POST YOUR OIL NEWS, Clips here


"

http://www.lifeaftertheoilcrash.net/

From greekman

Oil Falls As Traders Bet on Weak Demand
By PABLO GORONDI 23 January 2008

Oil futures fell Wednesday, extending overnight declines as many investors indicated they doubt that the U.S. Federal Reserve's surprise cut in its key interest rates will stave off a serious economic slowdown that would dampen demand.

Light, sweet crude for March delivery lost $1.71 to $87.50 a barrel in electronic trading on the New York Mercantile Exchange by mid-afternoon in Europe. It fell 71 cents to settle at $89.21 a barrel in the floor session Tuesday.

The contract for February delivery fell 72 cents on Tuesday to settle at $89.85 a barrel. It expired at the close of trade.

The Fed slashed its federal funds rate the interest that banks charge each other on overnight loans by three-quarters of a percentage point Tuesday to 3.5 percent.

The U.S. central bank was responding to concerns about a possible recession that have sent global equities markets sharply lower in recent days. Asian stock markets rebounded Wednesday, although the Dow Jones industrials still lost 1.1 percent after the cut.

U.S. stock prices fell in another rocky opening Wednesday, with investors uneasy about the health of the economy and corporate earnings after disappointing reports from big names like Apple Inc. and Motorola Inc. In the first minutes of trading, the Dow Jones industrial average fell 189.24, or 1.58 percent, to 11,781.95.

In Europe, however, the indices started higher but turned negative as the day went on. By the afternoon, London's FTSE 100 Index was down 3 percent, the CAC-40 in Paris was 4 percent lower and Frankfurt's DAX was down 4.3 percent.

The Dow industrials might have fallen further Tuesday had the Fed not acted. Oil futures recovered from earlier losses during the day because the Fed move appeared to stabilize stocks, analysts said.

In Cairo Wednesday, Energy Secretary Samuel Bodman said high oil prices were beginning to affect the U.S. economy.

"The economy has been able to withstand it until now," Bodman said. "I believe the 100 dollar price of oil is starting to have an impact."

Bodman has been touring the Middle East to talk about energy, security and other issues.

The volatility of the equity markets has been a "confidence breaker" for oil investments, said Olivier Jakob of Petromatrix in Switzerland.

To regain confidence, "oil would need to find some of its own trading arguments rather than just follow the fluctuations of equities, Jakob added.

"Despite the strong rebound from the lows, we are not yet out of negative momentum," Jakob said in a daily market report.

Energy investors often view stocks as a proxy for economic growth, and slower economic growth could cut demand for oil and petroleum products such as gasoline and heating oil.

High energy prices also have been cited as a force pushing the economy toward recession. If oil prices continue to fall, as many analysts now expect, that could relieve some of the pressure on the global economy.

In London, March Brent crude futures fell $1.54 cents to $86.91 a barrel on the ICE Futures exchange.

Nymex heating oil futures fell 3.86 cents to $2.434 a gallon while gasoline prices dropped 3.82 cent to $2.2424 a gallon. November natural gas futures were unchanged at $7.67 per 1,000 cubic feet.

Oil recovers on global stock markets surge
Thu 24 Jan 2008, 7:45 GMT


By Luke Pachymuthu

- Oil prices rebounded on Thursday, after a late surge in U.S. stock indices helped cool simmering fears of a recession in top energy consumer the United States.

U.S. stocks reversed a five-day slide on Wednesday, giving further boost to major Asian share markets on Thursday, buoyed by hopes that a government-backed plan to rescue ailing bond insurers was beginning to shape up, potentially staving off billions more in credit losses. [nN239173]

U.S. crude jumped 70 cents to $87.69 a barrel by 0745 GMT, after settling at a 13-week low of $86.99 a barrel in the previous session. London Brent crude rose 76 cents to $87.38 a barrel.

"The jump in oil is being driven by the late rally on U.S. stock indices," said Jim Ritterbusch, president of Ritterbusch & Associates.

Oil has lost more than $3 so far this week as bourses worldwide posted losses on widespread concerns that the U.S. credit and housing crisis could trigger a recession and depress oil demand growth.

Analysts said funds and speculators had been closing out their positions in oil and commodities to cover margin calls and to finance losses in equity markets, which was now becoming the prime indicator of oil demand growth.

"At least for the next few weeks, we will be putting inventory data and the weak dollar on the backburner," Ritterbusch said.

While U.S. oil is down almost 13 percent from the all-time peak above $100 a barrel hit on Jan. 3, prices remain up more than 60 percent from year-ago levels.

Tight inventory levels, OPEC production restraints and strong demand from investors seeking higher returns and a possible hedge against inflation supported oil on its surge.

On Wednesday Qatar's oil minister said OPEC did not need to boost output when it meets on Feb. 1 to determine production policy, and expressed concerns that demand could take a blow if a recession hit. [nN2351445]

A Reuters poll of analysts forecast U.S. weekly government oil inventory data to be released on Thursday would show a 2.2 million-barrel gain. Distillates stocks were forecast to show a 100,000-barrel draw, while gasoline stocks were expected to have risen by 1.4 million barrels. [EIA/S] (Editing by Ramthan Hussain)

25/01/08

BANGKOK, Thailand - Oil futures rose Friday in Asia to extend a gain of more than $2 a barrel after U.S. leaders agreed to a stimulus plan in an effort to avert a major slowdown in the world's largest economy.

ADVERTISEMENT

Light, sweet crude for March delivery rose 39 cents to $89.80 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract gained $2.42 to settle at $89.41 a barrel in the floor session.

Prices were also boosted Thursday after the U.S. government reported a drop in heating oil supplies.

Are We 'Running Out!
The link below is to a very interesting article.

http://www.lifeaftertheoilcrash.net/

It is VERY long so won't cut paste any sections.
On initial reading, it appears to be a scare mongering article, and if you believe just half of it, you will probably go to the nearest cliff and jump of. But there are many obvious truths that can't be ignored, and it is worth wading through.
Several of these obvious truths are that the more drastic the shortages become the more governments will encourage exploration/production. There will be very generous tax breaks, grants and as many incentives as they can think of to make sure any last vestige of oil is removed from the ground at virtually any price.
Just reading a few sections made me think that the next 3 to 5 years could be the most profitable for oil exploration/drilling companies and their partners ever.

Be interesting to see what others think.

Friday January 25 2008

appeared in the Guardian on Friday January 25 2008 on p34 of the Financial section. It was last updated at 23:55 on January 24 2008. Regal Petroleum has been referred to a London Stock Exchange disciplinary committee after allegedly breaking the rules over the disclosure of price sensitive information regarding wells drilled in the Aegean sea. The small exploration and production company, which has been dogged by controversy over the last eight years, said it "understood" that the case against it related to rules 10 and 11 of the code covering the Alternative Investment Market.

"Regal has been notified by the London Stock Exchange that following an investigation it intends to refer a case regarding alleged breaches by Regal of the Aim rules to the Aim disciplinary committee," it said in a statement. A spokesman for the firm declined to give any other details saying "we are not allowed to comment further".

Regal caused concern five years ago when two much hyped exploration wells, Kallirachi 1 and 2, were found to contain mainly water rather than oil or gas. The share price collapsed overnight and fed into wider investor worries about a host of small speculative stocks on the junior stock market whose values were inflated by unreal expectations.

Regal, then led by founder Frank Timis, desperately tried to put in place a range of management changes but these too were dogged with trouble as various directors came and went, with at least one resigning days after being appointed.

