Oil Prices Today

Oil Gains a Second Day as Drop in U.S. Stockpiles Signals Demand

2012-02-07T21:20:00.000-08:00

Oil rose for a second day in New York after an industry report showed stockpiles shrank in the U.S., the world’s biggest crude consumer.

West Texas Intermediate futures climbed as much as 0.6 percent yesterday from the highest close in a week. Crude inventories fell by 4.5 million barrels in the seven days ended Feb. 3, the first drop in three weeks, the American Petroleum Institute said after the day’s settlement. An Energy Department report today may show supplies rose 2.5 million barrels, according to a Bloomberg News survey of analysts.

“The API data provided momentum for the price gains,” said Ric Spooner, a chief analyst at CMC Markets in Sydney. “Front-month prices for West Texas are in a trend-channel pattern, with the range broadly between about $95.50 on the downside and $100.50 on the upside.”

Oil for March delivery advanced 56 cents to $98.97 a barrel in electronic trading on the New York Mercantile Exchange and traded at $98.90 at 12:18 p.m. in Singapore. The contract yesterday increased $1.50, or 1.6 percent, to $98.41, the highest settlement since Jan. 31. Prices are 14 percent higher than a year ago.

Brent oil for March settlement was at $115.98 a barrel, down 25 cents on the ICE Futures Europe exchange. The benchmark contract’s premium to New York-traded West Texas Intermediate was at $16.96, narrowing for a second day. The gap was at $19.02 on Feb. 6, the widest in three months.

Price Outlook

WTI will average $100.40 a barrel this year, according to a projection from the U.S. Energy Department. The forecast is 15 cents higher than the January estimate, it said yesterday in its monthly Short-Term Energy Outlook.

U.S. gasoline stockpiles rose 4.4 million barrels last week, figures from the American Petroleum Institute show. They are forecast to gain 875,000 barrels in the government report, according to the median of 10 analyst estimates in the Bloomberg News survey. Inventories of distillates, a category that includes diesel and heating oil, climbed 386,000 barrels compared with a projection for an 875,000 barrel decline.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Bollinger Band

Oil in New York has technical resistance along the middle Bollinger Band, about $99.71 a barrel today, data compiled by Bloomberg shows. Futures slipped below the lower band yesterday before settling higher, signaling a rebound from chart support. Investors tend to sell contracts as prices approach resistance.

Goldman Sachs Group Inc. recommended selling contracts of West Texas Intermediate crude for delivery in May and buying those for June, as rising inventories at the U.S. storage hub in Cushing, Oklahoma, will put pressure on short-term prices.

Crude inventories at Cushing, which typically drive the difference between monthly contracts, have increased by 2.8 percent this year to 30.1 million barrels, according to data from the Energy Department.

Source.

Oil prices drop as Greek talks stall

2012-02-06T21:46:00.000-08:00

Oil prices were in decline today as frustration with the inability of Greek policymakers to agree on a deal to impose further budget cuts reduced demand for riskier assets. Greece needs to pass more austerity measures to secure the much needed €130 billion bailout from the Troika of lenders – the EU, the IMF and the ECB - and avert bankruptcy.

Greek policymakers today failed to agree on another round of austerity measures, which is demanded by Greece’s official lenders as a condition of the next financial aid package.

It was reported that the government had a deadline of noon to respond to Europe’s demands, however, this was denied by Greek officials.

Prime Minister Lucas Papademos and other leaders of the ruling coalition are set to resume negotiations tomorrow.

Papademos’ partners oppose the proposed cuts, warning that reductions in wages and pensions could ultimately lead to social unrest.

However, if the Troika opts not to provide further aid to the debt-ridden nation, it will likely go into a default as soon as in March when it faces a deadline to repay €14.4 billion.

A Greek default could have disastrous consequences for the European economy, reducing its energy demand and oil imports.

In the meantime, Iranian oil minister Rostam Ghasemi said on Saturday that Iran could stop supplying oil to Europe immediately in response to the embargo imposed by the at the end of last month.

Europe planned to reduce its dependence on Iranian oil gradually and stop importing crude from the Middle Eastern country, which is accused of illegally developing a nuclear weapon, by July to have enough time to find new suppliers and prevent a sharp hike in oil prices.

Iran has previously threatened to cut off oil supplies, but a vote on the proposal was delayed a week ago.

It was also reported that the world’s second largest energy consumer China aims to further reduce oil imports from Iran.

A Reuters report quoted sources in China’s oil industry, who said there would be another cut in imports from Iran in March, which have been reduced by 285,000 barrels of oil per day due to a dispute over pricing.

China currently accounts for a fifth of all of Iran’s crude exports.

US light, sweet crude for March delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), fell US$1.07 to US$96.77/barrel in morning trade in New York.

March Brent crude dropped 37 cents to US$114.16/barrel on the ICE Exchange this afternoon.

Today’s top risers in the oil and gas sector were:

Cairn Energy (LON:CNE), up 19.5 percent at 345.4 pence at midday

Trap Oil (LON:TRAP), up 11.5 percent at 24 pence

Gulf Keystone Petroleum (LON:GKP), up 7 percent at 324.75 pence

Argos Resources (LON:ARG), up 6.5 percent at 22.74 pence

Mediterranean Oil & Gas (LON:MOG), up 4.5 percent at 5.1 pence

The top fallers were:

Atrim Energy (LON:AEY), down 18.5 percent at 74.3 pence at midday

Forum Energy (LON:FEP), down 5 percent at 65.5 pence

Matra Petroleum (LON:MTA), down 4.5 percent at 0.67 pence

Amerisur Resources (LON:AMER), down 4 percent at 19.68 pence

Woburn Energy (LON:WBN), down 4 percent at 1.8 pence

Source.

Oil prices rise after drop in US hiring expands

2012-02-05T21:41:00.000-08:00

A surge in U.S. hiring lifted oil prices for the first time in a week. As more Americans commute to work and the economy picks up, demand for energy is expected to rise.

U.S. benchmark crude increased by $1.48 on Friday to end the week at $97.84 per barrel. It was the first time since Jan. 26 that the price of crude ended the day higher. Brent, used to price international varieties of crude, rose by $2.51 to finish at $114.58 per barrel.

Prices rose after the government reported that the U.S. economy added 243,000 jobs in January. That was the biggest increase since April of last year, when 251,000 jobs were created. The unemployment rate fell to 8.3 percent — the lowest in three years.

The positive U.S. jobs data added to evidence that the world's largest economy — and biggest user of gasoline — is growing stronger. Manufacturing grew in January at the fastest pace in seven months. Factory orders rose in December by 1.1 percent, driven higher by big increases in spending on industrial machinery and autos.

The U.S. economic reports suggest the, "economy is in recovery with fewer jobless claims, more people on payrolls, higher equities prices, brisk car sales, and high travel bookings," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

Oil prices had fallen 3 percent during the first four days of the week. They were pushed lower on reports that U.S. fuel demand continues to fall behind where it was last year. The 4-week average for gasoline demand is down 7.3 percent. Last year, American drivers used nearly 3 percent less gasoline than they did in 2010.

Friday's employment report led investors to believe that gasoline demand could eventually rebound. Gasoline futures, which gauge where traders think prices are headed, rose by 4.55 cents to end at $2.9144 per gallon.

At the pump, regular unleaded gasoline is already at the highest ever for this time of year, reflecting surging energy demand in other parts of the world like China. A gallon of gas cost an average of $3.467 — 17.9 cents more than a month ago and 35.1 cents more than a year ago, according to auto club AAA, Wright Express and Oil Price Information Service.

Prices are expected to rise in coming months as the economy improves and as refineries crank up production of more expensive warm-weather gasoline blends. Analysts say prices could reach $4 per gallon by the spring.

In other energy trading, heating oil added 6.15 cents to end at $3.1144 per gallon and natural gas fell by 5.5 cents to finish the week at $2.499 per 1,000 cubic feet.

Source.

Oil Futures Fall a 5th Day as U.S. Stockpiles Rise

2012-02-01T23:31:00.001-08:00

Oil traded near the lowest in six weeks as U.S. crude stockpiles increased more than estimated and gasoline use fell to a 10-year low. Brent crude in London was at the biggest premium to New York prices in 12 weeks.

Futures fluctuated today after declining as much as 0.6 percent in early trading. They settled yesterday at the lowest price in six weeks after an Energy Department report showed crude supplies in the U.S. rose by 4.2 million barrels last week. Inventories were projected to increase 2.6 million barrels, according to a Bloomberg News survey.

“Oil appears to be driven by U.S. domestic factors, the larger-than-expected increase in crude stockpiles and the fall in gasoline demand,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “In the short-term, it flies in the face of the run of reasonably positive data from the U.S.”

Crude for March delivery was at $97.40 a barrel, down 21 cents, in electronic trading on the New York Mercantile Exchange at 12:55 p.m. Singapore time. The contract fell 0.9 percent yesterday to $97.61 a barrel, the lowest since Dec. 20. Prices are down 1.4 percent this year.

Brent oil for March settlement gained 23 cents, or 0.2 percent, to $111.79 a barrel on the London-based ICE Futures Europe exchange. It rose 58 cents yesterday to $111.56, the highest close since Jan. 11. The European benchmark contract’s premium to West Texas Intermediate futures was at $14.39, the widest since Nov. 11. That compares with a record spread of $27.88 on Oct. 14.

North Sea Oil

Brent’s premium to U.S. crude reflects unrest in Nigeria, Africa’s top oil producer. Nigerian security forces arrested the alleged spokesman of a militant Islamist group blamed for bombings and gun attacks that killed hundreds this year, the State Security Service said yesterday.

“Given the concerns in Nigeria, we can anticipate the potential for this spread to retract lost ground and see it heading back to $15 a barrel,” said Jonathan Barratt, chief executive officer of Barratt’s Bulletin in Sydney.

More North Sea oil is being shipped to Asia than at any time in the past eight years as prices fall to the lowest levels in 15 months compared with Middle East alternatives, according to shipping data.

Companies led by BP Plc and Vitol Group have sent at least 8 million barrels of North Sea oil to Asian ports since mid- December, equivalent to six days of U.K. production, according to ship-tracking data from AISLive Ltd. That’s the most for any month since 2004, data from Galbraith’s Ltd., a London-based shipbroker, show.

Fuel Supplies

In the U.S., gasoline consumption decreased to 7.97 million barrels a day, the lowest since September 2001, according to Energy Department data. Stockpiles of the fuel increased 3.02 million barrels last week, the report showed. They were projected to rise 500,000 barrels, according to the median of 12 analyst estimates in the Bloomberg News survey.

Distillate inventories, a category that includes heating oil and diesel, dropped by 135,000 barrels, the U.S. report showed. They were estimated to decline 1.38 million barrels, according to the survey.

Oil initially climbed yesterday in New York after data from the Institute for Supply Management showed manufacturing in the U.S. grew in January at the fastest pace in seven months. The Tempe, Arizona-based group’s manufacturing index rose to 54.1 from 53.1 in December. The median forecast of economists surveyed by Bloomberg News was 54.5.

‘Mixed Bag’

“Oil futures were a mixed bag, despite being encouraged by the unexpected rise in global manufacturing activity early in the session,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a note today. The inventory data “showed a substantially larger than expected increase in crude stocks.”

The United Steelworkers union and Royal Dutch Shell Plc averted a potential strike earlier this week that would have idled as many as 69 refineries by tentatively agreeing to a new three-year contract.

The proposal includes pay increases of 2.5 percent in the first year and 3 percent in the second and third years, along with some of the improvements in safety language sought by the union, according to three labor representatives with direct knowledge of the negotiations.

Slowdown in China

In China, net crude-oil imports may grow at the smallest pace in at least six years in 2012 as the world’s second-biggest economy slows, estimates released by state-owned China National Petroleum Corp. show.

China, the world’s second-largest oil user, may raise retail fuel prices for the first time since April following gains in the crude grades the government tracks.

The moving average of Brent, Dubai and Indonesia’s Cinta crudes, the three types in the country’s pricing basket, over the past 22 working days climbed 4.3 percent as of yesterday, according to C1 Energy, a commodity researcher based in Shanghai. That’s above the 4 percent target that could trigger a fuel adjustment by the National Development and Reform Commission, China’s top economic regulator.

Source.

Oil prices rise EU fiscal deal, Iran tensions

2012-01-31T21:08:00.000-08:00

Oil prices rose today due to developing news on Europe's fiscal problems.

Demand for crude futures in London and New York received more support after German Chancellor Merkel urged China to reduce its dependence on Iranian oil.

Meanwhile, traders feared Iran could cut off oil and crude supplies to Europe and other major customers. OPEC added fuel to the fire stating that the tensions between Iran and the West could reduce investments in the oil and gas sector.

In an interview with the Dow Jones Newswires, Secretary General of OPEN Abdalla Salem el-Badri said the situation could hurt the economy if it led to a sharp hike in oil prices.

Prices of US light, sweet crude, Brent crude listed on the original article here.

Gas Price still high

2011-09-13T06:15:00.000-07:00

Gas prices continue to fluctuate even though experts predicted that by mid-September, the national average would be around $3.35 for a gallon of regular gasoline. Today's gasoline prices are at an average $3.65 which is more expensive than it was a month ago, and nearly $1 per gallon higher than this time last year.

Analysts attributed the price shifts to the combined forces of a chaotic situation in Libya and the recent lashing of Hurricane Irene, followed by Labor Day weekend, when gas prices always seem to rise a bit.

More on this from this link.

Crude down in Asian trade

2011-08-11T20:30:00.000-07:00

SINGAPORE– Oil tumbled in Asian trade Friday due to a stronger dollar as global financial markets remained on edge on worries over the struggling US economy and the European debt crisis.

Analysts said prices are expected to be volatile, mirroring developments in the financial markets and the global economy.

New York’s main contract, West Texas Intermediate light sweet crude for delivery in September, fell 47 cents to $85.25 per barrel.

Brent North Sea crude for September delivery dipped 57 cents to $107.45.

“The US dollar has strengthened and that puts some downward pressure on oil, but this is part of the volatility of the markets,” said Victor Shum, an analyst with Purvin and Gertz energy consultancy in Singapore.

A stronger dollar makes dollar-priced oil more expensive, leading to softer demand and pushing prices lower.

Shum added that oil price movements will largely be “depending on headlines”, referring to news that can influence investors’ behaviour.

Crude prices fluctuated sharply in US trade on Thursday before following stock markets higher as bargain hunting and less bearish economic outlooks took hold in the markets.

“Growth concerns have pinned back oil prices at six-month lows, but current market turmoil distracts from supportive market fundamentals,” said Lawrence Eagles of JPMorgan Chase.

“However, with future economic growth becoming a central concern, we consider the implications for demand and supply if growth downgrades continue and what lessons, if any, the recession of 2008 provides,” he said in a client note.

Source.

Oil Prices Back on Track to Rise After Def Pledges Low Rate to 2013

2011-08-11T01:57:00.000-07:00

On Wednesday, the steep fall in oil prices came to an end after the U.S. Federal Reserve promised to extend near-zero interest rates for two more years.

On Tuesday, oil prices tumbled below $79 per barrel to its lowest level since September 2010 on the New York Mercantile Exchange. This was before the Fed statement about interest rates surfaced. However, after the news came out investors took a sigh of relief and the broader U.S. equity market jumped almost 4 percent to close above 11,200 points.

