $12.8m in cash to take over an unlisted public company and pay off its debt.
Jinka Minerals has the appealing factor of owning three projects, all of them reassuringly in Australia - the Burnakura gold project 50km south of Meekatharra, the nearby Gabanintha copper-gold deposit and the Jervois base metals project near Alice Springs.
Jinka has 1400 shareholders. You would have thought that such a company would have floated, but the main barrier to that has been the $4.9m Jinka owes MD Michael Ruane, who parted with the readies needed to buy Burnakura.
The debt is perfectly justifiable - directors from time to time lend their companies money - but it is hard to sell an IPO when a chunk of the proceeds will be used to pay debt, no matter that it may have been money well spent.
Meanwhile, Kentor has begun talking to the locals in Kyrgyzstan. Most of the people are on board, the main opposition coming from the wealthiest families in the area.
They are opposed to the mine because they fear it will deprive them of cheap farm labour.
The workers tending crops and herds get paid between $60 and $80 a month, while Kentor is planning to offer about $450 a month.
Kentor is trying to get the top landowners onside by offering contracts for them to supply the mining village with meat and build fences and pipelines.
Milestone at Dragon
SO many ASX announcements get scant attention except from the more enthusiastic shareholders, but we like to notice milestones when possible.
We didn't have space for the news several weeks ago from Dragon Mining (DRA) reaching a gold inventory of 1 million ounces, but the latest drilling result allows us to make amends.
The 1.12 million ounce resource was due mainly to the upgrade of resource at the Kuusamo project in Finland, where there is 383,500oz at an average 5.4 grams/tonne.
During the week, the company announced a very good result there, with the top half of a hole returning 34.9m at 9.3 grams/tonne.
There's 583,200oz at 5.7g/t at Vammala, also in Finland, and 158,200oz at the Svartliden gold mine in Sweden.
These figures are after depletion has been subtracted, these two operations producing 14,940oz between them in the December quarter.
Speewah ambitions
ONE to keep an eye on is Speewah Metals (SPM), which has an ambitious exploration program for this year.
That program, unveiled on Friday, is to target another two to five billion tonnes of ore at its vanadium-titanium project in the East Kimberley region.
The company says it has Australia's largest vanadium in magnetite deposit, with a resource of 3.16 billion tonnes at 0.3 per cent.
Speewah is doing metallurgical tests and other groundwork before either raising money for a bankable feasibility study and development or sale of the project.
Source
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