The company's capacity to walk into trouble continued as recently as November when it announced that Shell was going to buy a 51% stake in its Ukrainian assets only for the deal to collapse 48 hours later. The money was going to be used to develop the Svyrydivske and Mekhediviska-Golotvschinska fields in Ukraine and yesterday Regal announced a successful 84m share placing as replacement funding. Timis did not take part in the cash-raising and his stake in the company has been reduced from 20% to around 15%.

Oil Falls on Concern Economy May Slow; OPEC May Maintain Output

By Nesa Subrahmaniyan

Feb. 1 (Bloomberg) -- Crude oil fell for a second day in New York on concern that a recession in the U.S. may curb fuel demand in the world's biggest energy-consuming nation and prompt OPEC to maintain production targets.

Oil fell 1.2 percent, extending yesterday's 3 percent decline, after a report showed the number of Americans seeking unemployment benefits for the first time jumped to a 27-month high. Increasing world oil supplies will do little to help the global economy, OPEC President Chakib Khelil said before a meeting of the producer group in Vienna today.

``There's no compelling case for OPEC to increase production because their analysis shows that markets are adequately supplied,'' David Moore, a commodity strategist at Commonwealth Bank of Australia, said by telephone from Sydney today. Concern about a U.S. recession ``adds further uncertainty to the outlook for demand.''

Crude oil for March delivery fell as much as $1.11, or 1.2 percent, to $90.64 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was trading at $90.91 a barrel at 2:06 p.m. in Singapore.

The contract fell as low as $89.58 after the U.S. jobless claims report yesterday and settled 58 cents, or 0.6 percent, lower at $91.75 a barrel.

Oil prices gained the preceding five sessions after the U.S. Federal Reserve cut interest rates twice in two weeks to bolster confidence in financial markets and shore sliding U.S. equities.

``The Fed is acting very aggressively, but there's concern that they won't be successful,'' Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts, said yesterday.

OPEC Quotas

The Organization of Petroleum Exporting Countries produces more than 40 percent of the world's oil. World inventories are ``good'' and prices include a $30 speculative premium for politics and the weak U.S. dollar, Khelil said. A change to the group's quotas today is unlikely.

OPEC ministers from Venezuela, Libya and Qatar said the group will rebuff a request from U.S. President George W. Bush for more oil. The leaders will delay until March deliberations on a supply cut to bolster prices, which have slipped 8 percent from a record $100.09 a barrel on Jan. 3.

``A cut is not on the cards,'' he said. ``Psychologically, it's not going to help the world economy.''

Brent crude for March settlement traded 68 cents, or 0.7 percent, lower at $91.53 a barrel at 12:59 p.m. Singapore time. The contract dropped 32 cents, or 0.4 percent, to $92.21 a barrel on London's ICE Futures Europe exchange yesterday.

``Right now, everybody is focused on the macroeconomic picture,'' said Jonathan Benjamin, senior analyst at New Wave Energy LLC in Aptos, California. ``Are we going into a recession? Are we going to be using less oil this year because we're going to be producing less?''

U.S. Stockpiles

While U.S. oil stockpiles are ``relatively low compared with last year'' gasoline inventories are rising and fuel demand appears to be slowing, Benjamin said. Oil will likely trade between $90 and $92 near-term as traders and investors try to gauge the direction of the U.S. economy, he said.

U.S. gasoline demand fell to 8.94 million barrels a day last week, based on deliveries by refiners, the Energy Department reported Jan. 30. It was the lowest in two years.

Crude-oil inventories rose 3.56 million barrels to 293 million barrels, taking their three-week gain to 3.6 percent. Gasoline stockpiles rose 3.56 million barrels to 223.9 million barrels, the highest since Feb. 9.

``The possibility of a recession has speculators on edge,'' James Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois, said yesterday. ``We're already recording a drop in gasoline demand growth, and now we could see a drop in fuel demand from the industrial and manufacturing sectors.''

SINGAPORE - Oil prices fell Friday despite expectations that OPEC would decide to maintain its production levels, as worries of a possible U.S. recession weighed on crude futures.

The economic concerns were renewed after the U.S. Commerce Department reported Thursday that consumer spending rose in December by 0.2 percent, the weakest performance since June.

Claims for unemployment benefits in the United States jumped by 69,000 last week, the Labor Department said, more than three times what economists expected.

Light, sweet crude for March delivery lost 72 cents to $91.03 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore.

The contract fell 58 cents to settle at $91.75 a barrel on Thursday.

OPEC oil ministers suggested Thursday that they will keep production at present levels because of fears that soft economies around the world will translate into weakened demand.

Friday's special meeting was set in December after prices flirted with the $100-a-barrel level to give the 13-nation organization a chance to step in and increase output in case volatile markets needed calming.

Voicing the general sentiment, Qatar's Abdullah bin Hamad Al Attiyah said OPEC should leave overall quotas as they are. And looking ahead to the next meeting, in March, he said "all the possibilities are there" shorthand for a possible cut in production, if the U.S. economy weakens enough to cut into demand.

Through Wednesday, oil prices had risen $5.34 a barrel, or 6.1 percent, over five trading days on optimism that the U.S. Federal Reserve's rate cuts and an economic stimulus package working its way through Congress will stave off a serious downturn. But many investors doubt the plans will work.

The U.S. Energy Department said Wednesday the country's crude oil and gasoline inventories jumped more than expected last week. Gasoline inventories are at their highest levels in nearly two years, analysts said.

Heating oil futures fell 1.93 cents to $2.5098 a gallon while gasoline prices dropped 1.22 cents to $2.345 a gallon.

Natural gas futures declined 6.4 cents to $8.01 per 1,000 cubic feet.

Brent crude futures dropped 64 cents to $91.57 a barrel on the ICE Futures exchange in London.

04/02/2008
Oil prices rise but demand concerns remain
4 hours ago

LONDON (AFP) Crude oil prices climbed on Monday, partly overcoming heavy recent losses on fears of a US recession that would dampen demand for energy.

New York's main contract, light sweet crude for delivery in March, won 29 cents to 89.25 dollars per barrel.

Brent North Sea crude for March delivery rallied 54 cents to 89.98 dollars.

Oil prices had dropped earlier Monday, extending heavy pre-weekend losses, "as persistent fears over a possible US led global slowdown fuelled further profit taking," Sucden analyst Nimit Khamar said.

Oil futures had lost almost three dollars in New York on Friday, after a shock drop in US employment renewed concerns of a dramatic slowdown in the world's biggest energy consumer.

Markets were rattled Friday by a US government report showing the economy had lost 17,000 nonfarm jobs in January.

It was the first jobs loss in more than four years and indicated that strains from a housing crisis and a related credit crunch were spreading through the world's biggest economy.

Also on Friday the oil cartel OPEC decided to maintain its output quota, ignoring a plea by US President George W. Bush for an increase in production to help reduce high oil prices that stunt economic growth and fuel inflation.

The Organisation of the Petroleum Exporting Countries, which pumps 40 percent of world oil, held its official daily output at 29.67 million crude barrels at a meeting in Vienna.

Explaining its decision, the 13-nation cartel said stockpiles of crude were likely to increase in the first half of this year. The group also noted "the projected economic slowdown."

Ministers from OPEC are to meet again on March 5.

Since striking a high above 100 dollars at the start of the year, New York oil prices have weakened owing to fears of a US recession and a global economic slowdown.

But crude futures are still almost double the level of a year ago.

The United States had said Friday that it would continue to urge OPEC to increase output, even though prices have cooled significantly since New York crude hit an historic 100.09 dollars a barrel on January 4.