In London, Brent crude was up 4.06 percent to $106.73 per barrel on the ICE Futures Exchange. The benchmark oil for September delivery number was up 3.24, or 4.09 percent, to $82.54 per barrel on Wednesday in electronic trading on the New York Mercantile Exchange.

A report showing an unexpected decline in U.S. crude supplies also helped push oil prices higher.

The American Petroleum Institute said late Tuesday that crude inventories fell to 5.2 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 1.8 million barrels. Inventories of gasoline dropped 1.0 million barrels last week while distillates decreased 600,000 barrels, the API said.

However, some analysts have warned that prices could moderate later in the week as attention again focuses on the prospect of economic growth. "The impact of the Fed move will likely fade by week's end," MF Global analysts wrote in a note. "The Fed's move to keep rates depressed for so long is likely because the central bank realizes that growth will be tepid for some time to come. This scenario does not bode well for commodities, especially base metals and energy."

Analysts also expect crude to fall further as consumer demand falters amid muted economic growth in developed countries. "The global economic dynamics that set this sharp oil price decline into motion a few weeks ago remain very much intact and capable of forcing a price decline into the $70 to 75 zone," energy consultant Ritterbusch and Associates said in a report. "The main theme behind the oil trade of the past month remains one in which heightened economic uncertainties mainly related to Europe and the U.S. are bringing into clearer focus a significant downdraft in oil demand."

Just as oil prices started to move higher today, many of oil and gas company shares are also expected to trade heavily once the market opens Wednesday. Exxon Mobil Corp. (NYSE: XOM) shares were trading lower by 0.47 percent to $71.30 in pre-market trading today. ConocoPhillips last traded at $64.56, up 4.26 percent, and Chevron Corp. (NYSE: CVX) last traded at $93.40, up 3.49 percent, on Tuesday.

As oil prices move higher, the pressure on the U.S. dollar was seen on Wednesday. The dollar was trading lower against the euro at $1.4356 per euro, and 76.5250 yen for a dollar, lower by 0.93 percent.

The rebound in crude oil prices helped investors brush off a drop in July implied crude imports by China.

Source.

Crude up in Asia on bargain hunting

2011-08-03T22:10:00.000-07:00

Oil prices were up in Asia on Thursday as investors hunted for bargains after crude markets plunged in late US trade, analysts said.

New York’s main contract, light sweet crude for delivery in September, added 53 cents to 92.46 per barrel.

Brent North Sea crude for September delivery gained 39 cents to $113.62.

Crude traders were capitalising on cheap crude after it fell to one-month lows in late US trade Wednesday, analysts said.

“I think it’s just a temporary relief rally because oil prices were quite battered yesterday,” said Serene Lim, oil and gas analyst for ANZ bank in Singapore.

Crude markets had been dragged south on Tuesday by weak jobs creation and service sector growth numbers from the United States, prompting fears of a slowdown in the world’s largest oil consumer.

The Institute for Supply Management’s index released Wednesday showed the giant US service sector growing at a snail’s pace in July, with non-manufacturing activity dropping to 52.7 last month, barely above the 50 no-growth level.

US private sector hiring also slowed in July, with payrolls firm ADP reporting a net 114,000 jobs created by private, non-farm businesses last month compared with 145,000 in June.

Source.

Crude Oil Price Declines for a Third Day on Speculation OPEC Will Increase Quotas

2011-06-06T21:43:00.000-07:00

Oil dropped for a third day in New York amid speculation OPEC may increase output quotas when it meets in Vienna tomorrow.

Futures slipped as much as 0.7 percent today after falling to the lowest in two weeks yesterday. The Organization of Petroleum Exporting Countries may raise production limits, Barclays Plc said June 6. The International Energy Agency said on May 19 it saw “an urgent need” for more oil to help bring down high prices threatening economies. Crude also slid on signs fuel demand is faltering along with slowing economic growth.

“The outcome of the OPEC meeting will be key,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicted oil will average $113 a barrel in the third quarter. “The growth outlook from the economic data looks like it’s hit a bit of a softer patch.”

Crude for July delivery slid as much as 68 cents to $98.33 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.52 at 12:16 p.m. Singapore time. The contract yesterday fell $1.21, or 1.2 percent, to $99.01. Prices are up 38 percent the past year.

Brent crude for July delivery was at $114.01 a barrel, down 47 cents, on the London-based ICE Futures Europe exchange. The contract yesterday lost $1.36, or 1.2 percent, to $114.48. Prices are 58 percent higher the past year.
Oil Bets

The European benchmark contract traded at a premium of $15.49 a barrel to U.S. futures today. The difference between front-month contracts in London and New York reached a record $19.54 on Feb. 21. It averaged 76 cents last year.

Options traders increased bets that oil prices will fall further. The most-active option yesterday was the July $95 put, which rose 17 cents to 79 cents. The second-most active contract was the August $90 put, which climbed 13 cents to $1.05.

“There is speculation that OPEC may raise production targets this week, on concerns from some OPEC members that higher oil prices are curbing demand,” economists at Australia & New Zealand Banking Group Ltd., led by Warren Hogan, wrote in a note today.

A “recalibration” of OPEC’s output target closer to actual output is expected, Barclays analysts led by London-based Paul Horsnell said in yesterday’s report.
OPEC Targets

The group will have to increase its production target by as much as 2.5 million barrels a day from 24.845 million or risk prices rising higher, according to a report from Johannes Benigni, chairman of consultant JBC Energy GmbH in Vienna.

“If OPEC doesn’t increase supply sufficiently it would be a tacit communication to the market that $100+ oil is acceptable,” said Benigni.

OPEC won’t announce a supply increase and will keep its formal production quota unchanged for an eighth consecutive meeting at the June 8 gathering, according to a Bloomberg survey of analysts conducted May 24-31. Venezuelan Oil Minister Rafael Ramirez also said the group is unlikely to raise production.

The OPEC members bound by the output quotas, not including Iraq, produced 26.2 million barrels a day in May, or about 1.4 million barrels over the limit, according to a Bloomberg News survey of analyst, producers and oil companies. Total supply was 28.895 million last month.

Brent has advanced 21 percent this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and spread to Libya. In Syria, state television reported yesterday that more than 120 members of the security forces have been killed in the northern town of Jisr al-Shughour.

U.S. Stockpiles

A report from the U.S. Energy Department tomorrow may show U.S. gasoline stockpiles climbed by 1 million barrels last week from 212.3 million, according to a Bloomberg News survey of analysts. Crude inventories probably dropped 1.5 million barrels, the survey shows.

The U.S. unemployment rate unexpectedly climbed to 9.1 percent in May and payrolls grew at the slowest pace in eight months, the Labor Department reported June 3. Employers added 54,000 jobs last month, after a revised 232,000 gain in April that was smaller than initially estimated. The median forecast in a Bloomberg News survey called for payrolls to rise 165,000.

The Energy Department is scheduled to release its Short- term Energy Outlook today. The department last month cut its forecast for global oil consumption for this year to 88.08 million barrels a day from 88.2 million estimated in April.

Source. Oil dropped for a third day in New York amid speculation OPEC may increase output quotas when it meets in Vienna tomorrow.

Futures slipped as much as 0.7 percent today after falling to the lowest in two weeks yesterday. The Organization of Petroleum Exporting Countries may raise production limits, Barclays Plc said June 6. The International Energy Agency said on May 19 it saw “an urgent need” for more oil to help bring down high prices threatening economies. Crude also slid on signs fuel demand is faltering along with slowing economic growth.

“The outcome of the OPEC meeting will be key,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicted oil will average $113 a barrel in the third quarter. “The growth outlook from the economic data looks like it’s hit a bit of a softer patch.”

Crude for July delivery slid as much as 68 cents to $98.33 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.52 at 12:16 p.m. Singapore time. The contract yesterday fell $1.21, or 1.2 percent, to $99.01. Prices are up 38 percent the past year.

Brent crude for July delivery was at $114.01 a barrel, down 47 cents, on the London-based ICE Futures Europe exchange. The contract yesterday lost $1.36, or 1.2 percent, to $114.48. Prices are 58 percent higher the past year.
Oil Bets

The European benchmark contract traded at a premium of $15.49 a barrel to U.S. futures today. The difference between front-month contracts in London and New York reached a record $19.54 on Feb. 21. It averaged 76 cents last year.

Options traders increased bets that oil prices will fall further. The most-active option yesterday was the July $95 put, which rose 17 cents to 79 cents. The second-most active contract was the August $90 put, which climbed 13 cents to $1.05.

“There is speculation that OPEC may raise production targets this week, on concerns from some OPEC members that higher oil prices are curbing demand,” economists at Australia & New Zealand Banking Group Ltd., led by Warren Hogan, wrote in a note today.

A “recalibration” of OPEC’s output target closer to actual output is expected, Barclays analysts led by London-based Paul Horsnell said in yesterday’s report.
OPEC Targets

The group will have to increase its production target by as much as 2.5 million barrels a day from 24.845 million or risk prices rising higher, according to a report from Johannes Benigni, chairman of consultant JBC Energy GmbH in Vienna.

“If OPEC doesn’t increase supply sufficiently it would be a tacit communication to the market that $100+ oil is acceptable,” said Benigni.

OPEC won’t announce a supply increase and will keep its formal production quota unchanged for an eighth consecutive meeting at the June 8 gathering, according to a Bloomberg survey of analysts conducted May 24-31. Venezuelan Oil Minister Rafael Ramirez also said the group is unlikely to raise production.

The OPEC members bound by the output quotas, not including Iraq, produced 26.2 million barrels a day in May, or about 1.4 million barrels over the limit, according to a Bloomberg News survey of analyst, producers and oil companies. Total supply was 28.895 million last month.

Brent has advanced 21 percent this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and spread to Libya. In Syria, state television reported yesterday that more than 120 members of the security forces have been killed in the northern town of Jisr al-Shughour.

U.S. Stockpiles

A report from the U.S. Energy Department tomorrow may show U.S. gasoline stockpiles climbed by 1 million barrels last week from 212.3 million, according to a Bloomberg News survey of analysts. Crude inventories probably dropped 1.5 million barrels, the survey shows.

The U.S. unemployment rate unexpectedly climbed to 9.1 percent in May and payrolls grew at the slowest pace in eight months, the Labor Department reported June 3. Employers added 54,000 jobs last month, after a revised 232,000 gain in April that was smaller than initially estimated. The median forecast in a Bloomberg News survey called for payrolls to rise 165,000.

The Energy Department is scheduled to release its Short- term Energy Outlook today. The department last month cut its forecast for global oil consumption for this year to 88.08 million barrels a day from 88.2 million estimated in April.

Source.

Latest Oil Prices Dip

2011-06-05T22:04:00.000-07:00

Brent crude slipped toward $115 a barrel on Monday on concern about demand after disappointing jobs data from top consumer United States, but a softer dollar and political upheaval in the Middle East limited losses.

The possibility that OPEC will raise supply when ministers meet this week also put pressure on prices. Gulf Arab members led by Saudi Arabia will push for a rise, but were likely to face opposition from OPEC's leading hawks Iran and Venezuela.

"Today there is no shortage of supply. OPEC will do its job," the chief executive of the French energy giant Total (TOTF.PA) said at a conference in Kuala Lumpur.

Brent crude fell 33 cents to $115.51 a barrel by 0340 GMT, after settling up 30 cents on Friday. U.S. crude slipped 8 cents to $100.13 a barrel.

"We are going to have sideways trade, basically because the weaker economy means weaker crude oil prices because of less demand in the U.S., but we have Yemen that's going to keep it high (along with) the weaker dollar," Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp, said.

U.S. data showed payrolls rose by 54,000 in May, the softest reading since September, and the country's jobless rate rose to 9.1 percent in May from 9 percent in April.

Falling oil demand and higher supplies in the world's largest economy are pushing prices lower, analysts said. U.S. crude oil stocks rose in the week to May 27 to their highest seasonal level for May since 1990.

TransCanada Corp's (TRP.TO) 591,000 barrel-per-day (bpd) capacity Keystone pipeline -- which carries oil from Alberta to the U.S. oil hub of Cushing -- resumed shipping crude oil, one week after being shut by a leak at a Kansas pumping station, the Calgary-based company said in a statement.

Technical charts indicated that oil prices may drop in the short term, with Brent expected to slip to $112 per barrel and U.S. oil expected to revisit the Friday low of $98.12 per barrel.

The dollar .DXY slid to a fresh one-month low against a basket of major currencies early in Asia on Monday, as the jobs data bolstered expectations that U.S. interest rates will stay low for longer.

"The value of the dollar and the way it's declining is keeping some of these commodities at levels which are not sustainable," Jonathan Barratt, managing director of Commodity Broking Services in Sydney, said.

MIDDLE EAST SUPPORTS

Violence in the Middle East underpinned prices due to worries that instability could spill over to some of the world's largest oil and gas producers and disrupt global supplies.

Yemeni President Ali Abdullah Saleh was recovering from an operation in Saudi Arabia to remove shrapnel from his chest while a truce between his troops and a tribal federation appeared to be holding.

Protesters, interpreting Saleh's absence as a sign that his grip on power was weakening, celebrated on the streets of Sanaa where they have been staging anti-government demonstrations since January.

Syrian forces shot dead 31 people in the last 48 hours during demonstrations in a northwestern town and official media said gunmen killed four policemen in the same town.

Protests against Syria's President Bashar al-Assad have grown despite reform gestures dismissed by the opposition and a continuing crackdown that has killed at least 1,100 people since the uprising erupted two months ago.

Source.

Oil edges up after falling below $US100

2011-06-02T22:12:00.000-07:00

OIL edged up today, rebounding from earlier lows and holding close to the key level of $US100 a barrel as traders await more signals on the strength of the US economy.

Light, sweet crude oil for July delivery settled US11 cents higher at $US100.40 a barrel on the New York Mercantile Exchange, after dropping as low as $US98.46 a barrel earlier in the session. Brent crude oil on the ICE futures exchange ended $US1.04 higher at $US115.57 a barrel.

After a 2.4 per cent drop yesterday, oil prices fluctuated between gains and losses for much of the latest session. A US government report showing increases in oil and petrol stockpiles initially pushed crude oil lower, but prices quickly returned to the middle of a trading range between $US95 and $US105 that has held oil since mid May.

"We still have that gravitational pull toward the $US100 level. Whenever we move a couple bucks from that level, we seem to swing back again," said Jim Ritterbusch, head of oil-trading adviser Ritterbusch and Associates.

US oil stockpiles rose by 2.9 million barrels in the week ended May 27, according to data released by the Department of Energy. Analysts had expected stocks would fall, according to a Dow Jones Newswires survey. Gasoline stocks also rose, adding 2.6 million barrels in the fourth-straight week of increases.

Rising inventories have combined with a string of weak economic reports in recent days to keep pressure on crude oil prices. Yesterday, an index on manufacturing fell short of expectations, while a separate report said the private sector hired 38,000 workers last month, well short of the 190,000 expected by economists.

Early in the latest session, jobless claims saw only a modest decline, suggesting the important monthly jobs report, to be released late tonight (AEST), may be gloomier than analysts had thought.