"OPEC's decision to leave production unchanged on Friday served as a reminder of its willingness to keep the oil market tightly balanced," said Barclays Capital commodities analyst Kevin Norrish.

A note of caution from Bloomberg:
"In the near term it looks like the move to the downside (Brent Crude) is exhausted,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. `Yesterday (6th feb) we had bearish statistics and were unable to break through the recent lows.''

Stockpiles rose 7.05 million barrels to 300 million barrels in the week ended Feb. 1, an Energy Department report showed yesterday.

"The market fundamentals are deteriorating daily,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. There are going to be bouts of short-covering but the move lower looks inevitable.''

Associated Press 02.08.08, 3:34 PM ET

http://www.forbes.com/feeds/ap/2008/02/08/ap4634197.html


Prices also rose on news that North Sea oil production was cut by 280,000 barrels a day because of technical problems at a Total SA oil field, and that Russian crude output could fall this year with the depletion of a large oil field.

Possible another spike up to $100 barrel then, it doesn't take much now to put the price up!

http://ap.google.com/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD8UOTT1O0

What would this do to the price?
http://www.resourceinvestor.com/pebble.asp?relid=40396
cyril

Tax hits North Sea competitivenessFiled from Aberdeen
2/26/2008 3:05:37 PM GMT

UK: The North Sea is becoming less competitive in global terms as the tax man eats away at increased investment, Oil & Gas UK said today. The representative body's 2007 Activity Survey showed investment continued strongly with US$24 billion spent on exploring, developing and extracting the oil and gas reserves.



In turn though, cost inflation of 15 to 20 percent a year reduced the efficiency of such sums to the leve that the North Sea now yields a return on investment which is just a third of what it was five years ago.



Investment in developing new oil and gas reserves dropped by around US$2 billion to US$9.8 billion in 2007.



Operating existing assets also continued to get more expensive in 2007. The new report shows operating expenditure rose by US$1 billion in 2007 to US$12.4 billion and is expected to rise further to around US$13 billion in 2008.



Oil & Gas UK's Economics Director Mike Tholen said, "The survey does, however, show that there are significant opportunities to sustain investment of 29 billion (US$58 billion) over the next ten years."



Fifteen more fields are expected to start up in 2008 and overall production is expected to decline at only four percent a year until the end of the decade.



While exploration and appraisal drilling activity rose in 2007 from 70 wells to 111 wells, the increase was largely accounted for by appraisal drilling instigated by the need to reduce technical and commercial risks in such a high cost environment.



Oil & Gas UK Chief Executive Malcolm Webb said, "Over the years, the valuable experience gained in a maturing oil and gas basin means that the UK now has access to world-class people and technology, extensive infrastructure for bringing oil and gas ashore and a range of well-established initiatives to improve the efficiency of working practices.



"However, the North Sea's maturity also makes it more sensitive to cost inflation which is clearly affecting its capital efficiency and hence competitiveness.



"It must be recognised that, even in the current price environment, the tax regime continues to have an impact on long-term investment confidence.



"The primary challenge facing industry, regulators and Government now is to ensure that the UK remains globally competitive, enabling it to attract the required investment in future and keep the supply chain engaged on the UKCS."

Speculation Adds to Oil Price Surge
By H. JOSEF HEBERT 15 hours ago

WASHINGTON (AP) Market speculation on energy prices may have added as much as 10 percent to crude oil costs and the peak may be yet to come, a top Energy Department official said Tuesday.

Guy Caruso, head of the department's Energy Information Administration, told a Senate hearing that supply and demand would suggest a price of about $90 a barrel.

Prices fluctuated around $102 a barrel Tuesday although futures prices later dropped below $100 a barrel on the New York Mercantile Exchange on word that the Organization of Petroleum Exporting Countries are likely to keep production as is when they meet on Wednesday. Oil prices had surged to $104 a barrel on Monday.

President Bush, meanwhile, chided OPEC for failing to pump more oil as energy prices soar and the U.S. economy slumps. "My advice to OPEC is understand the consequences of high energy prices," Bush said after an Oval Office meeting with Jordan's King Abdullah II.

"I think it's a mistake to have your biggest customers' economies slowing down as a result of higher energy prices," Bush said.

Caruso said that supply and demand cannot account for all of the recent price surge.

"Something is clearly going on," he told the Senate Energy and Natural Resources Committee.

Caruso said that in the long run oil prices are forecast to decline, but he acknowledged any short-term predictions are uncertain and prices could increase further.

"I think it's difficult to say whether this is a peak because there's so much uncertainty," said Caruso.

Sen. Byron Dorgan, D-N.D., asked Caruso to explain the recent surge in oil prices.

"I am fairly well convinced that in the short term what we have is an unbelievable orgy of speculation," Dorgan said.

"There's clearly been a surge in moneys coming in to commodities markets, including energy, which has had some upward effect on the price above the trendline," Caruso responded. He said it was difficult to say whether speculation contributed $5 or $10 to the most recent surge, but that his agency's estimate of where prices should be, based on supply and demand, was about $90 a barrel.

Caruso said higher oil prices also stem in part from strong global economic growth, shortages of experience workers, equipment and construction material in the oil industry, and political instability in regions of major oil production.

Energy analysts also have cited the shift of money from the stock market to the commodity markets, including energy, as well as the declining value of the dollar and political turmoil in the Middle East, Nigeria and Venezuela, and a buildup of military forces on the Venezuela-Colombia border in recent days.

Caruso said his agency's forecast shows oil prices declining over the next eight years, and then resuming an upward direction.

The Energy Information Administration's long-term energy forecast expects oil prices to average $57 a barrel by 2016, declining because of increased production of crude oil and availability of alternative fuels including ethanol. But then increased demand is projected to push crude prices higher again to an average of well over $100 a barrel by 2030.

That brought a skeptical response from some senators.

"We're looking at $100 barrel today. I'm not confident in these projections in any way shape or form," said Sen. Kenneth Salazar, D-Colo., adding that he would not rule out $100 oil through 2015.

Caruso acknowledged difficulty in predicting short and long-term prices given today's price volatility.

"In the long run we do think...that high prices do stimulate investment on the supply side," he said. "We do think that over time the (fundamental) economics should prevail."

"It's our view that the longer term impact of the current high oil prices will lead to more exploration and development and investment." But Caruso noted the EIA has hedged its numbers for 2030. It said crude oil prices could be $111 a barrel by 2030 under one economic scenario, but as much as $185 a barrel under another set of economic assumptions.

On the Net:
Energy Information Administration: http://www.eia.doe.gov

Bow Valley bites the dust in North SeaFiled from Aberdeen
3/5/2008 3:37:15 PM GMT





UK: The Bow Valley-operated 16/27a-8 exploration well has turned out to be a duster. The well was drilled by semisubmersible Transocean Prospect to a total measured depth of 11,838 feet (3,608 m).



Bow Valley says Block 16/27a contains prospectivity in multiple zones including the Eocene, Paleocene, Jurassic and Triassic formations. The 16/27a-8 well is a shallow well which only evaluated the Eocene formation.



Elsewhere in the North Sea, Bow Valley will shortly participate in the drilling of the Blackbird prospect close to the Ettrick field development. Bow Valley holds 12 percent interest in Blackbird.



Bow Valley has also committed to an undisclosed drilling rig to drill one exploration well on Block 22/11b in the second half of 2008. Block 22/11b is currently owned by Bow Valley at a 100 percent working interest but the company anticipates finding a partner to join in the drilling of this well.