Many investors have become more pessimistic on the state of the economy over the past month, which has factored into the drop in oil prices from above $US113 a barrel in early May. Concerns are growing that a slowdown in China along with issues related to euro-zone debt will weigh on the global recovery.

Earlier this week, economists from Bank of America-Merrill Lynch lowered their estimates for growth in 2011 US gross domestic product to 2 per cent from 2.8 per cent.

The threat of a slowdown already appears to be contributing to a drop in oil and fuel consumption, as businesses and consumers cut spending in the face of high prices.

US petrol stockpiles have increased for four straight weeks, the Energy Department data showed. In addition, US petrol demand for the Friday before Memorial Day, an important day of travel, fell by 3.7 per cent from a year ago, according to a MasterCard SpendingPulse report released on Tuesday.

"The fact that crude (oil) is still building, still finding its way into storage, it could be that we're seeing a little bit of a slowdown in demand," said Tom Bentz, a director at BNP Paribas Commodity Futures.

"In general, the market is vulnerable because of the weak economic data we've been seeing."

Source.

Oil slides 2.4pc on US demand concerns

2011-06-01T22:03:00.000-07:00

Light, sweet crude for July delivery settled down $US2.41, or 2.4 per cent, to $US100.29 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange, which has traded above $US100 a barrel since February, settled down $US2.20, or 1.9 per cent, to $US114.53 a barrel.

Crude ended lower after the ISM manufacturing index fell short of expectations, indicating growth in the energy-intensive manufacturing sector has not been as fast as economists expected. The index fell to 53.5 in May, compared with a forecast for 57. Readings above 50 indicate growth.

April's reading came in at 60.4.

"The manufacturing sector had been a big engine for growth," said Andy Lebow, senior vice-president for energy at MF Global. "It's very significant on the diesel (demand) side."

A separate report said the US private sector hired 38,000 new workers last month, well below the 190,000 expected by economists. The report, by payroll giant Automatic Data Processing and consultancy Macroeconomic Advisers, is also prompting worries about oil demand in the world's largest crude consumer.

"Soft data is what caused all this to happen, started the slide," said Mark Waggoner, president of Excel Futures.

The disappointing jobs reading comes ahead of the most closely watched report on US employment levels, the non-farm payrolls report, due on Friday.

Several reports have suggested the US economy struggled in May. Regional factory reports were weak, jobless claims remained high, and the Conference Board's consumer confidence index fell sharply last month.

Today's decline wiped out yesterday's gains. Oil futures rose more than 2 per cent yesterday on reports that European countries appeared closer to another bailout of Greece, as well as on the outage of TransCanada's Keystone pipeline network.

The pipeline network connects heavy oil fields in Alberta with the Nymex delivery point of Cushing, Oklahoma. Less oil flowing into Cushing is seen as easing the supply glut at the oil hub and supporting the Nymex contract.

The pipeline remained down for repairs today, spokesman Terry Cunha said.

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German Inflation Unexpectedly Eased in May as Price of Crude Oil Declined

2011-05-27T23:24:00.000-07:00

Inflation in Germany, Europe’s largest economy, unexpectedly eased in May after oil prices dropped from a 2 1/2-year high.

The harmonized inflation rate fell to 2.4 percent from 2.7 percent in April, the Federal Statistics Office in Wiesbaden said today. Economists had expected inflation to hold at the highest level since September 2008, the median of 17 forecasts in a Bloomberg News survey showed. On the month, consumer prices declined 0.2 percent.

Oil prices have dropped 11 percent this month after breaching $114 a barrel in April, leaving households with more money to spend. European Central Bank officials have signaled they are ready to raise borrowing costs further to curb price pressures after increasing the benchmark interest rate to 1.25 percent last month, even as peripheral nations such as Greece, Portugal and Ireland remain mired in a sovereign-debt crisis.

“Today’s German inflation numbers are just a temporary breather,” said Carsten Brzeski, an economist at ING Group in Brussels. “Obviously, with these inflation numbers, the ECB won’t hastily rush to a June hike. The German data is also not soft enough to put the ECB off from another hike in July.”

On a non-harmonized basis, inflation slowed to 2.3 percent in May from 2.4 percent and prices were unchanged on the month, the statistics office said.
Price Mandate

VCI, the main association of German chemical companies, on May 17 raised its forecast for production, sales and prices this year in the industry, on increasing global demand.

“We have to avoid commodity-price increases becoming entrenched in longer-term inflation expectations, which could have second-round effects on wages and prices,” ECB President Jean-Claude Trichet said yesterday. “We are carefully monitoring the situation and we stand ready to do whatever is necessary to fulfill our mandate.”

Euro-area inflation probably remained at 2.8 percent this month, according to the median of 27 forecasts in a Bloomberg survey. The European Union’s statistics office in Luxembourg will publish the data on May 31. Economists in a separate survey forecast the ECB will raise its main lending rate to 1.75 percent by the end of the year.

The German economy grew 1.5 percent in the first quarter as companies boosted spending to meet increased export demand and construction rebounded from a slump in the previous three months. The government predicts growth of 2.6 percent this year after a record 3.6 percent expansion in 2010.

At the same time, countries from Greece to Portugal are struggling to grow amid a debt crisis that’s shaking the foundations of the single currency. The euro area will grow 1.6 percent this year after expanding 1.8 percent in 2010, the European Commission forecast this month.

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Crude Rises to Highest in Two Weeks on U.S. Fuel Demand; SocGen Sees $106

2011-05-26T21:59:00.000-07:00

Oil traded near a two-week high in New York on signs of increased U.S. fuel demand after a government report showed inventories of diesel and heating oil fell in the world’s biggest crude-consuming nation.

Futures reached their highest since May 11 today after the Energy Department said yesterday that U.S. distillate supplies declined 2.04 million barrels to 141.1 million last week, the lowest since April 2009. Fuel demand climbed 2.2 percent. Oil may rise to $106 a barrel in coming weeks as prices mirror an early-May pullback in 2010 that launched a rally in the rest of that year, Societe Generale SA said.

“People are optimistic about a recovery even though the economics suggest otherwise,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, who predicted oil will average $100 this year. “The fact that oil hasn’t broken through $95 on the downside is the key.”

Crude for July delivery on the New York Mercantile Exchange was at $101.22 a barrel at 9:14 a.m. London time, down 10 cents, after gaining as much as 58 cents to $101.90. Brent crude for July settlement was at $114.73 a barrel, down 23 cents, on the ICE Futures Europe exchange in London. The contract yesterday climbed $2.40, or 2.1 percent, to $114.93, the highest settlement since May 10.

China Power Shortages

“Distillates stole center stage from gasoline on worries about surging demand in China and India,” said Phil Flynn, vice president of research at PFGBest in Chicago.

China may face power shortages of 30 gigawatts this summer, the China Electricity Council said last month. The government suspended diesel exports to increase supplies for use in power generation.

U.S. distillate consumption was the highest since the week ended April 15, according to the Energy Department. Total fuel demand climbed 2.2 percent to 18.9 million barrels a day. Refineries operated at 86.3 percent of capacity, the most since Jan. 7.

Heating oil futures in New York climbed for a third day, gaining as much as 1.97 cents, or 0.7 percent, to $3 a gallon.

U.S. gasoline stockpiles increased 3.79 million barrels to 209.7 million, the biggest addition since February, according to the report. They were forecast to rise 450,000 barrels, according to the median of 14 analyst estimates in a Bloomberg News survey. Gasoline use dropped 0.3 percent to 9.03 million barrels a day.
Fibonacci Support

Crude oil supplies gained 616,000 barrels to 370.9 million. Stockpiles were forecast to decrease by 1.5 million barrels, according to the survey.

Oil in New York, heading for the first monthly decline since August, has rebounded from its Fibonacci support near $95 a barrel, a level based on weekly price swings over the past year, according to Stephanie Aymes, a cross-commodity technical analyst at Societe Generale. Crude will probably continue to trade “sideways” in coming weeks before climbing to $106, the next Fibonacci retracement level, she said.

Oil also gained after the Organization for Economic Cooperation and Development raised its forecast for U.S. growth this year. The economy will expand 2.6 percent, up from a November estimate of 2.2 percent, the organization said in its annual economic outlook published yesterday. The OECD maintained its forecasts for the world economy to expand 4.2 percent this year and 4.6 percent in 2012.

Schork Report

The dollar declined, making commodities more attractive as an investment. The Dollar Index, a measure of the greenback against six major currencies, fell as much as 0.6 percent today, the biggest decline since April 20.

The Bank of England may raise interest rates after its economy expanded in the first quarter, which may support oil prices, according to Stephen Schork, Villanova, Pennsylvania- based analyst at The Schork Group Inc.

“This would put pressure on the Bank of England to ramp up interest rates which would, in turn, increase the strength of sterling,” he said in today’s Schork Report. “A stronger sterling implies a weaker dollar, and a weaker dollar implies… that’s right, higher crude oil prices.”

Brent crude, the European benchmark contract, traded at a premium of $13.47 a barrel to U.S. futures, compared with $13.61 yesterday. The difference between front-month contracts in London and New York surged to a record $19.54 on Feb. 21. It averaged 76 cents last year.

Brent has advanced 22 percent this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and spread to Libya, Iran and Syria. Yemen’s President Ali Abdullah Saleh said fighting could drag the country into civil war and warned that those who seek to disrupt security would be met with force.

The Organization of Petroleum Exporting Countries will leave production quotas unchanged at its June 8 meeting in Vienna because there is enough oil to meet demand, Iraq’s Deputy Prime Minister Hussain al-Shahristani said yesterday.

Source.

Oil prices hit two-week high

2011-05-25T22:03:00.000-07:00

Oil prices rose 2% today, climbing to two-week highs as an unexpected drop in US distillate inventories trumped a sharp rise in gasoline stocks and as a softer dollar supported fresh commodities buying.

Inventory data from the US Energy Information Administration showed distillate stocks, which include heating oil and diesel fuel, fell 2.04 million barrels to 141 million barrels last week, the lowest since April 2009.

The data overshadowed a larger-than-expected 3.79 million barrel build in gasoline stocks and an unexpected modest gain of 616,000 barrels in crude stocks.

US crude for July delivery settled $US1.73 higher, or 1.74%, at $US101.32 a barrel, the highest close since May 10.

In London, ICE Brent for July closed up $US2.40, or 2.1%, at $US114.93, also the highest settlement since May 10.

Prices had been lower in the early going on concerns about weak gasoline demand ahead of the US driving season that kicks off on the US Memorial Day holiday on May 30.

"The main component in today's rise in crude futures is the supportive drawdown in distillate stocks," said Rich Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.

"We're also seeing a weaker dollar and higher prices in gold, silver and copper as supportive," he added.

The 19-commodity Reuters-Jefferies CRB index, a global commodities benchmark, rose 1.6%, gaining the most in a week and extending Tuesday's rise of 0.7%.

Oil trading volumes were moderate, with US crude down 18% from the 30-day average, with about an hour to go before the end of the day's trade. Brent crude volume was down about 8% from the 30-day average.

US June heating oil finished up 7.06 cents, or 2.43%, at $US2.9803 a gallon, also the highest since May 10.

Earlier, Brent rose on concerns about unrest in the Middle East and North Africa after violence escalated in Yemen while uncertainty over Libya's future festered as NATO strikes intensified.

South African President Jacob Zuma said he would visit Tripoli next week to discuss an exit strategy for Libyan leader Muammar Gaddafi in cooperation with the Turkish government.

Schism widens on market's course

Sharp upward revisions of oil price forecasts by Wall Street giants Goldman Sachs and Morgan Stanley have deepened the schism between oil bears and bulls to levels unseen since oil prices peaked in 2008, a Reuters monthly poll showed.

While bears cited weak demand and ebbing geopolitical risk premiums as reasons for oil to plunge to $US75 per barrel, bulls saw it soaring to $US140 due to supply shortages and the limited ability of OPEC to cushion any new disruption.

Further signs of weaker economic demand in the US appears to buttress bearish views about the future course of oil prices.

Data today showed a larger-than-expected drop in new orders for long-lasting US manufactured goods in April, the largest decline in six months.

The weak durable goods report could embolden economists to moderate their forecasts for the US second-quarter growth, analysts said.

US dependence on imported oil fell below 50% of total oil demand in 2010 for the first time in more than a decade due to the weak economy and the increasing number of fuel efficient vehicles, a report from the US Energy Department showed today.

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Stocks Adrift As Traders Digest Renewed Bullish Calls On Oil

2011-05-24T22:23:00.000-07:00

Stocks drifted lower Tuesday as investors digested a slew of economic news in the U.S. and abroad.

A prediction today from Goldman Sachs and Morgan Stanley about oil prices sent crude back near $100 per barrel. Those firms believe oil prices will increase through the rest of the year, which could mean higher prices at the pump.

The Commerce Department said new home sales increased 7.3% last month. The report also said inventory levels were falling while prices were going up.

Aside from the oil call, Goldman lowered its forecast for China's gross domestic product for this year and next due to unexpectedly weak economic data and high oil prices. Goldman now expects China's GDP to be 9.4% down from a prior forecast of 10%. And for 2012, the firm sees 9.2% growth, down from 9.4%.

As for company news, medical equipment maker Medtronic disappointed investors with its growth forecast and shares were down 1.5% on heavy volume.

Shares of AutoZone were up over 6% on stronger than expected results for its third quarter. The company's earnings jumped 12% over last year.

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Oil slumps on weak jobs data, IEA output call

2011-05-23T00:05:00.000-07:00

(Reuters) - Oil prices fell more than $1 on Thursday as weak U.S. economic data stoked worries about demand, and the International Energy Agency suggested members could release emergency stocks if OPEC failed to act.

The pull-back coincided with a broad decline across commodity markets, which are testing price floors following several weeks of volatile trade.

Oil volume was light at a quarter less than the 30-day average, suggesting many traders remained on the sidelines. The oil volatility index .OVX dipped to its lowest since May 5 as demand for options protection ebbed.

U.S. crude for June delivery settled $1.66 lower at $98.44, a day after rebounding when some buyers scooped up bargains. Prices touched a session high of $100.79, trading in a narrow range of between $96 to $101 for a sixth day.

"Some of the new longs that came into the market after the recent fall of about $20 a barrel are selling as the U.S. economic data this morning wasn't supportive," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

"The recent buyers pushed prices back to over $100, but they were disappointed with the data on weekly jobless claims and regional manufacturing and are bailing out," he added.

In London, ICE Brent for July delivery settled down 88 cents at $111.42, off the early session high of $113.04.

U.S. data showed weekly jobless benefit filings fell last week, yet claims remained above 400,000 for the sixth straight week, sparking labor market concerns.

Other data showed sales of previously owned U.S. homes fell in April while factory activity in the U.S. mid-Atlantic region grew much more slowly than expected this month, raising more concerns about economic growth.

Still, with unemployment down from a year ago there was some evidence that U.S. drivers were taking near-record $4 gasoline prices in stride.

Americans will cut other expenses rather than forsake highway holidays this Memorial Day weekend, travel group AAA said on Thursday, forecasting that the number of people hitting the road would be little changed from 2010.

The 19-commodity Reuters-Jefferies CRB index .CRB, a global benchmark for commodities, was down 1.4 percent, heading for its largest loss in a week.

IEA URGES PRODUCERS TO PUMP MORE

Concerned that high oil prices would dent the fragile global economic recovery, the Paris-based International Energy Agency urged oil producers to boost supply to cut fuel costs.

IEA, a watchdog for 28 industrialized nations, suggested its members could release emergency stockpiles if OPEC failed to act, although U.S. officials played down prospects for using the Strategic Petroleum Reserve to tamp down prices.

The IEA statement, issued after its governing board met, was an unusual comment on producer policies, analysts said. The statement came ahead of OPEC's next policy meeting on June 8.

The 12-member Organization of the Petroleum Exporting Countries maintains that world oil supplies are adequate.

"The IEA is part of the equation today. Investors have to be saying to themselves, 'hey, they could be serious about pulling the trigger on reserves'," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.

Also weighing on prices, UK consultancy Oil Movements forecast that seaborne oil exports from OPEC, excluding Angola and Ecuador, will rise by 420,000 barrels per day in the four weeks to June 4.

An unexpected drop in U.S. crude oil inventories last week and a large drop in stockpiles at the key Cushing, Oklahoma, delivery point for the U.S. oil futures contract further supported Wednesday's rally.

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Oil prices fall on demand concerns

2011-05-19T21:34:00.000-07:00

Oil prices fell today as weak US economic data stoked worries about demand, and the International Energy Agency suggested members could release emergency stockpiles if producers did not increase supply.

The price retreat cut short yesterday's rebound from sharp losses of about $US20 a barrel in two weeks that traders and analysts had called overdone.

The downturn, part of a broad decline for commodities, came a session after the sector had posted its biggest daily rise in two months.

The 19-commodity Reuters-Jefferies CRB index, a globl benchmark for commodities, was down 1%, heading for its largest loss in a week.

US crude for June delivery traded $US1.43 lower at $US98.67 barrel.

In London, ICE Brent for July delivery dropped 76 cents to $US111.54.

IEA urges producers to raise supply

Concerned that high oil prices would dent the fragile global economic recovery, the Paris-based International Energy Agency urged oil producers to boost supply to cut fuel costs.

IEA, a watchdog group for 28 industrialised nations, suggested its members could release emergency stockpiles if OPEC failed to act.

The IEA statement, issued after its governing board met, was an unusual comment on producer policies, analysts said. The statement came ahead of OPEC's next policy meeting on June 8.

The 12-member Organization of the Petroleum Exporting Countries maintains that world oil supplies are adequate.

"The IEA is part of the equation today. Investors have to be saying to themselves, 'hey, they could be serious about pulling the trigger on reserves'," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.

John Lipsky, IMF acting Managing Director, said the global recovery remained fragile and urged continued international support for shaky economies in Europe, where the debt crisis has also fed worries about energy demand.

Yesterday, oil prices rebounded after losing two straight days as buyers emerged to scoop up bargains, following the recent sharp decline in prices.

An unexpected drop in US crude oil inventories last week and a large drop in stockpiles at the key Cushing, Oklahoma, delivery point for the US oil futures contract further supported yesterday's rally.

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Oil price up in Asia

2011-05-18T19:56:00.000-07:00

SINGAPORE—Oil rose in Asian trade on Thursday after US oil stockpiles did not increase as expected, analysts said.

New York’s main contract, light sweet crude for June delivery, advanced 13 cents to $100.23 a barrel and Brent North Sea crude for July delivery gained 13 cents to $112.43.

The US Department of Energy (DoE) in its weekly report Wednesday showed American crude stockpiles had failed to rise as expected in the week ending May 13.

Stockpiles steadied last week, bucking forecasts for a rise of 700,000 barrels, according to analysts polled by Dow Jones Newswires.

“This was one key reason why crude oil prices was performing impressively,” said Ker Chung Yang, a Singapore-based commodity analyst at Phillip Futures.

“Crude oil prices will likely hang around the $100 level for quite some time unless there is a strong impetus to bring it down,” Ker told AFP.

Traders closely monitor the DoE report for clues on US demand as it is the world’s biggest oil consumer.

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Oil prices fall in choppy trading

2011-05-17T22:02:00.000-07:00

Oil prices slipped today in choppy trading as weak economic data fuelled concerns about demand that have contributed to crude's 15% decline so far in May.

The US dollar index seesawed with the euro and the greenback's weakness late helped oil pare losses, traders and brokers said.

Oil felt pressure from news that US housing starts and building permits fell in April and factory output slumped.

US gasoline futures slid sharply early, then pared losses after tumbling nearly 5% the previous session on the receding threat to refineries from flooding in the Mississippi River delta.

Brent crude for July delivery dropped 85 cents to settle at $US109.99 a barrel, bouncing after earlier falling as low as $US108.07.

US crude for June delivery slipped 46 cents to end at a 12-week low settlement of $US96.91 a barrel, having dropped as low as $US95.02 on the day that June crude options expired on the New York Mercantile Exchange.

Traders and analysts noted open interest concentrated on puts at the June crude option $US95 strike price.

US crude trading volumes were 10% above the 30-day average, more robust than Brent volumes that were about 4% below.

"With the housing numbers coming in soft and industrial production coming in (near) flat, there is some concern there will be a double dip in the housing slump and on a broader scale for the economy as a whole," said Rob Kurzatkowski, futures analyst with OptionsXpress in Chicago.

"We're seeing further liquidation on the precious metals, and that's offering some outside pressure on the oil market as well."
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Copper ended lower for the first time in four sessions as the weak US economic data weighed on the industrial metal. Weak US retail and corporate earnings and the dollar's early strength pressured gold..

Concerns about the European debt crisis also weighed on oil, as investors watched to see if peripheral economies such as Greece and Portugal will be able to meet their obligations.

The euro bounced and rose against the dollar in choppy trading, but remained vulnerable on concerns Greece might restructure its massive debt.

The dollar index, measuring it against a basket of currencies, edged lower late after earlier being bolstered by the yen's weakness.

A stronger dollar can pressure dollar-denominated oil prices by raising the price for consumers using other currencies and pulling investment from commodities to less risky markets.

US oil inventories

US crude, gasoline and heating oil futures turned higher in post-settlement trading after a report from the industry group American Petroleum Institute showed gasoline and total distillate stocks fell last week.

Crude stocks rose 2.7 million barrels, gasoline stocks fell 676,000 barrels and distillates dropped 2.8 million barrels, the API said.

Ahead of the API report, a Reuters survey of analysts had forecast US crude inventories would be up for the fourth straight week, but only by 1 million barrels.

Gasoline stocks were seen up 800,000 barrels and distillate stockpiles up only 700,000 barrels.

"The report on its face is neutral, but the product draws continue to impress, especially given the retail price point," said John Kilduff, partner at Again Capital LLC in New York.

Rising water levels on the Mississippi River looked less likely to hurt eight refineries in Louisiana after US Army engineers began opening flood gates, helping US gasoline futures settle lower today.

The gasoline crack spread, or profit margin for refiners, pulled back more than $US3 to just below $US26 a barrel, after pushing above $US40 on May 10.

US retail gasoline demand fell last week compared with a year ago, but was up versus the previous week, a report from MasterCard Advisors' said on Tuesday.

Source.

Oil Drops on U.S. Economy, Greece; BofA’s Blanch Sees Demand Destruction

2011-05-15T22:09:00.000-07:00

Oil dropped for the first day in three in New York after President Barack Obama said failure to raise the U.S. debt ceiling may unravel global finances and threaten growth in the world’s biggest crude consumer.

Futures slipped as much as 1.3 percent after Obama said the U.S. “could have a worse recession than we’ve already had,” according to a segment taped for CBS’s “Face the Nation” program. Prices also slid on concern Greece’s debt crisis may worsen, threatening Europe’s economic growth. Oil may drop in the second half of the year amid signs prices are causing demand to slow, said Francisco Blanch, head of Global Commodity Research, Bank of America Merrill Lynch.

“At the moment, anything seen to adversely impact growth in the U.S. gets factored into oil prices,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicted crude in New York will average $113 a barrel in the third quarter.

Crude for June delivery slid as much as $1.30 to $98.35 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.79 at 1:06 p.m. Sydney time. The contract gained 2.5 percent last week, the biggest weekly gain since the period ending April 8. Prices are 41 percent higher the past year.

Brent oil for June settlement lost 44 cents, or 0.4 percent, to $113.39 a barrel on the London-based ICE Futures Europe exchange. The contract advanced 4.3 percent last week.

The U.S. administration will begin stimulating domestic crude production to blunt rising gasoline prices with measures including encouraging drilling in Alaska and giving oil companies more time to comply with safety regulations, Obama said in his weekly address.
Mississippi Flooding

Gasoline prices outpaced crude, dropping 0.6 percent in New York, as flooding from the Mississippi River threatened the second-largest U.S. oil refinery. Futures for June delivery lost 1.7 cents to $3.0572 a gallon today.

Louisiana opened four of the 25 gates at the Morganza floodway, allowing the Mississippi River to pour into the Atchafalaya River basin. Inside the threatened area are 2,264 oil or natural gas wells that each day produce 19,278 barrels of crude, about 10 percent of Louisiana’s onshore total, and 252.6 million cubic feet of gas, according to the state.

The Mississippi was threatening to reach to a flow rate of 1.62 million cubic feet per second unless water was diverted, putting in peril the levees at Baton Rouge, home to an estimated 229,000 people and industrial areas that include an Exxon Mobil Corp. refinery, the company’s second largest U.S. facility.
Louisiana Refineries

Alon USA Energy Inc.’s refinery in Krotz Springs is in a zone under a mandatory evacuation order, St. Landry’s Parish spokeswoman Francine Sias said. Alon spokesman Blake Lewis said the parish had granted the company an extension. A temporary levee is being constructed by employees to protect the 83,000- barrel-a-day refinery and 243 nearby homes.

Oil prices will head lower in the July-to-December period amid signs of demand destruction, Blanch said at a media briefing in Hong Kong today. Brent may trade at an average $122 a barrel in the second quarter and $94 in the fourth, he said.

The European benchmark has climbed 20 percent this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and spread to Libya, Algeria, Bahrain, Iran, Syria, Oman and Yemen.

Brent traded at a premium of $14.59 a barrel to U.S. futures, compared with $14.18 on May 13. The difference between front-month contracts in London and New York surged to a record $19.54 on Feb. 21. The spread averaged 76 cents last year.

Yemen’s Joint Meetings Party, a coalition of six opposition groups, says a plan to end the country’s political crisis is dead following a visit by the chief envoy of Arab Gulf states seeking to broker a deal.

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Steep fall in oil, petrol halts trading

2011-05-11T23:11:00.000-07:00

PETROL futures plunged today, pulling the price of oil with it, after an unexpected rise in US inventories.

The drop was so steep that it triggered a rare five-minute halt of all energy trading on the New York Mercantile Exchange for the first time in more than two years.

June reformulated petrol blendstock dropped 7.6 per cent, the biggest one-day percentage decline since February 2009.

Light, sweet crude oil for June delivery settled down $US5.67, or 5.5 per cent, to $US98.21 a barrel on the Nymex. Brent crude oil on the ICE futures exchange settled down $US5.06, or 4.3 per cent, to $US112.57 a barrel.

While petrol futures began the session lower, their slide steepened after the Energy Information Administration posted a surprise increase in US inventories, signalling slackening demand.

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"We went from anticipating a drop in gasoline inventories for last week to seeing a build instead," said Tim Evans, energy analyst at Citi Futures Perspective.

"That certainly sparked some selling out of the gasoline market."

The decline in petrol futures triggered a rare five-minute halt to energy trading, after the contract hit its daily trading limit of US25 cents. The limit was raised to US50c after trading resumed

All of the contracts revert to their old trading limits later today. Contracts trading on the ICE don't have trading limits and trading on that exchange wasn't halted, a spokesman said.

Energy trading on the Nymex was last halted on September 22, 2008, due to a surge in crude-oil prices.

Although the EIA report triggered the initial sell-off in petrol, the decline gathered significant momentum as the session went on.

Market participants said traders took profits off the table after petrol's steep climb in the previous session, exacerbating the decline. Petrol's premium over crude oil, called the "gas crack," hit a record $US38 a barrel yesterday before plunging more than $US5 today.

"You're seeing...profit-taking from people who did catch the move on the run-ups in the cracks," said Raymond Carbone, a floor broker and president of Paramount Options in New York.

Crude oil inventories rose 3.8 million barrels last week, the EIA said, exceeding analyst estimates. Supplies of distillates, including heating oil and diesel, fell 843,000 barrels.

The data suggest that demand for crude oil and petrol is softening ahead of the critical northern summer driving season.

The EIA report also said stockpiles in Cushing, Oklahoma, rose 1.1 million barrels to a near-record 41.6 million barrels.

Rising inventories at the key oil hub and Nymex delivery point have been depressing the price of the main Nymex crude oil contract this year. The discount of the Nymex's light, sweet crude-oil contract to Brent crude oil rose to above $US14 a barrel today.

Source.

Oil prices jump more than $5 a barrel today

2011-05-09T23:41:00.000-07:00

Crude oil rose more than $5 a barrel today, topping $102 in New York, as it rebounded from the biggest weekly decline since 2008, Bloomberg News reported. Oil climbed on signals that the global economic recovery remains intact.

Futures rose 5.5 percent, the most in more than two months, after a report today showed German exports surged to a record in March and the U.S. Labor Department said last week that payrolls expanded. Prices also advanced on concern that a rising Mississippi River will flood Louisiana refineries.

“Some of the economic news has been stronger than expected, reducing worries about demand,” said Rick Mueller, a principal with ESAI Energy LLC in Wakefield, Massachusetts. “The Mississippi floods are increasing concern about disruptions, especially of the products.”

Crude oil for June delivery rose $5.37 to settle at $102.55 on the New York Mercantile Exchange, the biggest one- day gain since Feb. 22. Futures dropped 15 percent in the five days ended May 6, the largest weekly decline since December 2008. Prices are up 37 percent from a year ago.

North Sea Brent crude for June settlement increased $6.77, or 6.2 percent, to $115.90 a barrel on the London-based ICE Futures Europe exchange.

Source.

Crude Oil Plunges as Higher Prices Are Forecast to Curb Growth

2011-04-13T00:15:00.000-07:00

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.

Oil prices up again, 12th time this year

2011-04-12T18:13:00.000-07:00

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.

US oil price tops key $110 barrier

2011-04-07T18:21:00.000-07:00

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.

China Raises Fuel Prices After Crude Advances to 30-Month High

2011-04-06T22:17:00.000-07:00

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.

Brent oil tops $120 a barrel on Libya unrest

2011-04-04T18:13:00.000-07:00

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.

The good oil on Bakken barrels

2011-04-04T01:53:00.000-07:00

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

Yuan Set for Weekly Gain on Oil Price Rise, Manufacturing Health

2011-03-31T22:50:00.000-07:00

China’s yuan was poised for a third weekly gain as oil prices surged and a report signaled exporters are withstanding the currency’s appreciation.

Crude prices in New York surged to $107.65 a barrel, adding to pressure on authorities to seek a stronger yuan to reduce import costs. Manufacturing growth accelerated for the first time in four months, easing concern that monetary tightening may lead to a sharp slowdown in the world’s second-biggest economy. China’s central bank set the reference rate 0.06 percent higher at 6.5527, the strongest level since July 2005.