Bow Valley President and CEO R. G. Moffat said, "Although lack of early success in our U. exploration program is disappointing, we see significant exploration potential remaining on Block 16/27a in addition to our continuing exploration elsewhere.



"We are committed to a multi-well, multi-year exploration program funded out of cash flow. We expect to participate in two more exploration wells in the North Sea over the next six months and are working on plans to participate in additional wells through the remainder of the year and into 2009."

Oil Prices Set New Highs Above $110
By PABLO GORONDI 2 hours ago

Oil prices on Thursday hit a record high above $110 a barrel as investors fled the tumbling dollar that fell to new lows against the euro and a 12-year low versus the yen.

Light, sweet crude for April delivery rose 78 cents to reach $110.70 in early afternoon European electronic trading on the New York Mercantile Exchange. On Wednesday, it had set a record trading high of $110.20 a barrel.

In London, Brent crude futures rose 23 cents to $106.50 a barrel on the ICE Futures exchange.

The greenback's decline has played a role in a surge in crude futures, which have hit record territory in 11 of the past 12 sessions, despite the fact that crude supplies have risen 10.2 percent since early January.

The euro rose as high as $1.5625 before falling back to $1.5592.

In Asia, the dollar briefly slumped to 99.75 yen before creeping back up to 100.27 yen.

"The dollar will remain the dominant factor until the Fed meeting next Tuesday but oil will also have to balance with equities under the pressure of more credit hedge funds going bellyup," said Olivier Jakob of Petromatrix in Switzerland, referring to the U.S. Federal Reserve.

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

"Oil and other commodities have an intrinsic value so that to the extent that the U.S. dollar depreciates, (oil) becomes relatively cheaper in terms of other currencies, such as the euro," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney. "So you get an adjustment to compensate for that effect."

Oil prices initially fell Wednesday in New York trading after the U.S. Energy Department's Energy Information Administration, or EIA, said crude supplies rose 6.2 million barrels last week, more than three times the 1.6 million barrels forecast by analysts surveyed by Dow Jones Newswires. But buyers quickly returned to the market.

"I think the weakness of the U.S. dollar was a key part of that," Moore said.

The EIA also reported that gasoline supplies rose 1.7 million barrels last week, well above the expected 300,000 barrel increase, and distillate supplies dropped 1.2 million barrels, less than the expected 2 million barrel decline.

It was the eighth increase in crude supplies in nine weeks, putting oil inventories back on a growth track after a one-week decline. Meanwhile, forecasters including the Energy Department, the International Energy Agency and OPEC have consistently reduced their demand growth predictions for this year.

Wednesday's EIA report offered more evidence demand is falling: Gasoline consumption fell 0.7 percent last week compared to the same week last year. Normally, gasoline consumption grows about 1.5 percent year-over-year, just to keep pace with population growth.

Many analysts argue that current oil prices can't be justified by the market's underlying supply and demand fundamentals. Yet evidence of weak demand amid growing supplies has not stopped oil prices from rising in the past, particularly when the dollar is falling.

"Some investors are apparently viewing oil and other commodities as providing something of a hedge against U.S. dollar weakness and possibly inflation concerns as well," Moore said.

In other Nymex trading, heating oil futures gained 0.77 cent to $3.0321 a gallon (3.8 liters) while gasoline prices were down 1.06 cents to $2.7180 a gallon. Natural gas futures added 2.7 cents to $10.038 per 1,000 cubic feet.

Oil steady as producers warn on high prices
Tuesday, 22 April 2008 07:49
World oil prices eased only slightly in Asian trade this morning after once again crashing through record highs and as producers warned sky-high values are here to stay.

Analysts said reports of pipeline sabotage in Nigeria had helped boost prices, which broke records almost every day over the past week.

New York's main oil futures contract, light sweet crude for delivery in May, fell 22 cents to $117.26 a barrel. The benchmark contract had struck a new peak in intraday trading of $117.76 before closing at a record $117.48 yesterday on the New York Mercantile Exchange.

Brent North Sea crude for June delivery fell two cents to $114.41 a barrel, after finishing at an all-time high of $114.43 a barrel last night in London. It earlier struck an intraday record of $114.86.

Anglo-Dutch oil firm Shell said yesterday that it may not be able to honour contracts for April and May after a leading Nigerian militant group attacked two key pipelines of Africa's top petroleum producer.

Despite record-high prices, the president of the OPEC oil producers' cartel, Chakib Khelil, said over the weekend that there was no need for an immediate increase in production.

Oil prices are unlikely to fall back below $90, the energy minister of OPEC-member Venezuela, Rafael Ramirez, said yesterday at an international forum in Rome.

Analysts say turmoil in global financial markets has driven investors into oil and other commodities. Oil prices have also been boosted recently by a weak US dollar. The sliding value of the US currency makes dollar-priced goods cheaper for foreign buyers and tends to encourage oil demand.

UK refinery shuts for strike, fuel prices soar
04.21.08, 3:29 PM ET



LONDON, April 21 (Reuters) - Unions at a major British oil refinery were due to meet management for talks on a planned strike that drove oil prices to a new record on Monday as a farmers' union said fuel suppliers had imposed rationing.

The 200,000 barrels per day Grangemouth refinery in Scotland was cutting production on Monday ahead of a two-day strike due to start on Sunday over pensions cuts.

A shutdown at Grangemouth could cut flows of North Sea crude into Britain and hit British gas supplies if the Forties pipeline, which feeds the refinery, is forced to close.

"The union is meeting the company later this evening," a source with the refinery's union told Reuters by telephone.

"The plant is in the process of beginning to shut down."

Ineos was not immediately available for comment on talks. Earlier, refinery owner Ineos' Communications Manager Richard Longden said it would take a week to fully shut the plant.

Worries about a supply disruption at Grangemouth was one of the factors helping push U.S. oil futures to a new record high of $117.76 a barrel on Monday.

Oil traders said the effects could be felt first on the diesel market.

"It's more a diesel problem than anything else," said one London based oil trader.

A spokesman for British Prime Minister Gordon Brown said the dispute was a matter for the company and unions to resolve. "There is contingency planning under way," he said, without giving details.

The threat of shortages pushed the price of London ICE gas oil futures, the basis for diesel prices throughout Europe, within a few dollars of their all time record high of $1,079 per tonne. European gasoline hit a record of $1,002 per tonne.

In New York, gasoline futures surged to their record high of $3.0040 a gallon and heating oil, the basis for U.S. diesel and heating oil prices, hit its all time peak at $3.3309 a gallon.

This rise in oil is incredible !, for investors great and for non hedged oil producers...the profit reports next year will be double that of 2 years ago...really extraordinary !, though we must all hope we don't get a crash in all the other stocks with this going on...the airlines must be cursing !

RF;

Tonite $120 heading to $123 by Thursay..long oil shares short airlines.

In the next 36 months, oil prices will hit $187 a barrel and gasoline prices could reach as high as $6 a gallon, Money Morning Investment Director Keith Fitz-Gerald predicts.

How? Consider the four following concurrent events:

The Dollar Doldrums: Oil is priced in dollars. And the dollar is in the dumper. OPEC members will counter the greenback decline by marking up the price of crude, causing prices to increase still more in dollar-denominated terms.


Soaring Global Oil Demand: Newsflash: there hundreds of millions of new motorists in Asia. China's oil imports jumped 18% in one month. And India's Tata Motors Ltd has unveiled a $2,500 Nano. The fallout: oil will first get more expensive as supplies start to drying up.