“The move reflects continued need to fight imported inflation via currency appreciation as oil prices continue to climb,” said Dariusz Kowalczyk, a Hong Kong-based senior economist at Credit Agricole CIB. “China remains in a tightening mode and will use a variety of tools, including stronger currency, to bring price pressures under control.” Kowalczyk forecast the yuan to reach 6.3 per dollar by the end of this year.

The yuan gained 0.16 percent this week and rose 0.02 percent today to 6.5472 per dollar as of 10:00 a.m. in Shanghai, according to the China Foreign Exchange Trade System. The currency touched 6.546 today, the strongest level since the country unified official and market exchange rates at the end of 1993. In Hong Kong’s offshore market, the currency fell 0.02 percent to 6.5485.

Twelve-month non-deliverable forwards were little changed at 6.419 per dollar in Hong Kong, reflecting bets the currency will strengthen 2 percent from the onshore spot rate in a year, according to data compiled by Bloomberg. Group of 20 finance chiefs meeting in China yesterday held out the prospect of an enlarged global role for the yuan to encourage the government to free up a currency described by the U.S. as “substantially undervalued.”
Manufacturing Strength

The Purchasing Managers’ Index rose to 53.4 in March from 52.2 in February, the China Federation of Logistics and Purchasing said in a statement on its website today. The reading compared with the median forecast of 54 in a Bloomberg News survey of 17 economists.

Premier Wen Jiabao is seeking to restrain surging prices for homes and consumer goods while sustaining economic growth to create jobs. Inflation topped the government’s target in the first two months of this year and officials will boost interest rates again this quarter, according to all 20 economists in a Bloomberg News survey.

Source

Crude Oil Trades Near One-Week Low in New York as Libyan Rebels Make Gains

2011-03-29T22:56:00.000-07:00

Crude oil dropped to the lowest price in a week in New York as the advance of Libyan rebels against Muammar Qaddafi’s troops spurred hope that the conflict in Africa’s third-largest oil producer may end soon.

Futures fell as much as 1.2 percent after Libyan government troops prepared to block advancing rebels at Sirte, Qaddafi’s hometown. Crude extended losses after St. Louis Federal Reserve President James Bullard indicated that the Fed may tighten monetary policy soon, fanning speculation demand growth may falter in the U.S., the world’s biggest oil consumer.

“The fairly disappointing news hurt market sentiment for risk appetite and pushed crude oil prices lower,” said Myrto Sokou, a London-based research analyst at Sucden Financial Ltd.

Crude for May delivery on the New York Mercantile Exchange fell as much as $1.28 to $102.70 a barrel, the lowest price since March 22, and was at $103.28 at 1:34 p.m. London time. Brent crude for May settlement on the London-based ICE Futures Europe exchange was down 59 cents at $114.21 a barrel.

President Barack Obama yesterday defended his decision to involve U.S. forces in the war. Military intervention “stopped Qaddafi’s deadly advance” and helped prevent a massacre of civilians that would have “stained the conscience of the world,” Obama said in a speech at the National Defense University in Washington late yesterday.

U.S. Monetary Policy

The U.S. Federal Reserve may need to decide on when to tighten monetary policy before the outlook for the global economy clears up later this year, Bullard said today in Prague.

A reduction in the Fed’s asset-purchase, or “quantitative easing,” program may begin if the U.S. economy is strong and global uncertainties are resolved, he said. A cut in the $600 billion program could be “on the order of $100 billion,” Bullard told reporters today following a presentation at a banking conference in Prague.

The volume of futures contracts trading on the New York Mercantile Exchange declined to 433,173 on March 25, the lowest since Dec. 31, according to data compiled by Bloomberg. Oil rose 4.3 percent last week to $105.40 a barrel.

“As governments around the world continued to take actions in response to the recent events, the oil market took a wait- and-see approach,” David Greely and Jeffrey Currie, analysts at Goldman Sachs, said in a report dated yesterday.
Hedge Fund Positions

Lower trading volumes are accompanied by high speculative net-long positions. Hedge-fund managers and other large speculators, betting that prices will rise, increased their net- long positions in futures by 5.9 percent to 286,812 futures in the seven days ended March 22, according to Commodity Futures Trading Commission data.

“We are in a situation where the speculative long positions are at very high levels but market liquidity at very low levels. This makes for a clear liquidity risk,” Olivier Jakob, managing director of Geneva-based consultants Petro matrix, said in a research note.

Futures in New York have rallied 22 percent since anti- government protests began Feb. 15 in Libya. The market may see little room for further gains in the near future, according to Glen Ward, head of retail derivatives of London Capital Group.

“All these long positions have to be got out of at some stage, so it’s time for the market to have a correction,” Ward said. “What you have seen is basically profit-taking.”

Stockpiles of crude in the U.S., the world’s biggest oil consumer, probably gained for a fourth week as imports rose ahead of the peak gasoline demand season, a Bloomberg News survey showed. The Energy Department publishes its weekly inventory report tomorrow. The industry-funded American Petroleum Institute releases its supply data today.

Commercially held inventories climbed 2 million barrels in the week ended March 25, according to the median estimate of nine analysts surveyed. Supplies previously increased to 352.8 million, the highest since December, as imports reached a six- week high.

Source

Oil Prices Rise

2010-06-21T07:23:00.000-07:00

Crude prices rose 1.4 percent today to the highest levels since mid May after China vowed to allow a flexible yuan exchange rate, raising expectations of higher crude imports by the world's No. 2 oil user.

US crude for July delivery rose as much as US$1.09 to US$78.27, the highest since May 10. It temporarily pared gains as did stock markets after China on Monday set the yuan mid-point unchanged from Friday, and was up 97 cents at US$78.15 at 0204 GMT.

A stronger yuan against the greenback may render Chinese imports of dollar-denominated oil cheaper, fanning energy consumption, analysts including Ben Westmore, from National Australia Bank said.

"China is important for the global oil market and an appreciating yuan is going to help fuel its imports," said Westmore.

"The natural implication of a re-valuation is that your import prices are falling. If you expect inflation to be kept under control, authorities won't need to tighten and that will have a comparatively stimulatory impact on the domestic economy."

China announced on Saturday that it would resume making the yuan flexible, signalling that it was ready to break a 23-month-old peg to the dollar that had come under intense international criticism.

But in a lengthy statement about how reform would proceed, the central bank explicitly ruled out a one-off revaluation, repeatedly said there was no basis for any big appreciation and added that the currency's value was not far off its fair level.

"You are going to struggle to see oil break to the upside without a great deal of clarity about the euro situation yet," Westmore said, adding prices were unlikely to surpass their early-May 19-month peak above US$87 before the end of the year.

US crude has recovered about 21 percent from a trough below US$65 a month ago, but is still US$9 lower than the 2010 peak.

ICE Brent crude for August rose as much as US$1.17 to US$79.39 a barrel on Monday, the highest price since May 14, and was up US$1.11 at US$79.33.

YUAN'S WIDE IMPACT

"The positive impact from a re-valuation will offset the adverse effect on the external sector," Westmore said. "The US economy is recovering faster than we thought three or four months ago."

Final Chinese commodity trade statistics for May, to be published later on Monday, were also in focus.

"The news of the yuan is more important for metals than for crude because a larger proportion of metals flows into China," Westmore said.

Global stocks, commodity-linked currencies and other higher-yielding currencies may receive an immediate boost this week in response to China's decision on the yuan.

Japan's Nikkei average powered to a one-month high on Monday, but Shanghai's Composite Index opened up a marginal 0.2 percent and S&P futures trimmed gains after the yuan's mid-point was left unchanged from Friday.

Analysts have also said China's move towards a flexible yuan was likely to be taken as a vote of confidence in the global economic recovery's staying power.

World stocks gained for a ninth straight day on Friday on improved risk appetite after a Spanish bond auction eased fears about sovereign debt in Europe and helped the euro hold near three-week highs.

In a sign of normalisation, Wall Street's fear gauge, the Volatility Index, tumbled below 24 on Friday after setting a 14-month high above 47 in May.

The oil market was also set to focus on this week's US Federal Reserve's Federal Open Market Committee (FOMC) two-day meeting on interest rates to June 23, seeking further evidence that low borrowing costs and other economic stimulus measures will remain in place for the rest of the year.

BP estimates that a worst-case scenario rate for the Gulf of Mexico oil spill could be about 100,000 barrels of oil per day, according to an internal company document released on Sunday by a senior US congressional Democrat.

Source

Oil Rises Above $77 as Hedging Demand Overrides Supply Concern

2009-12-04T04:06:00.000-08:00

Crude oil rose above $77 a barrel in New York as the dollar weakened, spurring investor demand for commodities to hedge against inflation.

Oil rebounded after losing 2.3 percent yesterday as the U.S. Energy Department reported that crude stockpiles swelled to their highest level since August. The dollar slipped as indications the global economy is recovering stimulated demand for higher-yielding assets.

“The dollar is the single most important factor in the market,” said Eugen Weinberg, senior commodities analyst at Commerzbank AG in Frankfurt. “It’s not the fundamentals. The weaker dollar is a really big concern for many investors and they try to protect themselves by buying into commodities.”

Crude oil for January delivery rose as much as 90 cents, or 1.2 percent, to $77.50 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $77.18 a barrel at 1:08 p.m. in London. Prices have gained 73 percent this year.

The Organization of Petroleum Exporting Countries, responsible for 40 percent of global oil output, will hold its last meeting of the year in Angola on Dec. 22.

Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah said surplus supply isn’t cutting prices because of speculation and the dollar weakness. He spoke to reporters at Cairo airport today as he arrived for a Dec. 5 meeting of Arab oil ministers.

An Institute for Supply Management index of non- manufacturing businesses, which make up the largest part of the U.S. economy, will rise to 51.5 in November from 50.6 in October, according to a Bloomberg News survey before today’s report. The U.S. currency dropped to $1.5122 per euro at 12:47 p.m. in London, from $1.5044 yesterday in New York. Gold hit a record for a third day, touching $1,226.56 an ounce.

Crude Stockpiles

Commercially held U.S. crude oil inventories rose 2.09 million barrels to 339.9 million, the highest level since August, the Energy Department report showed. Stockpiles were forecast to decline by 400,000 barrels, according to the median estimate from analysts surveyed by Bloomberg News.

Gasoline supplies climbed 4 million barrels to 214.1 million as imports hit a 14-week high, the Energy Department said. Distillate fuel inventories fell 1.17 million barrels to 165.7 million, 29.9 percent above the five-year average level.

“Demand indications for November-to-date remain firm for gasoline, greatly improved for jet, but are still very sluggish for other distillates,” analysts at Barclays Capital, led by Paul Horsnell, said in a report after the Energy Department data.

Total U.S. daily fuel demand averaged 18.5 million barrels in the four weeks ended Nov. 27, down 3.2 percent from a year earlier, the Energy Department said. Consumption slipped by 497,000 barrels a day last week.

China Rising

Rising consumption outside the U.S., particularly in China and India, may push oil prices to an average of $90 a barrel next year, compared with $61 this year, UBS AG’s wealth management group told reporters today in Singapore.

Brent crude oil for January settlement rose as much as $1.03, or 1.3 percent, to $78.91 a barrel on the London-based ICE Futures Europe exchange. The contract was at $78.70 a barrel at 1:09 p.m. in London.

Source

Crude Oil Declines as Growing Supply Dampens Recovery Outlook

2009-12-03T05:17:00.000-08:00

Crude oil fell after an industry report showing an increase in U.S. supplies reinforced speculation that fuel demand will be slow to recover.

The American Petroleum Institute reported that crude inventories rose by 2.89 million barrels last week, while gasoline and distillate fuel stockpiles also climbed. The U.S. Energy Department will release its report today. Ministers from Iran, Nigeria and Kuwait have indicated the Organization of Petroleum Exporting Countries will keep supply quotas unchanged at their Dec. 22 meeting.

“Eighty-dollars is proving a tough nut to crack, and last night’s stats put paid to any further testing of the resistance there,” said Christopher Bellew, senior broker at Bache Commodities Ltd. “There doesn’t seem any shadow of doubt that OPEC will leave quotas unchanged, and that’ll keep prices range- bound until the meeting.”

Crude oil for January delivery declined as much as 82 cents, or 1.1 percent, to $77.55 a barrel in electronic trading on the New York Mercantile Exchange. It traded for $78.06 at 1:08 p.m. London time. Prices have gained 74 percent this year.

Crude gained yesterday after reports yesterday showed signs of increased manufacturing output in the U.S. and China, which account for about 32 percent of global oil consumption.

The U.S. Energy Department will release its weekly supply report today in Washington. Inventories are forecast to decline, according to a Bloomberg News survey.

Energy Department

The Energy Department report is forecast to show that crude inventories fell 450,000 barrels, according to the survey. Oil- supply totals from the API and Energy Department moved in the same direction 75 percent of the time in the past four years, according to data compiled by Bloomberg.

“What is important here is that demand recovery was not as swift as expected, and this is also evident from overhanging crude and product stocks,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “We do not expect demand from the U.S. to reach pre-crisis levels until well into 2011.”

Inventories of distillate fuels, which include heating oil and diesel, rose 1.06 million barrels to 168 million, the API report showed. The Energy Department will probably say stockpiles fell 350,000 barrels last week, according to the Bloomberg News survey. Supplies are at 166.9 million barrels, the highest since January 1983.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Yachtsmen Released

Five British yachtsmen detained by Iran’s navy in the Persian Gulf last week were released today, state-run media reported. Oil prices dropped about 50 cents a barrel after the news of the release.

Iran’s Revolutionary Guards Corps said questioning of the sailors made it clear they had entered Iranian waters by mistake, the Fars news agency reported.

Brent crude oil for January settlement was at $79.13 a barrel, down 22 cents, on the London-based ICE Futures Europe exchange at 1:10 p.m. London time.

Source

Fundamental Oil Report

2009-12-02T05:45:00.000-08:00

Crude oil gained for the second day above $77 a barrel after Dubai's debt woes has eased and ahead of important data due later on today.

Oil prices jumped 1.6% overnight paring previous losses incurred last week after Dubai's news which aroused skeptics with regard recovery. However, the United Arab Emirates pledged to support for banks and Dubai world started discussions to restructure $26 billion of debt which spurred optimism in markets.

U.S. stocks advanced last night and Asian shares gained today on speculations Japan will not allow its currency to appreciate more. In addition, manufacturing improved in China before the release of manufacturing data in the U.S. later in the day. MSCI Asia Pacific Index touched two-weeks high and Nikkei closed on the highest gains in 2 weeks.

On the other hand, the U.S. dollar and Japanese yen slipped today as optimism eroded demand on lower-yielding currencies. The dollar index, a gauge of the dollar movements versus a basket of major currencies, plunged to 75.57 from today's opening at 74.82. The dollar's slid enhanced demand on commodities as an inflation hedge.

Moreover, the American Petroleum Institute will release its weekly report today to show demand on crude inventories in the U.S. last week, where the EIA report will be released tomorrow.

Oil is currently traded at $74.59 recording a high of $75.08 and a low of $74.57, whereas the contract on Monday edged up $1.23 closing at $77.28, while recording a high of $78.00 per barrel and a low of $75.13 per barrel.

Source

Oil Prices Headed Lower?

2009-07-04T00:00:00.000-07:00

Oil prices may finally be getting acquainted with reality. After clipping an eight-month high earlier today, crude prices tumbled more than 2% to close below $70 a barrel.

Given the shaky consumer-confidence reading this morning, primarily attributed to higher gasoline prices, a drop in oil prices would be welcome. And it may be in the offing following a 41% gain in prices during the second quarter.

The oil market has not exactly focused on fundamental supply and demand issues during the past couple of years. The price spike to $147 a barrel one year ago looks bizarre in retrospect. The lows of $35 a barrel earlier this year reflected the post-Lehman uber-pessimism.

More recently, the surge in oil prices — up 68% in the last five months — has similarly ignored reality. Oil supplies are rising, global demand is down and inflation fears remain highly theoretical.

Oil bulls have focused on two notions: a weaker dollar and rising demand from China. When the dollar declines, commodity prices tend to rise since they are priced in dollars. Need more of the weak buck to buy the same amount of crude, all things being equal. There is something to this idea, because the dollar has struggled and many expect it to have a rough go amid soaring fiscal deficits.

The China demand notion, however, is far weaker. Even if China demand is rising, the wilting economies of Europe, Japan and the U.S. more than compensate for that demand. Given the still uncertain prospects for these large economies, it’s hard to see how demand will drive oil prices higher.

Intriguingly, Chevron and ExxonMobil started retreating from recent highs earlier in June even as oil prices pressed higher. Maybe those stock moves foreshadowed coming weakness in the oil market. We could see a broader retreat in oil prices, especially if the Green Shoots don’t start blossoming into something more than a hope.

Source

Oil Tumbles From 8-Month High as Consumer Confidence Slumps

2009-07-03T00:00:00.001-07:00

Crude oil tumbled from an eight- month high and gasoline fell as U.S. consumer confidence declined in June, indicating lower fuel demand.

Oil dropped 2.2 percent after the Conference Board’s sentiment index unexpectedly weakened and delinquencies on the least risky U.S. mortgages more than doubled. The U.K. economy shrank the most since 1958, a government report showed. Oil also retreated on forecasts that U.S. fuel supplies rose last week.

“The consumer confidence number is raining on the bulls’ parade,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “We were moving higher earlier today but concerns about the economy are now pulling the market lower.”

Crude oil for August delivery fell $1.60 to settle at $69.89 a barrel at 2:53 p.m. on the New York Mercantile Exchange. Prices are up 57 percent this year. Futures touched $73.38 a barrel earlier today, the highest since Oct. 21, as militant attacks curbed supply from Africa’s largest producer.

Prices pared losses in electronic trading after the American Petroleum Institute reported that U.S. crude-oil supplies dropped 6.82 million barrels to 349.7 million last week, the biggest decline since September. Futures were down 92 cents, or 1.3 percent, at $70.57 a barrel at 4:46 p.m.

Oil in New York posted a 41 percent quarterly gain, the biggest since 1990. Prices have rallied as rebounding world equity markets and a weaker dollar encouraged investors to buy the commodity as an alternative investment.

‘Significant Volatility’

“I’m expecting significant volatility this week as fund managers position themselves for the end of the quarter and because it’s a short trading week,” said Stephen Schork, president of the Schork Group Inc. of Villanova, Pennsylvania. “I don’t think this is the death-knell of the market.”

There will be no floor trading in New York on July 3 because of the Independence Day holiday.

“Once we come back from the holiday on Monday, it will be a whole new game,” Schork said. “Price is high and demand is low. Attention may shift to the fundamentals.”

Gasoline for July delivery declined 3.86 cents, or 2 percent, to end the session at $1.8972 a gallon in New York. The July contract expired today. The more-active August contract declined 3.34 cents, or 1.7 percent, to settle at $1.902.

The Conference Board’s consumer sentiment index fell to 49.3 from a revised 54.8 in May, the New York-based research group said. Prime mortgages 60 days or more past due climbed to 2.9 percent of such loans through March 31 from 1.1 percent at the same point in 2008, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said today.

U.K. Economy

Gross domestic product in the U.K. decreased 2.4 percent in the first quarter from the final three months of 2008, the Office for National Statistics said today in London. The economy was forecast to slip 2.1 percent, according to the median of 28 economists surveyed by Bloomberg News.

“Oil moved above $73 overnight, but then had to face some sobering headlines,” said John Kilduff, senior vice president of energy at MF Global in New York. “The U.K. GDP numbers were quite dour, which took the momentum right out of the market.”

An Energy Department report tomorrow will probably show that U.S. fuel inventories rose last week. Gasoline supplies climbed 2 million barrels, according to the median of 15 estimates in a Bloomberg News survey. Stockpiles of distillate fuel, a category that includes heating oil and diesel, increased 1.5 million barrels.

Crude-oil supplies declined 2 million barrels, according to the survey. The Energy Department is scheduled to release its weekly report on July 1 at 10:30 a.m. in Washington. The industry-funded API released its weekly supply data at 4:40 p.m. today, 10 minutes later than usual.

Possible Outcomes

“Just about any possible outcome tomorrow will be bearish,” said Peter Beutel, president of Cameron Hanover Inc., an energy consulting company in New Canaan, Connecticut. “We are expecting the fuel stocks to increase and there will be plenty of crude oil available even if there is a drop.”

Total U.S. daily fuel demand in the four weeks ended June 19 was down 6.6 percent from a year earlier, the Energy Department said last week.

The International Energy Agency, an adviser to 28 developed nations, yesterday lowered its five-year forecast for global crude demand because of the economic slump. The Paris-based agency cut its oil-consumption estimates for every year through 2013 by about 3 million barrels a day.

Declining crude oil and gasoline prices helped send the Reuters/Jefferies CRB Index of 19 raw materials lower. The index dropped 1.7 percent to 249.96. The measure is up 13 percent for the quarter.

Brent Oil

Brent crude oil for August settlement fell $1.69, or 2.4 percent, to end the session at $69.30 a barrel on London’s ICE Futures Europe exchange.

Crude oil volume in electronic trading on the Nymex was 456,723 contracts as of 3:06 p.m. in New York. Volume totaled 371,435 contracts yesterday, 25 percent less than the average over the past three months. Open interest was 1.15 million contracts. The exchange has a one-business-day delay in reporting open interest and full volume data.

Source

Iraq awards BP-led consortium a contract to develop oil field

2009-07-01T07:14:00.000-07:00

Reporting from Baghdad -- A much ballyhooed effort by Iraq to lure foreign investment and expertise to help its battered oil industry fizzled Tuesday after it became clear that the government is not prepared to pay the prices international oil companies are asking for their services.

Iraq was seeking bids for the development of eight of its existing oil and gas fields, but only one contract to work one oil field was awarded at a public auction televised live from Baghdad's Rashid Hotel in the heavily fortified Green Zone.

The disappointing outcome to the widely anticipated event, which was planned a year ago, suggested that international oil firms aren't as eager to invest in Iraq as the government had hoped and that there will be no quick fix for the nation's looming financial problems.

"It's pretty much a total disaster," said Peter Kemp of the New York-based Energy Intelligence publishing group. "It seems the Iraqis totally miscalculated the commercial realities of this process."

The sole contract was awarded to a consortium led by Britain's BP and including China's CNPC International Ltd., marking the first time foreign companies have been permitted to invest in Iraqi oil since 1972, when the country's oil industry was nationalized. Iraqi Oil Minister Hussein Shahristani called it a "historic day" that coincided with the withdrawal of U.S. troops from Iraq's cities.

The auction drew dozens of executives from the world's top oil firms and was being closely watched for signs of how the new Iraq is likely to go about developing its vast proven oil reserves, the third-largest in the Middle East after Saudi Arabia and Iran.

But as the bids were unsealed, it quickly became clear that there was a wide gulf between the maximum price the Iraqi government was prepared to pay investors to develop the oil fields and the minimum price oil companies were prepared to accept.

A Chinese consortium sought 10 times the price offered by the Iraqi government to develop the Maysan field in southern Iraq, and a consortium led by U.S. oil giant ConocoPhillips sought five times more than the Iraqi offer to develop the Bai Hassan field in the north.

Under such contracts, oil companies would be paid a fixed fee per unit of oil or gas produced, above a certain threshold, in return for much-needed technical expertise and investment in infrastructure to increase production.

Four of the eight fields on offer received only one bid each, and a gas field in troubled Diyala province received no bids, indicating that oil companies are less keen to enter the potential quagmire of Iraq than had been anticipated, despite recent security improvements.

Shahristani acknowledged that oil companies investing in Iraq will need to pay hefty fees to security companies to ensure the safety of employees, which may explain why their prices were so high.

"Some of the oil companies are not very comfortable with the security situation, and this is why they didn't offer acceptable bids," he said.

The process also has been bitterly opposed by some Iraqi politicians, who believe that the fee structure being offered to foreign oil companies represents a surrender of national interests. Shahristani was under intense pressure not to concede too much, said Ruba Husari, founder of the Iraq Oil Forum website.

"In political terms, he can say it wasn't a sellout, that we did not give our oil fields to the international companies at any price," she said.

Shahristani said he thought the prices offered by the government were realistic but he also hinted at the political pressure, saying that his government had sought to balance a fair price for the oil companies with the need "to have a fair deal for the Iraqi people."

But Iraq is equally under pressure to do something to bolster its oil production, which has been sagging as the country's antiquated oil infrastructure erodes after decades of neglect. The government, which is running an $18-billion deficit this year, is being funded by surpluses accumulated in previous years, but it could face difficulties next year, officials say.

Shahristani said he was confident that the contract awarded would be enough to generate an extra $1.7 trillion over the next 30 years from southern Iraq's vast Rumaila oil field. But Husari said she thought the production targets set for the field were "overambitious."

Companies whose bids were rejected by the government were invited to resubmit their offers, which would then be considered by the Iraqi Cabinet. But it was unclear what the time frame would be, or whether a middle ground could be found given the differences that emerged.

The Oil Ministry also plans a second public auction by the end of the year, seeking investments in previously undeveloped oil fields.

Source

Iraqi oil minister says OPEC to cut production

2009-02-08T05:00:00.000-08:00

OPEC members are expected to cut oil production when they convene in March to try to push up prices to at least $70 a barrel, Iraq's oil minister said Saturday.

Hussain al-Shahristani also identified the country's political tensions, bureaucracy and lack of funds as main impediments to developing Iraq's hydrocarbon resources.

OPEC cuts have so far failed to stop the dramatic fall in oil prices since July. The drop has hit Iraq particularly hard. The country depends on oil revenues for nearly 95 percent of its budget. As a result, the government was forced to slash its 2009 draft budget from $80 billion to $64 billion.

"The year 2009 will be a tough year around the world and that will be reflected on the oil demand and then prices will drop," al-Shahristani told a symposium in Baghdad on developing Iraq's oil and gas industry.

"In March, OPEC will convene and there will be an intention for more production cuts to shore up prices and encourage production from non-OPEC members," al-Shahristani added.

"We do believe that the price should be no less than $70 for a barrel."

In December, OPEC announced a 2.2 million barrel production cut aimed at boosting prices that have plummeted from mid-July highs of $147 per barrel. The cuts came on top of another 2 million barrel production cut instituted in the last quarter of 2008.

But oil prices have continued to deteriorate. Benchmark light, sweet crude for March delivery dropped a dollar on Friday to settle at $40.17 a barrel on the New York Mercantile Exchange.

Iraq is a member of the Organization of Petroleum Exporting Countries but is not committed to its production quota because the war-plagued country produces less than its potential.

Al-Shahristani also renewed his objection to oil deals signed between the Kurds and Western oil companies, saying they are a main "impediment" in approving the country's long-awaited hydrocarbon law because they "contradict the law and contradict Iraq's benefit."

The Kurds run a three-province semiautonomous region with vast oil reserves. They argue that the Iraqi constitution gives them the right to unilaterally negotiate and sign oil deals without consulting with the central government in Baghdad.

The Kurds' nearly two dozen deals have left politicians at loggerheads since February 2007.

"Iraq's oil sector should not be taken hostage by the current political situation and it should be freed to be developed properly," he said.

He also called on the government to ease some of its bureaucracy and enable the ministry to have a say on major contracts to speed up development of Iraq's dilapidated oil and gas infrastructure.

"Now, we have dilapidated and eroded pipelines. ... We can't buy new ones because we don't have enough money especially because the 2009 budget has not been approved yet."

Iraq, which sits on the world's third-largest oil reserves - at least 115 billion barrels - has offered 19 oil and gas fields to international companies for development in two major bidding rounds.

Iraq plans to add 4 million to 4.5 million barrels a day to its current 2.4 million barrels per day capacity over the next four to six years. The ministry plans to sign the contracts for the first round in mid-2009 and the second round by the end of the year.

A third bidding round, to be announced this year, will offer 65 exploration blocks nationwide, al-Shahristani said without elaborating.

Source

A Call for Oil Price Stability

2008-12-20T19:17:00.000-08:00

In less than a year, oil prices have gone down partly because of the ongoing global financial crisis. I first thought of the Iraq invasion in 2003 as the major cause of price increase of oil.

Early this year, I've witnessed first hand here in the Philippines how an oil-consuming country gets affected by the continuing rise of oil prices. People literally jammed our light-rail transit system. Those who would normally use their cars to commute to work suddenly found themselves among the throng of people lining up to get a cheap ride on the trains.

I read an article on the dailynews.com today urging cooperation among oil producers and consumers to help stabilize the price and future supply of oil. Will our world leaders finally "talk" about this pressing issue? You can read the whole article from this link:

http://www.newsdaily.com/stories/lj506554-us-london-energy-meeting

Crude continues decline despite signals from OPEC

2008-11-16T23:03:00.000-08:00

Oil prices slumped Friday, despite signals from OPEC that it may slash production again, with the markets instead focused on the most recent reports showing drastic cutbacks in spending and consumption by businesses and consumers.

Gasoline prices again fell overnight, prompting one analyst to note a "half price holiday sale on gas" with Americans fueling up for the Thanksgiving holiday at half the price they did in July.

Light, sweet crude for December delivery fell $1.20 to settle at $57.04 a barrel on the New York Mercantile Exchange.

The Commerce Department Friday reported the largest ever October plunge for retail sales and a sharp drop in business inventories. It said retail sales fell by 2.8 percent last month, surpassing the old mark of a 2.65 percent drop in November 2001 in the wake of the terrorist attacks that year.

The decline in sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers retrenched.

That likely means fewer vehicle miles driven, both because of job losses and less trips to the shopping mall and less money spent on vacations. Businesses are slowing down as consumption drags.

The Commerce Department reported business inventories dropped by 0.2 percent in September. It was the first decline since March 2007 and the biggest drop in more than three years, since inventories fell by 0.3 percent in July 2005.

The national average price for regular gasoline fell overnight, down 2.6 cents to $2.152 a gallon, according to according to auto club AAA, the Oil Price Information Service and Wright Express. That is nearly $1 a gallon below what it was a month ago and nearly $2 below where it was in July when prices peaked at $4.11 per gallon.

"We're on a trajectory that cannot be turned around on the short term," Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service, said Friday of gasoline prices.