Obfuscation by OPEC: Key players of the Organization of the Petroleum Exporting Countries have "reported" no new discoveries for decades.


Terrorism Threats: Threats are escalating beyond comfort levels, already driving up prices and creating a double-whammy effect. Damage to pipelines and refineries could crimp supplies just as global demand escalates.
That sounds pretty painful, but it also gives investors one of biggest profit opportunities in decades.

"Savvy investors [will realize that] we are still in the very early stages of a generational game with the potential to be played for great profits," Fitz-Gerald said.

Wed, Apr. 23, 2008


Record set for gas, oil
Gasoline reaches $3.51 a gallon, and crude nears $120 a barrel. They will likely continue to rise.
By John Wilen

Associated Press

NEW YORK - Gasoline and oil prices pushed further into record high territory yesterday, with retail gasoline reaching a national average of $3.51 for the first time and crude nearing $120, as the dollar fell to a new low against the euro.
At the pump, the national average price of a gallon of regular gasoline rose 0.8 cent yesterday, according to a survey of stations by AAA and the Oil Price Information Service. Prices for diesel - used to transport most food, industrial and commercial goods - also rose overnight to a record yesterday of $4.204 a gallon.

Gasoline prices are nearly 66 cents higher than last year, and they have prompted many analysts to raise their estimates of where gas is going to go.

"I wouldn't rule out the possibility that we could get to $4," said Antoine Halff, an analyst at Newedge USA L.L.C.

Other analysts are less certain. Fred Rozell, retail-pricing director at the Oil Price Information Service, said he thought gasoline prices would rise only 10 cents to 20 cents more nationally. That would mean they would peak near $4.15 a gallon in California, where prices are typically highest, and about $3.50 in New Jersey, where they are typically lowest.

Gasoline prices are rising for many reasons, including oil's record run. Light, sweet crude for May delivery rose to a record of $119.90 before retreating to settle up $1.89 at a record $119.37 a barrel on the New York Mercantile Exchange.

Many investors see commodities such as oil as a hedge against inflation and a falling dollar. Also, a weaker greenback makes oil cheaper for investors overseas.

The dollar fell yesterday after the National Association of Realtors said sales of existing homes dropped in March while the median home price declined, raising prospects that the Federal Reserve will cut interest rates further this year. Fed cuts in interest rates tend to weaken the dollar.

Oil also rose on overseas concerns. A Royal Dutch Shell P.L.C. joint venture declared force majeure on April and May oil-delivery contracts from a 400,000-barrel-a-day Nigerian oil field because of a pipeline attack last week. The move protects the company from litigation if it fails to deliver on contractual obligations to buyers.

In Mexico, oil production slipped 7.8 percent in the first quarter to 2.91 million barrels a day as output at the country's oil fields waned, state oil company Petroleos Mexicanos said. In Scotland, workers at Ineos P.L.C.'s 196,000-barrel-a-day Grangemouth refinery and petrochemical plant threatened to strike over changes to a pension plan.




Time to get out me old push bike !! :)

Oil prices edge higher towards 114 dollars
4 hours ago

LONDON (AFP) Oil prices rose slightly on Thursday after falling sharply the day before in response to a bigger-than-expected rise in US crude reserves.

New York's main oil futures contract, light sweet crude for June delivery, rose 13 cents to 113.59 dollars per barrel. New York crude had struck a record high 119.93 dollars on Monday.

London's Brent North Sea crude for June gained eight cents to 111.44 dollars. The contract had hit an all-time peak of 117.56 last Friday.

Oil prices fell nearly two dollars on Wednesday after slumping by more than three dollars on Tuesday.

"Oil prices were almost unchanged (from Wednesday's close), with market participants still digesting the latest US inventories report and with the dollar continuing to strengthen against a basket of major currencies," said Sucden analyst Andrey Kryuchenkov.

The US currency fell to a record low of 1.6019 to the euro on April 22 but has since recovered, changing hands at around 1.55 dollars in European trade on Thursday.

A stronger US currency makes dollar-priced crude more expensive for foreign buyers and tends to dampen demand.

On the supply side, US government data released Wednesday showed that US crude inventories rose 3.8 million barrels in the week ending April 25, far stronger than market expectations for a gain of 1.5 million barrels.

"The weekly data is generally bearish, with a larger than expected crude build and an unexpected build in distillate inventories," said Eric Wittenauer, analyst at Wachovia Securities.

After striking record highs on Monday, oil prices began sliding Tuesday amid an end to a two-day strike at the Grangemouth refinery in Scotland.

The stoppage had closed a pipeline which supplies 40 percent of Britain's oil and gas.

Over the past two weeks, oil prices have smashed through a series of record highs, sparking widespread international concern among consumer nations.

Kuwaiti Oil Minister Mohammad al-Olaim said Wednesday that OPEC may hold an extraordinary meeting on oil prices before a scheduled conference in September and did not appear to rule out higher production.

However, Libya's acting oil minister Chukri Ghanem indicated that the Organization of Petroleum Exporting Countries cannot pump more crude oil.

Oil rises towards $125 after earlier dip
Janet McGurty, Reuters
Published: Tuesday, May 13, 2008
LONDON (Reuters) - Oil rose towards $125 a barrel on Tuesday, shrugging off a forecast for slower growth in world demand from the International Energy Agency that earlier sparked profit taking.

A decline in China's oil imports in April, the first year-on-year drop in 18 months, also raised questions over demand. China is the world's second-largest oil consumer after the United States.

U.S. crude was up 47 cents to $124.70 a barrel by 1211 GMT (8:11 a.m. EDT), after falling as low as $123.10. On Monday, it hit a record of $126.40. London Brent crude rose 25 cents to $123.16. Record-high oil prices will slow global oil demand growth this year to 1.03 million barrels per day (bpd), said the IEA, 230,000 bpd less than its previous forecast.

But the adviser to 27 industrialized countries also said demand growth from emerging countries led by China and the Middle East remained strong.

Investors wondered how long demand could hold up given the sharp rise in oil prices, which first hit $100 in January.

"It's not the absolute level, it's the rate," said Evan Smith of Texas-based fund manager U.S. Global Investors.

A too-rapid rise in prices is "what's going to cause oil prices to hold back. It's going to be demand destructive."

China's April crude oil imports fell by 3.9 percent from a year ago to 3.47 million bpd, and were also down from the record of 4.07 million bpd in March, official Chinese data showed.

The market has kept a close watch on oil demand in China and India, whose economic booms have helped send prices up sixfold since 2002.

Weekly U.S. inventory data on Wednesday will provide further direction to the market after an unexpected fall in distillates stocks, which include heating oil and diesel fuel, pushed prices higher last week.

U.S. crude inventories are expected to have risen for a fourth straight week, while products stocks would also rise, helped by an increase in refinery utilization, a Reuters poll of analysts found.

(Additional reporting by Maryelle Demongeot in Singapore and Alex Lawler and Barbara Lewis in London)

Crude sets new mark above $135
Concerns about supply and weakening dollar help oil prices maintain upward surge.
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May 22, 2008: 6:49 AM EDT

Fuel costs hurt air travelersWhat is to blame for high oil prices?
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BANGKOK, Thailand (AP) -- Oil prices hit a record above $135 a barrel before falling back slightly in Asia on Thursday, with supply worries, rising global demand and a slumping dollar keeping crude futures on an upward track.

With gas and oil prices setting new records nearly every day, many analysts are beginning to wonder what might stop prices from rising. There are technical signals in the futures market, including price differences between near-term and longer-term contracts, that crude may soon fall. But with demand for oil growing in the developing world, and little end in sight to supply problems in producing countries such as Nigeria, few analysts are willing to call an end to crude's rally.

"The sentiment in the market is very bullish at the moment," said David Moore, commodity strategist with the Commonwealth Bank of Australia in Sydney. "The U.S. dollar was weaker last night, and also the U.S. EIA report showed an unexpected decline in U.S. commercial crude oil inventories, so there's a combination of factors pushing the oil prices higher."

Crude prices blew past $130 on Wednesday amid concerns about demand, supplies and a weaker dollar, and then they just kept going. The rise accelerated when the U.S. Energy Department's Energy Information Administration said U.S. crude inventories fell by more than 5 million barrels last week. Analysts had expected a modest increase.

Late afternoon in Singapore, light, sweet crude for July delivery was up $1.71 at $134.88 a barrel in electronic trade on the New York Mercantile Exchange.

The contract had earlier hit a trading record of $135.09 a barrel after rising $4.19 in the floor session Wednesday to settle at $133.17. The settlement price marked crude's largest one-day price advance since March 26.

Some analysts say crude has been boosted in recent days by especially strong demand for diesel in China, where power plants in some areas are running desperately short of coal and certain earthquake-hit regions are relying on diesel generators for power.

Also, the Wall Street Journal reported Thursday that the Paris-based International Energy Agency is in the middle of its first attempt to comprehensively assess the condition of the world's top 400 oil fields.

For several years, the IEA has predicted that supplies of crude and other liquid fuels will arc gently upward to keep pace with rising demand, topping 116 million barrels a day by 2030, up from around 87 million barrels a day currently.

Now, the agency is worried that aging oil fields and diminished investment mean that companies could struggle to surpass 100 million barrels a day in production over the next two decades, the paper reported.

That view has been echoed by many analysts watching the seeming unending string of oil price records.

"The market is really structurally tight ... oil demand is not growing that fast but supply is constrained," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

In its weekly report, the U.S. Energy Information Administration said gasoline inventories also fell, which took the market by surprise as well. Inventories of distillates, which include heating oil and diesel fuel, rose less than analysts surveyed by Platts had expected.

In Asia, the dollar gained slightly from overnight levels, but was still showing a downward bias that wasn't there last week.

Investors see hard commodities such as oil as a hedge against inflation and a weak dollar and pour into the crude futures market when the greenback falls. A weak dollar also makes oil less expensive to buyers dealing in other currencies.

Many investors believe the dollar's protracted decline over the past year has been the most significant factor behind oil's rise from about $66 a barrel a year ago.

And while Moore said his bank's "expectation is that oil prices will ultimately fall back from current levels over the course of this year ... the likelihood is that we'll have oil prices remaining at what would be considered a high level by the standards of a couple of years ago for some time yet."

In other Nymex trading, heating oil futures rose 8.2 cents to $3.9904 a gallon while gasoline prices added 3.92 cents to $3.4357 a gallon. Natural gas futures rose 9.3 cents to $11.733 per 1,000 cubic feet.

First Published: May 22, 2008: 3:51 AM EDT

May 23 (Bloomberg) -- Crude oil rose, headed for a third weekly gain, after a report forecast that the 2008 hurricane season may be more active than usual, threatening oil platforms and refineries in the Gulf of Mexico.

The 2008 season, which begins on June 1, may have as many as nine hurricanes forming in the Atlantic Ocean, more than average, the National Oceanic and Atmospheric Administration said in a report yesterday. Crude prices rose to a record yesterday spurred by concerns about long-term supply.

``The prospect of a more active hurricane season is at the back of people's minds, keeping the market up,' said Robert Laughlin, a senior broker at MF Global Ltd. in London.

Crude oil for July delivery rose as much as $2.33, or 1.8 percent, to $133.14 a barrel on the New York Mercantile Exchange. It was at $132.92 a barrel at 12:18 p.m. in London.

Yesterday, oil fell $2.36, or 1.8 percent, to settle at $130.81 after reaching $135.09 a barrel, the highest since futures started trading in 1983.

At the lower end of the NOAA's forecast, as few as six Atlantic hurricanes may form, including two major ones, which would make 2008 an average storm year. In the past two years, NOAA predictions have overestimated the number of hurricanes.

``It's the first look at what might happen,'' said Barbara Lambrecht, an analyst at Commerzbank AG in Frankfurt. ``The hurricane outlook is a bit better than last year but a bit stronger than average.''

Oil trades above $132 a barrel
1 hour ago

SINGAPORE (AFP) Oil traded higher at more than 132 dollars a barrel Monday as the US summer driving season kicked off, underscoring concerns that output was inadequate amid rising demand.

Tightness in the oil market has made prices sensitive to a confluence of factors, including a weak US dollar, speculative funds, an unwillingness by oil-producers to raise production and geopolitical tensions, analysts said.

In afternoon Asian trade, New York's main oil futures contract, light sweet crude for July delivery, was up 56 cents to 132.75 dollars a barrel, after closing at 132.19 dollars a barrel in New York on Friday.

Electronic trading on the New York Mercantile Exchange was unaffected by the US Memorial Day holiday on Monday.

The US summer driving season, which kicked off at the weekend, is a time when Americans take to the roads on their holidays, boosting fuel demand in the world's biggest economy and affecting global prices.

London's Brent North Sea crude for July delivery was trading at 131.90 dollars a barrel, up 33 cents.

On Thursday, Brent struck an all-time high of 135.14 dollars and New York crude reached a record 135.09 dollars, before both contracts plunged as investors banked profits.

Mark Pervan, senior commodities strategist at ANZ Bank, said buying ahead of the reopening for floor trading in New York on Tuesday pushed prices higher Monday.

Expectations the dollar will continue to struggle has also made the market more attractive because a weak US currency makes dollar-commodities such as oil cheaper for foreign buyers.

"A lot will depend on the performance of the US dollar. I think trading will be dictated by the currency markets this week," Pervan said.

Investors were positioning on expectations the US market will reopen strong on Tuesday, he said.

The dollar was steady in Asian trade on Monday as traders awaited upcoming data amid worries that soaring oil prices could hinder a recovery in the US economy, dealers said.

The dollar was stable at 103.28 yen in Tokyo afternoon trade from 103.31 in New York late Friday.

The euro was steady at 1.5763 dollars from 1.5761 but slipped to 162.80 yen from 162.91.

Investors were waiting for a batch of economic data due this week as well as speeches by Federal Reserve officials for fresh clues on the outlook for US interest rates.

"Oil prices don't seem to be stopping their upwards march and are pressuring the (US) economy," said Kazuhiko Shibata, Tokyo branch manager at Dresdner Bank.

"Recent market optimism that the economy might be nearing the end of its slump has waned," he added.

Stock markets across Asia also fell on concerns of rising inflation stoked by surging oil prices.

"With crude oil still trading above 132 dollars a barrel and no positive news to lift sentiment, many investors are staying on the fence," said Rommel Macapagal of Westlink Global Equities in Manila.

"High oil prices will certainly hurt consumers and the overall domestic economy."

Crude futures have risen by more than a third since the beginning of 2008 when they struck 100 dollars for the first time, lifted by unrest in some of the oil-producing countries, falling energy inventories, high Asian demand for fuel and a weak dollar.

Reluctance by the Organisation of Petroleum Exporting Countries (OPEC) to hike their output has also helped keep prices high.