In his blog Thursday, Kloza estimated that the daily U.S. gasoline bill for the rest of November will be about $750 million per day less that what it was in early July when the cost was $1.55 billion per day.

He said some retailers have noted the actual purchase amounts of gasoline are smaller than what they were over the summer as motorists realize they will pay less for gas the next time they fill up.

He put the odds of oil dropping below $50 per barrel at about 50 percent even as the Organization of Petroleum Exporting Countries repeatedly removes oil from the market to keep pace with deteriorating demand.

An OPEC official said the 13-member states would meet in Cairo Nov. 29 on the sidelines of a previously planned meeting for Arab members of the group.

The official asked not to be named because the Vienna-based organization is not issuing a formal statement.

OPEC held an emergency meeting only three weeks ago and slashed production by 1.5 million barrels a day. Crude has tumbled 8 percent since then.

Analysts say OPEC's rhetoric rarely matches what it does.

Nevertheless, as the economy turns around, consumption of fuel will increase and send oil prices higher.

"In the long run global growth will be restored at some point," Kloza said Friday. "It will do their dirty work for them."

George Littell of Groppe, Long & Littell said OPEC's recent cuts will not be felt for a few more weeks. He noted that prices did not begin to fall this summer until Saudi Arabia ratcheted up production in July.

Littell said oil prices likely will start to rally in a few weeks once OPEC cuts start to hit and cold weather sets in across the country.

Jim Ritterbusch, president of energy consultants Ritterbusch and Associates, said OPEC needs to do something. If OPEC were to maintain production levels, oil consuming countries would be happy, but it probably would drag prices down another $5 or $10 a barrel, he said.

Oil prices have fallen about 60 percent during the last four months after reaching $147.27 in July.

OPEC, which produces about 40 percent of world supplies, has said it may cut production by the end of this month if prices continue to fall.

Before the 1.5 million barrel cut, OPEC said it was taking 520,000 barrels out of daily production. That too was brushed off by the market.

Meanwhile, the government said Friday that natural gas stockpile levels in the U.S. rose more than expected last week, but are 2 percent below the year-ago average.

The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories held in underground storage in the lower 48 states rose by 62 billion cubic feet to about 3.47 trillion cubic feet for the week ended Nov. 7.

Analysts had expected a boost of between 41 billion to 46 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The news sent natural gas for December delivery down less than a penny to settle at $6.312 per 1,000 cubic feet on the New York Mercantile Exchange on Friday.

In other Nymex trading, heating oil futures fell 4 cents to $1.8351 a gallon, while gasoline prices dropped 6 cents to $1.24 a gallon.

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Fuel Price Cut on September 2008

2008-09-02T19:47:00.000-07:00

Some relief is on the way. Fuel prices will drop for a second consecutive month at midnight tonight. The Minerals and Energy Department made the announcement last Friday that the retail price of petrol will drop by between 69 and 78 cents per litre. The wholesale price of diesel with 0.05% sulphur content will drop by R1.44 per litre. Diesel with 0.005% sulphur content would drop by R1.46 per litre. This comes as a huge relief to consumers who had been battling with the increased fuel prices a couple of months ago.

The wholesale price of illuminating paraffin will drop by R1.46 a litre and the single maximum national retail price for illuminating paraffin by R1.94 a litre. This is also much welcome for consumers of paraffin who were not happy that the price of paraffin did not drop when the petrol and diesel prices last dropped.

It is now a matter of waiting to see if the fuel prices continue to drop. The drop has been attributed to the strengthening rand and the softening world oil prices. But with the hurricane season approaching it will be interesting to see how oil prices react. We may see oil prices rising due to decreased supply because of the hurricanes.

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Oil Prices Rise as Gustav Shuts Gulf Installations

2008-09-01T06:37:00.000-07:00

World oil prices rose by less than one dollar in Asian trade today after the Hurricane Gustav forced the shutdown of almost all oil production in the Gulf of Mexico, said analysts.

New York's main contract, light sweet crude for delivery in October, rose 84 cents to USD 116.30 a barrel when trading closed Friday at the New York Mercantile Exchange.

Brent North Sea crude for October gained 72 cents to USD 114.77 from USD 114.05 in London on Friday.

About one quarter of the US oil production comes from the Gulf, one of the largest energy production hubs in the Americas, but the US officials said that more than 96% of Gulf oil production and 82% of the natural gas output had been stopped due to the storm.

Gustav was on target to plough into coastal Louisiana today, potentially as a Category 4 storm with sustained winds of 242 kilometres per hour and storm surges up to 4.8 metres above normal.

"It's all about Gustav," said Tony Nunan, of Mitsubishi Corp's international petroleum business in Tokyo.

He said that price gains had been limited because of underlying worries about a global economic slowdown and falling demand for oil.

World oil prices have sunk from record highs above USD 147 a barrel in early July after surging from USD 100 at the start of the year.

Today's rise of about one dollar was "not really that much", Nunan said, adding that trading would be thin because the US markets were shut for the Labour Day holiday.

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Oil prices soar to new heights as Arizona faces record gas prices

2008-05-17T00:09:00.000-07:00

Oil prices jumped above a record $127 per barrel Friday as Goldman Sachs Group projected oil prices to hit $141 this summer and $150 to $200 per barrel over the next two years.

All that puts inflationary pressure on gasoline prices, which are also at record highs.

The national average gas price is $3.79 per gallon, according to AAA. Gasoline prices in Arizona also are hitting record highs, with Glendale at $3.56 per gallon, Flagstaff at $3.69 and Scottsdale at $3.60. The statewide average is $3.57 per gallon, according to AAA.

Oil prices were $126 per barrel Friday morning, Arizona time, after approaching $128 early in the day, according to Oil-Price.net.

Oil-Price.net projects crude will hit $164 a barrel over the next year.

Crude prices were also pushed up Friday after Saudi Arabia declined President Bush's request to increase oil outlays.

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Oil prices below $90 in Asian morning trade

2008-01-17T20:49:00.000-08:00

SINGAPORE -- World oil prices fell below $90 in Asian trading on Friday amid deepening concerns that weakness in the US economy -- the world's biggest energy consumer -- could sharply dent demand, analysts said.

In morning trade, New York's main contract, light sweet crude for delivery in February, slid 51 cents to $89.62 a barrel.

The contract closed 71 cents lower at $90.13 a barrel in trading on the New York Mercantile Exchange Thursday.

Brent North Sea crude for March delivery fell 20 cents to $88.55 per barrel, after settling 75 cents lower at $88.75 per barrel on Thursday in London.

"The drop in demand is certain in the short term with the economic slowdown in the United States affecting sentiments worldwide. Everyone stops spending, and that will drive prices further down," said Tony Nunan, of Mitsubishi Corp's international petroleum business in Tokyo.

He said trading is volatile and in a "worst-case scenario" prices could fall as low as $69 a barrel.

"I can see prices dropping to the lower 80s or even the higher 70s as we move towards the end of the first quarter," he said.

Oil prices retreated as US stocks fell sharply Thursday, with investors reeling from further dismal housing data and news of a record loss at Wall Street investment and brokerage firm Merrill Lynch.

Some analysts are predicting a prolonged real-estate slump and credit crisis could push the world's largest economy into recession.

On Friday, US President George W. Bush was to propose a series of "short-term, temporary measures" to stimulate the US economy and see it past current troubles, the White House said.

"If the US falls into recession and China slows down we could be headed for one of the most significant corrections of this decade in oil," said Phil Flynn, an analyst at Alaron Trading.

Prices remain at high levels but have shed more than $10 since striking a record in New York of $100.09 per barrel in early January.

"At the moment it seems that economic concerns continue to outweigh all these factors that drove crude prices to just above $100," Sucden analyst Andrey Kryuchenkov said in London.

"All the aspects that underpinned crude prices in 2007 and at the start of this year are still here, with tight supplies, geopolitical fears on the supply side and the broad weakness in the greenback.

But he said that until global economic jitters ease there is likely to be less emphasis on supply fundamentals.

Nunan said oil prices will only start to bounce back from first-quarter lows during the US summer holiday driving season when demand for gasoline peaks.

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IEA Says Oil Prices Could Fall Further

2008-01-16T19:00:00.000-08:00

PARIS — Crude oil prices could fall further from this month's record high of $100 per barrel because of weakness in the U.S. economy, the International Energy Agency said Wednesday.

Still, rising demand in China, tensions in Nigeria and the Middle East, and falling oil stocks remain "supportive factors" for prices, the Paris-based agency said in its monthly oil market report.

A "rapid retreat" in crude oil prices from the $100 mark earlier this month shows "how volatile markets remain and, in early 2008, there would appear to be some downside potential," the report said.

Light, sweet crude for February delivery fell $2.30 to settle at $91.90 a barrel on Tuesday _ down from the record high of $100.09 a barrel on Jan. 3. By midday Wednesday, the contract was down another $1.72 to $90.18 a barrel after sinking as low as $89.26 earlier. It was the first time since Dec. 19 the price of crude fell below $90.

World oil demand is expected to rise by 2.3 percent this year to 87.8 million barrels per day, the IEA said, which represents a slight cut from last month's prediction that demand would rise by 2.5 percent this year. The agency added that its forecast could change further if the economic slowdown in the U.S. _ a major oil consumer _ worsens. Weakening U.S. demand would only be "partially" offset by strong economic growth in China and the Middle East, the report said.

However, the IEA said its preliminary figures showed U.S. demand has not declined despite higher pump prices, and increased 0.1 percent in November compared with the same month a year earlier.

In China, a gasoline and diesel shortage suggests "that pent-up demand is significant," the IEA said, citing an "exponential increase" of energy use along with increased demand for cars, trucks, and planes, among other oil-consuming items in the booming Chinese economy.

Production from Iraq fell slightly to 2.3 million barrels per day in December, after hitting a 3 1/2-year high in the previous month, the IEA said. The agency said it was revising upward its estimate for Iraqi output in November to 2.4 million barrels per day, from 2.3 million.

The IEA said Iraq has signed an agreement with an affiliate of Russia's Gazprom to study the reactivation of 300,000 barrels per day of pipeline capacity from Kirkuk to Banias, Syria, that has been out of operation since before the U.S.-led war in Iraq began.

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Oil prices edge higher after briefly surpassing US$99 a barrel on cold weather, weak US dollar

2007-11-26T16:44:00.000-08:00

NEW YORK _ Oil prices edged up Monday after briefly surpassing $99 a barrel on signs of colder weather in the United States and Europe and worries about weakness of the U.S. dollar.

The Thanksgiving holiday on Thursday marked the unofficial start of winter in the United States. Among other areas, southeastern New Mexico got up to 22.86 centimetres of snow and experienced colder than normal temperatures over the holiday weekend. Snow also fell in Germany over the weekend.

“The onset of cold U.S. weather is going to boost fuel demand,‘‘ said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Light, sweet crude for January delivery on the New York Mercantile Exchange added 13 cents to $98.31 a barrel in electronic trading by midafternoon in Europe, after reaching a high of $99.11 earlier Monday.

On Friday, the contract rose 89 cents to settle at a closing record of $98.18 a barrel.

January Brent crude fell six cents to $95.70 a barrel on the ICE Futures exchange.

Meanwhile, the dollar fell slightly against the euro on Monday as speculation continued that the American credit crisis will lead to another cut in U.S. interest rates.

“The weakened U.S. dollar remains at record low levels and so we‘ve got pricing trying to test $100 again,‘‘ Shum said.

Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the U.S. currency is falling.

Nymex crude prices reached a trading record of $99.29 a barrel on Wednesday, and are within the range of inflation-adjusted highs set in early 1980. Depending on how the adjustment is calculated, $38 a barrel then would be worth $96 to $103 or more today.

“Almost anything could push prices higher from here and we have to expect to see a move to‘‘ $100 per barrel this week, said Peter Beutel, president of U.S. energy risk management firm Cameron Hanover, in a research note, listing a U.S. Federal Reserve interest rate cut, a weaker U.S. dollar, colder weather forecasts or “any petro-political problem‘‘ among the factors which could push oil prices to three digits.

“We have reached the point, though, where the inability to touch or break $100 this week would be seen as rather a spectacular failure,‘‘ Beutel wrote.

Shum said that data suggesting OPEC is increasing production more quickly than expected is likely to keep a temporary cap on crude oil prices.

Oil Movements, an oil tanker tracking firm based in Britain, reported that Organization of Petroleum Exporting Countries oil exports are likely to jump by an average of 720,000 barrels a day in the four weeks ended Dec. 8, more than the expected 500,000 barrels per day.

Crude oil prices rose 43 per cent between August and early November on falling domestic inventories, concerns about supply disruptions overseas and, many analysts argue, speculative buying. But recent forecasts have suggested high prices are cutting demand.

Nymex heating oil rose 1.08 cents to $2.7150 a gallon while gasoline prices gained 0.58 cent to $2.4728 a gallon. Natural gas futures rose 19.9 cents to $7.899 per 1,000 cubic feet.

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Oil prices dip after flirting with 100 dollars

2007-11-22T14:07:00.000-08:00

LONDON (AFP) — World oil prices eased on Thursday, one day after striking record peaks near to 100 dollars per barrel on concerns over weak crude supplies and the falling dollar.

Investors took a cautious stance to protect their positions since US floor trading was shut Thursday owing to the Thanksgiving holiday, analysts said.

New York's main contract, light sweet crude for January delivery, fell 39 cents to 96.90 dollars per barrel in electronic trade. The contract had hit an historic high of 99.29 dollars on Wednesday.

Elsewhere Thursday, London's Brent North Sea crude for January delivery slipped 21 cents to 94.63 dollars per barrel, after striking an all-time peak of 96.53 dollars on Wednesday.

"We have come up just short of 100 dollars twice now, so there is strong resistance (there)," Sucden analyst Michael Davies said in London.

Oil prices had failed to top 100 dollars per barrel on Wednesday, despite official data which showed that US energy stockpiles fell more heavily than expected last week.

David Moore, a commodity strategist with the Commonwealth Bank of Australia, said he had expected prices to rise after the disappointing US energy report.

"I thought the inventory data would be supportive of the market," Moore said. "It may have been investors were cautious ahead of the Thanksgiving holiday."

The US Department of Energy (DoE) announced Wednesday that reserves of US crude oil had sunk by 1.1 million barrels in the week ending November 16.

Analysts' consensus forecast had been for a gain of 750,000 barrels.

The DoE added that US reserves of distillates, including crucial heating fuel and diesel, dived by 2.4 million barrels last week. That was far heavier than market expectations for a drop of 450,000 barrels.

Heating fuel demand is expected to pick up as the Northern hemisphere winter kicks in next month. The US northeast region is the world's biggest user of heating oil.

Moore said the market can expect continued volatility in the weeks ahead as tight global supplies and geopolitical tensions in the Middle East continue to worry investors.

"The oil prices are certainly volatile and the outlook is obviously subjected to a lot of uncertainty. For that reason, we will see oil prices move higher in the near term ... it is still possible for oil prices to go above 100 dollars," he added.

Crude oil prices have surged by about 64 percent since the start of 2007, supported by supply disruptions in key producers such as Nigeria, geopolitical jitters over the Iranian nuclear crisis, and strong demand from China and India.

Oil prices were also winning support from a troubled dollar, which is striking a series of record low points against the surging euro.