OPEC, which produces 40 percent of the world's oil, insists that the market is well supplied and that record prices reflect speculative investment activity rather than actual supply and demand conditions.

IEA inquiry into whether oil supplies will run dry by 2012

May 26 2008

The International Energy Agency has ordered an inquiry into whether the world could run out of oil in four years' time, it was reported yesterday.

The IEA has concerns about what might happen in 2012, when demand for oil, boosted by the rapid growth of the Chinese and Indian economies, is expected to have reached 95 million barrels a day. Global supply at that point is projected at only 96 million barrels a day. Such a thin margin would be vulnerable to any sudden supply crisis in volatile countries such as Nigeria, Venezuela or Iraq, now estimated to have overtaken Saudi Arabia as the biggest oil nation.

The IEA said its inquiries would form part of short and long-term forecasts to be published in July and again in November. Its energy research chief, Lawrence Eagles, said: "Up to now we have believed that supply can cope with demand. One caveat is that we don't know for certain whether estimates of reserves in countries such as Saudi Arabia are entirely accurate."

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John Waterlow, analyst at oil research consultancy Wood Mackenzie, commented: "Many oil-producing countries are closed, secretive societies where it can be difficult to pinpoint the level of provable reserves."

The IEA's inquiry follows last week's new record high for black gold at $135 a barrel, fuelling inflation and possible world recession.

Although some analysts blame commodity speculators for the recent spike in prices, others point to surging international demand from Asia and South America. IEA researchers have warned that even if there is enough oil under the ground, supply difficulties could emerge because national oil companies and Western multinationals have failed to invest sufficiently in equipment and pipelines.

Meanwhile, 10 US airlines have been forced to close down since Christmas, according to the US Air Transport Association, which said it was "all to do with the cost of jet fuel". On Friday, shares in UK business airline Silverjet were suspended on the Alternative Investment Market after the airline admitted it was unable to secure funding to carry on doing business. Fuel costs for a single transatlantic trip on a Silverjet B767 are estimated to have jumped from 28,600 a year ago to 44,000 now.

Andrew Fitchie, analyst at Collins Stewart, said: "The no-frills airlines are in the eye of the storm. They will have to slash capacity, stay on the tarmac or look at merging."

The trouble with bubbles in term of trading them is that they go up progressively and come down like a bag of cement. Timing the fall for shorters who can't comprehend the ever more insane valuations is so difficult and it is so difficult to call the top. Similarly going long has serious ethical implications though that certainly doesn't bother Goldman or any other hedge funds that exploit a situation whoever gets in the way.Trend following techniques certainly work a treat so long as your not left standing when the music stops http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnsoros126.xml

http://www.youtube.com/watch?v=QovBLFZhQME

;)

Oil Trades Near 1-Week Low as Record Fuel Prices to Cut Demand

By Christian Schmollinger

May 28 (Bloomberg) -- Crude oil traded near a one-week low in New York after plunging yesterday on speculation record fuel prices will cut demand at the height of the U.S. driving season.

Gasoline futures fell for a second day after a report yesterday showed U.S. consumer confidence dropped to the lowest level since October 1992. The average U.S. gasoline pump price reached an all-time high May 26, crimping demand from motorists.

``The litmus test over the next couple of weeks will be how the U.S. driving season pans out and it looks like the risk is to the downside,'' said Mark Pervan, the senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne, who forecasts oil will trade between $120 and $135 in the next 18 months. ``The market is saying the driving season is going to disappoint.''

Crude oil for July delivery was at $128.81 a barrel, down 4 cents, on the New York Mercantile Exchange at 2:07 p.m. in Singapore. The contract earlier fell as much as 75 cents, or 0.6 percent, to $128.10, the lowest intraday price since May 20.

Yesterday, oil dropped more than $3 a barrel in the biggest one-day drop since April 29 to close at $128.85. Futures reached $135.09 on May 22, the highest since trading began in 1983, and have doubled in the past year.

``People realize that there is a point where high prices are going to start affecting demand and consumers will start revolting,'' said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. in Tokyo. ``The market is easy to push up until we have a collapse in demand and that's what it's going to take to get this thing into a downtrend.''

Brent crude oil for July settlement was at $128.23 a barrel, down 8 cents, on London's ICE Futures Europe exchange at 2:07 p.m. Singapore time. It declined $4.06, or 3.1 percent, to settle yesterday at $128.31 a barrel, the biggest decline since March 31. The contract touched a record $135.14 on May 22.

British PM calls for global action on oil price
Reuters, London

British Prime Minister Gordon Brown warned on Wednesday that the world was facing an oil "shock" and would find there was no easy answer to price rises without coordinated global action. Brown, who saw hundreds of protesting British truck drivers cause road chaos in the capital on Tuesday as they demanded government help over rising fuel prices, said he understood the impact on families across the country, but only a comprehensive international strategy would work in bringing oil prices down.
"A global shock on this scale requires global solutions," Brown wrote in The Guardian newspaper. He pledged to put global action on oil price rises at the top of the agenda at the Group of Eight (G8) summit in Japan in July and promised to propose more international work on "a better dialogue on supply possibilities and trends in demand."
Brown was due on Wednesday to meet oil industry executives in Scotland to discuss the high price of oil. According to The Guardian, he was expected to try to secure increased output from Britain's dwindling North Sea oil fields. But Brown said in the long term, oil dependency had to be reduced and other sources of energy explored and exploited.
"If we are to ensure a better deal for consumers, energy security and lower greenhouse gas emissions, Britain, Europe and the world will have to change how we use energy and the type of energy we use," he wrote. "We need to accelerate the development and deployment of alternative sources of energy, reducing global dependence on oil.
Brown's comments come a day after truckers from across Britain converged on London in a vast convoy, closing a busy artery and causing traffic chaos.
Similar protests took place in Wales, causing fresh trouble for Brown, whose leadership is under pressure after poor showings in recent local elections and a parliamentary byelection.
This latest wave of fuel protests, which echo similar protests in 2000, began in France, where fishermen have blockaded ports to demand cheaper fuel.
French truckers have also threatened to take action across France if the government fails to respond to their demands that industry diesel prices should fall back to average levels seen in January this year.
Diesel is about 130 pence ($2.57) a liter in Britain, more than double the price in the United States. Hauliers want a cut in fuel duty of 20 to 25 pence (40-50 cents) a liter.

Do you think there will be a retrace back to $100 when it hit's $140'ish

Oil price likely to hit $200 a barrel
BBC Onlone 30/05/2008

Global demand for oil has been fuelled by China and India
The price of crude oil could soar to $200 a barrel in as little as six months, as supply continues to struggle to meet demand, a report has warned.
Goldman Sachs energy strategist Argun Murti made the warning as benchmark US light crude passed the $123 mark for the first time. Surging demand was increasingly likely to create a "super-spike" past $200 in six months-to-two years' time, he said. Oil prices have now risen by 25% in the last four months and 400% since 2001.
US sweet, light crude hit an all-time peak of $123.53 (63.25) on Wednesday, while London Brent crude jumped to $122.32.
Mr Murti correctly predicted three years ago - when oil was about $55 a barrel - that it would pass $100, which it reached for the first time in January of this year. Soaring global demand for oil is being led by China's continuing economic boom and, to a lesser extent, by India's rapid economic expansion.
Both are now increasingly competing with the US, the European Union and Japan for the lion's share of global oil production.
This additional demand comes at a time of continuing production problems in a number of oil-producing nations.
Production is down in Nigeria after the latest attacks on pipelines this week by anti-government militants, while Iraqi exports through the north of the country have been hit by renewed cross-border raids by Turkish forces against Kurdish insurgents. Oil prices are also rising as the key US summer driving season approaches.
Economists warn that continuing high oil prices will impact on the global economy, hitting growth and fuelling inflation.