A weak greenback encourages demand for dollar-priced commodities because they become more attractive to investors using stronger currencies.

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Oil prices breach record $US99

2007-11-21T01:27:00.000-08:00

OIL prices rose above $S99 dollars per barrel in Asian trade today, within striking distance of the $US100-dollar level, as the US dollar slumped further, dealers said.

Concerns over tight global supplies was also helping push prices up, they said. The New York contract had closed at a new record of $US98.03 overnight.

In early morning Asian trade, oil prices pushed even higher.

New York's main contract light sweet crude for January delivery set a new intraday trading high of $US99.29 a barrel, breaking its previous record of $US98.62 set on November 7.

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Oil prices hit record highs amid dollar weakness

2007-11-20T14:45:00.000-08:00

NEW YORK (AFP) — World oil prices soared to new records Tuesday, breaching 98 dollars a barrel in New York, amid supply concerns and as the US dollar continued to weaken against other major currencies.

New York's main oil futures contract, light sweet crude for January delivery, soared 3.39 dollars to close at 98.03 dollars per barrel.

Prices in New York hit an all-time high of 98.62 dollars on November 7 during intraday trading, but Tuesday marked the first time prices had closed above 98 dollars.

In London, the price of Brent North Sea crude for January delivery surged 3.21 dollars to settle at 95.49 dollars per barrel, smashing a prior high of 95.19 dollars struck in November 7.

In after-hours trade, Brent crude was trading at even higher levels, at 96.24 dollars a barrel.

Some analysts believe oil prices could soon strike 100 dollars a barrel, especially as oil demand is being stoked by China and India's breakneck economic growth.

"Oil prices were higher today, with the dollar reaching fresh record lows against the euro and still coming off against other major currencies," Sucden analyst Michael Davies said.

The European single currency leapt to a historic peak above 1.48 dollars. The weakening dollar makes dollar-denominated commodities like oil cheaper for buyers armed with stronger currencies.

The market also continued to focus on the state of global energy supplies.

"Oil markets remain tight," analysts from the Commonwealth Bank of Australia said.

Despite supplies being strained ahead of the northern hemisphere winter, OPEC opted not to jack up its production quotas following a meeting in Saudi Arabia over the weekend.

The Organization of the Petroleum Exporting Countries (OPEC) has been under pressure, in particular from the United States, to boost supply to help cool prices.

However, OPEC's final declaration on Sunday after the meeting urged world peace to help stabilize prices and included a commitment to help fight global warming.

OPEC, which pumps 40 percent of global crude supplies, last decided to raise output in September when the oil producers' cartel agreed to provide an extra 500,000 barrels a day to the market, effective from November 1.

Some traders believe the ongoing weakness in the dollar will prompt OPEC to seek higher prices for oil, if not to move away from the currency all together.

"(OPEC) producers have seen their purchasing power decline with the dip in value of the greenback," said Bank of Ireland analyst Paul Harris.

OPEC has said it would hold off any discussion regarding production until its next meeting in December.

"The apparent removal of the possibility of increased supply will serve to at least underpin crude oil at these (price) levels," Harris said.

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Oil prices rise after OPEC summit

2007-11-19T17:33:00.000-08:00

NEW YORK (AFP) — World oil prices rose Monday amid tight crude supplies heading into the northern hemisphere winter as traders assessed the outcome of an OPEC summit held in Saudi Arabia over the weekend.

New York's main oil futures contract, light sweet crude for January delivery, closed up 80 cents at 94.64 dollars per barrel.

In London, Brent North Sea crude for January delivery settled up 66 cents at 92.28 dollars per barrel.

"Crude futures were firmer after the OPEC meeting over the weekend in Riyadh ended without the cartel signalling any increases of oil on top of the current quota," said Sucden analyst Michael Davies.

In the run-up to the two-day summit, the Organization of the Petroleum Exporting Countries (OPEC) had been under pressure to increase supplies to help cool prices which some analysts believe could soon strike 100 dollars.

A final declaration on Sunday from the oil exporters' group urged world peace to help stabilize prices and included a commitment to help fight global warming.

OPEC, which pumps 40 percent of global crude supplies, last decided to raise output in September when the oil producers's cartel agreed to provide an extra 500,000 barrels a day to the market, effective from November 1.

However, an influential London-based research group warned that oil supplies would remain tight in the coming months.

"While benchmark oil prices have retreated from the 100-dollar threshold they threatened to break in recent weeks, the oil market is likely to remain tight over the winter months, as the additional oil works its way slowly through the supply chain," the Centre for Global Energy Studies (CGES) said.

The CGES added in a monthly market report: "Signs that the global economy may be heading for a slowdown are undermining longer-term forecasts of oil demand growth, suggesting that prices could fall sharply next year.

"The path of oil prices over the coming months will be greatly influenced by how OPEC reacts to any downward correction."

Although some OPEC ministers expressed concern that expensive crude would eventually dampen demand for oil, they indicated that blame for the near triple-figure price lay outside the cartel.

"The apparent removal of the possibility of increased supply will serve to at least underpin crude oil at these levels," Bank of Ireland analyst Paul Harris said.

"The factors that have precipitated the move to record levels remain intact."

Heating fuel demand typically peaks during winter especially in the northeast region of the United States.

Crude futures had last week slumped further from all-time highs of 98.62 dollars in New York and 95.19 dollars in London as OPEC and the International Energy Agency downgraded their forecasts for global oil demand. Prices were also hit by news of a surprise increase to US energy inventories.

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US crude oil futures end higher

2007-11-19T05:00:00.000-08:00

NYMEX

US crude oil futures ended higher on Friday, on short-covering before expiry of the December contract, with a weakened dollar providing support.

Heating oil and gasoline futures racked up good gains with demand seen rising next week, with the US Thanksgiving holiday on Thursday.

On the New York Mercantile Exchange, December crude settled up $US1.67, or 1.8 per cent, at $US95.10 a barrel, after moving from $93.20 to $95.73. Players with short December positions covered to avoid having to make physical delivery.

US crude stocks rose last week, government data showed on Thursday, fuelling the sell-off. But storage at the Cushing, Oklahoma, delivery hub for NYMEX-traded oil remained at the three-year low of 13.4 million barrels, a supportive factor.

January crude settled up $US1.77, or 1.9 per cent, at $US93.84 a barrel, trading from $US91.81 to $US94.36.

NYMEX crude hit $98.62, a front-month record, on Nov. 7.

In London, January Brent crude ended up $1.39, or 1.5 per cent, at $91.62 a barrel, trading from $90 to $91.95.

LONDON METAL EXCHANGE

Copper touched a three-month low on Friday, hit by falling equity markets and worries about weakening demand before short-covering pushed prices into positive terrain ahead of the session's close.

Lead traded at levels last seen two months ago, led down by technical selling after falling below support at $3,450 a tonne.

Copper for delivery in three months on the London Metal Exchange fell as low as $6,785 per tonne, its lowest level since August 18, before prices recovered to close at $7,040.

Prices bounced ahead of the close on short-covering, traders said. Investors were buying back assets previously sold to close out short positions as many expected prices to fall further.

On Thursday, copper shed 3 per cent before closing at $6,920.

Three-months lead futures on the LME closed at $3,315 after touching $3,310, down 5.2 per cent. In the previous session, lead was indicated at $3,490/3,500.

Copper, used extensively in construction and wiring, had a brief boost on Wednesday when a big earthquake struck Chile, the world's top producer of the metal. Investors, afraid of a major supply disruption, raced to buy the metal.

Now, with damage to production thought to be limited, bearish sentiment, fanned by increasing risk aversion in global markets, worries over the health of the US economy and signs of weakening Chinese buying, is dominating the market.

US industrial production unexpectedly fell in October, recording its biggest decline since a matching drop in January, in a troubling sign for an economy already struggling under the weight of a housing downturn.

Data from the International Copper Study Group (ICSG) showed the copper market had a deficit of 258,000 tonnes between January and August this year, against a surplus of 38,000 tonnes in the same year-ago period.

Three-months tin closed at $17,400 against $17,375/17,400 on Thursday. It hit an all-time high of $17,575 earlier this week.

Three-months zinc was down at $2,525/2,530 from $2,590, aluminium was $20 lower at $2,550 and nickel was at $31,250 versus $31,700.

COMEX

US gold futures reversed early gains to finish a tad lower on Friday, capping an extremely volatile week as investors opted to lock in profits after initially hunting for bargains based on a weaker dollar and rising crude oil prices.

However, bullion dealers said the sharp fall in gold prices this week had not triggered a significant amount of physical buying.

Platinum futures also rebounded 2 per cent, after the world's biggest platinum producer slashed its output forecast for this year.

Most-active December gold on the COMEX division of the New York Mercantile Exchange trimmed initial gains but was settled down 30 cents at $787.00 an ounce. It traded between $785.60 and $798.40.

At mid-afternoon on Wall, spot gold was quoted at $784.80/785.50 an ounce, compared with $785.80/786.60 in New York Thursday afternoon. London bullion dealers fixed the afternoon spot reference price at $789.75.

COMEX December silver closed up 2.8 cents at $14.510 an ounce, trading between $14.365 and $14.745.

Spot silver was quoted at $14.44/14.49 an ounce, compared with $14.35/14.40 late Thursday in New York. London silver was fixed at $14.45.

Dealers said platinum benefited as Anglo Platinum, the world's biggest platinum producer, cut this year's output forecast to between 2.45 million and 2.5 million ounces of refined platinum from its previous forecast.

NYMEX January platinum ended up $27.80 or 2 per cent at $1,453.20 an ounce. Spot platinum was quoted at $1,446/1,451.

December palladium declined $5.10 or 1.4 per cent to close at $365.85 an ounce. Spot palladium was at $365/368.

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Rise in inventories sends oil price falling

2007-11-17T14:04:00.001-08:00

U.S. crude oil stockpiles climbed 2.81 million barrels to 314.7 million last week, the first gain in four weeks, the Energy Department said. A 750,000 barrel decline was expected, according to a Bloomberg News survey. Imports rose to the highest level since the week that ended Aug. 17.

"The jump in imports was enough for refiners to increase runs and still leave additional barrels to build stocks," said Tim Evans, an analyst with Citigroup Global Markets in New York. "The rise in imports is evidence that the declines we saw in recent weeks were a function of inventory management, not a shortage of oil."

Crude oil for December delivery closed down 66 cents at $93.43 a barrel on the New York Mercantile Exchange. Futures climbed to $98.62 on Nov. 7, the highest intraday price since trading began in 1983. Prices are up 57 percent from a year ago.

Brent crude oil for December settlement fell $1.14 to $90.22 a barrel on the London-based ICE Futures Europe exchange. Brent reached $95.19 a barrel on Nov. 7, the highest point since trading began in 1988.

Imports of crude oil rose 8.6 percent to 10.5 million barrels in the week that ended Nov. 9, the report showed.

"The gain shouldn't have been a surprise because there was no way that imports were going to stay so low," said Brad Samples, commodity analyst for Summit Energy Services in Kentucky. "The premium of WTI over Brent and some West African grades is a strong incentive to send barrels to the U.S. This should continue to boost inventories."

Total implied fuel demand in the United States averaged 20.6 million barrels a day in the four weeks that ended Nov. 9, down 0.7 percent from a year earlier, the Energy Department report showed. The Energy Department measures shipments from refineries, pipelines and terminals to calculate fuel demand.

"Even if demand here were to fall 5 percent, we would still see global growth because of what's happening in India and China," said Adam Hewison, president of INO.com, a Web site that provides technical analysis and financial news.

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Oil Rises More Than $1 on Signs OPEC's Lost Control of Prices

2007-11-17T03:46:00.000-08:00

By Mark Shenk

Nov. 16 (Bloomberg) -- Crude oil rose more than $1 a barrel on speculation that the Organization of Petroleum Exporting Countries has lost control of prices.

``OPEC can't do anything about the price,'' Venezuela's oil minister Rafael Ramirez said today in Riyadh, Saudi Arabia, where OPEC is holding a heads-of-state summit this weekend. Oil prices could reach $100 a barrel ``soon,'' he said. The December futures contract in New York expired today.

``OPEC could make things worse with a constrictive output policy but they can't lower prices with additional output,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York. ``The expiration of the December contract is adding a lot of volatility to the market. Open interest is plunging so there's a lack of liquidity.''

Crude oil for December delivery rose $1.67, or 1.8 percent, to $95.10 a barrel at 2:51 p.m. on the New York Mercantile Exchange. The more-active January contract rose $1.77, or 1.9 percent, to close at $93.84 a barrel. Futures climbed to $98.62 on Nov. 7, the highest intraday price since trading began in 1983. Prices are up 69 percent from a year ago.

Prices dropped 1.3 percent this week, only the second weekly decline since August.

Brent crude oil for January settlement rose $1.39, or 1.5 percent, to close at $91.62 a barrel on the London-based ICE Futures Europe exchange. Brent reached $95.19 a barrel on Nov. 7, the highest since trading began in 1988.

Abu Dhabi Meeting

OPEC's next meeting on production policy will be held on Dec. 5 in Abu Dhabi. The group was founded in 1960, holds three- quarters of the world's oil reserves and accounts for more than 40 percent of current production.

``There was talk earlier that OPEC might increase production in Abu Dhabi,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``As the market went down the silence was deafening. If prices head back to the $97 to $98 level, we will probably start hearing about additional barrels coming on the market.''

Oil prices have increased more than 20 percent since Sept. 11, when OPEC decided to increase output by 500,000 barrels a day starting Nov. 1.

``This is a leadership meeting and there's no expectation that production policy will change,'' said Bill O'Grady, director of fundamental futures research at A.G. Edwards & Sons in St. Louis. ``This might have a bigger impact on the foreign exchange markets than on the oil market. There are a number of concerns about U.S. policy concerning the dollar.''

Falling Dollar

The U.S. dollar declined against the euro, enhancing the appeal of commodities as an investment. Commodities often move in the opposite direction of the U.S. currency. A lower dollar makes oil relatively cheaper in the countries using other currencies.

Saudi Arabia, the world's largest oil exporter, won't discuss pricing oil in currencies other than the U.S. dollar, Saudi Foreign Minister Prince Saud Al-Faisal said, speaking at a meeting of OPEC oil and finance ministers today. Venezuela and Iran have pushed for discussions on pricing oil in currencies other than the dollar.

``As for the monetary aspect and the dollar I would like to ask his Excellency, the minister of Iran, to leave this question to the appropriate party, the ministers of finance, without mentioning that we gave them this task so that there won't be negative impact from OPEC,'' Al-Faisal said today, speaking in reaction to an Iranian proposal to discuss the currency.

``I don't think the market needs more oil,'' Algerian Oil Minister Chakib Khelil told reporters in Riyadh. He voiced concern that the global economy is weakening because of the subprime mortgage crisis in the U.S., and this may be reducing demand for fuel. ``This month, there is lower demand in China, lower demand in the U.S,'' Khelil said.

U.S. Inventories

Prices fell yesterday after the Energy Department reported that U.S. crude-oil stockpiles climbed 2.81 million barrels last week, the first gain in four weeks. Analysts surveyed by Bloomberg expected the report to show a decline.

``This is the fourth week that prices have rallied on Friday,'' Barakat said. ``We also came off strongly yesterday, which may be in part responsible for the move today.''

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net .

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