--------------------------------------------------------------------------------

Brent trading at a 60 point premium to US at the moment! Arb opportunity perhaps

Oil will moderate but not below US$100 a barrel
By Leonora Walters

The oil price will remain relatively high for some time to come and not dip below US$100 a barrel, predicts Nicholas Brooks, head of research and investment strategy at ETF Securities.


Brooks acknowledges that speculation has helped to drive oil to its recent highs, hitting a record US$135.09 a barrel on 22 May, while investors are keen to move out of equities into alternative investments. Oil and other commodities are also being used as a hedge against rising inflation.

This has led to more extreme predictions of oil hitting US$200 a barrel.

But Brooks said that when equities and credit markets stabilise there will be outflows from oil investments and falls in commodity prices. However he said the other fundamentals driving up prices remain in place, and this will them not far from current levels.

Yesterday oil was down 2% at US$128.45 a barrel in New York, and down 1.9% at US$128.51 a barrel in London.

Oil supply is being outstripped by demand and Organisation of Petroleum Exporting Countries (OPEC) are failing to make up the short fall. Although these countries have reserves they face capacity constraints because they do not have the infrastructure in place to pump more oil.

All OPEC members are currently producing oil at full capacity with the exception of Saudi Arabia, Kuwait and the United Arab Emirates. Although OPEC secretary general Salem el-Badri said the organisation would invest US$160bn (80bn) on increasing production capacity, this would take place over the next four years meaning it would not have a short-term effect.

Non OPEC members are also failing to help meet the supply, with the UK, Mexico and Norway expecting oil production declines, while Russia warned last month that its output may have reached its peak.

Another effect of this is that as capacity utilisation increases countries tend to build up their oil inventories so plentiful reserves do not mean a fall in price, said Brooks.

The rise in demand for oil is being driven by emerging economies such as China and the Middle East states, with China accounting for 34% of the growth in oil demand between 2004 to 2006, and the Middle East accounting for 26%. Middle East growth in demand has been helped by subsidised oil prices.

Brooks does not believe that many states will stop subsidising oil as this could be politically difficult. For example when Indonesia cut subsidies a few days ago increasing prices by 30%, protests erupted.

Key drivers in growing emerging market oil consumption include the increase in cars with vehicle sales rising 53% in China between 2005 and 2007, and 34% in India. Although car ownership in these states is low by world standards it is increasing quickly with per capita incomes, and China car sales may surpass US levels by 2010

I will have to get me one of those battery Bikes !

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/30/cnoil130.xml&CMP=ILC-mostviewedbox

There is nothing any one can do the market decides the price, you cannot probe airlines or any other company doing deals with the oil companies that is also speculation from the airlines and those companies as well as market speculators so its all hot air from the US regulator CFTC. I.M.O

smiler

Believe it or not this is called a smiler ride. Battery-Powered

Found another one also called a smiler ride, that's not you is it smiler.

If that pic is 39 years old could be ! :))

OIL: Oil jumped following a Morgan Stanley analyst's forecast of $150 oil by July 4, and in response to a drop in the dollar and fresh tensions in the Middle East.

Interesting angle on Oil News today in the Middle East.

'Kuwait MP's seek to cut oil output and limit production to one percent of proven reserves'. - Kuwait Arab Times 16.06.08.

The 'officially' stated reserves has been around 100 Billion barrels for several years. There are noises, probably with some truth, that the 'proven' reserves are materially less. There is some belief it could be as low as 25 Billion.

The current production is around 2.5 million barrels per day. The 'master plan' was/is to increase to 4 million barrels per day.

Clearly there are some political agendas being 'spun' by the new Kuwaiti MP's. Whatever the agenda, it all adds to the uncertainty of future oil supply.

This story will probably run a while as events unfold. I'll keep posting the news as it comes out.

Thanks Darradev (gcm still going well !)

Aye, the story has a fair bit to go.

I sold gcm a few weeks back but it is definitely on my watchlist.

Page last updated at 15:22 GMT, Monday, 16 June 2008 16:22 UK


Oil at record near $140 a barrel

There have been calls for increased global oil output
The price of crude oil has hit a new high of close to $140 a barrel in New York trade, despite Saudi Arabia agreeing to increase output in July.

US light crude rose to a record high of $139.89 a barrel, surpassing the previous high of $139.12 set on 6 June. The price later fell back slightly to trade up $4 at $138.86 a barrel.

On Sunday, Saudi Arabia had said it would increase its oil production by 200,000 barrels a day next month in a move to meet growing world demand.

That would make a total rise of 550,000 barrels a day, or over 6%, since May and would take Saudi output to its highest monthly rate since August 1981.

The news was announced after UN Secretary General Ban Ki-Moon met Saudi Oil Minister Ali al-Naimi in Jeddah for talks on the high oil price.

The market has got it in its head that we are about to run out of oil, and is looking for negative news

John Hall, oil analyst


Q&A: Record oil prices

Last month, Saudi Arabia increased its production by 300,000 barrels a day.

The country is thought to be the only oil producer with the ability to pump substantially more crude.

It argues that the current high prices are caused by speculators rather than any shortage of crude oil.

Oil prices had fallen by almost $2 on Friday after reports that Saudi Arabia might boost oil production but many believe that this pledge is too little too late to bring down oil prices.

Extremely volatile

"If they'd have said this six months ago, it might have had some effect," said oil industry expert John Hall.

"But the market has got it in its head that we are about to run out of oil, and is looking for negative news."

"The market is extremely volatile at the moment," he added. "Any disruption to supply is immediately jumped on."

Speculation about the future of oil prices has been rife recently, with some analysts predicting oil could jump to as much as $200 a barrel during the next 18 months.

Israeli threats to strike Iran over its nuclear programme have also helped fan the flames.

Movements in the currency markets on Monday also triggered the latest price spike, with the dollar weakening against the euro and subsequently making oil cheaper for investors dealing in other currencies.

Meanwhile, Norwegian oil firm StatoilHydro saw oil and gas production temporarily abandoned when a fire broke out on the 90,000 barrel a day North Sea platform.

Oil companies return to IraqBy Henk Sjoerd Oosterhoff*

20-06-2008

International oil companies are negotiating their return to Iraq 36 years after their expulsion from the country by former dictator Saddam Hussein. On 30 June, Royal Dutch Shell, Total, BP and ExxonMobil will sign agreements with Baghdad about providing maintenance work and technical support for Iraqi oil facilities over the next two years.

The oil companies have offered all sorts of enticements to secure the favour of the Iraqi government. They are offering the use of the most modern technologies, they have made countless analyses of the country's oil supplies, and during the past two years their experts have been touring Iraq offering free advice and training. Of course, they did this in the hope of securing contracts and huge profits at a later date.
According to Lucia van Geuns, an energy expert at the Clingendael Institute's International Energy Programme:

"It's a win-win situation. As a result of the events of the past years the Iraqi companies have not been able to maintain the same level as international companies. These companies can look forward to a bright future."


New exploitation law
For the time being only short-term contracts for maintenance and repair work will be agreed. The international firms will be paid as contractors who are delivering services ("service agreements"). Nothing has been agreed concerning the exploration and exploitation of new fields. The Iraqi parliament has been unable to agree to a new law regulating mining and exploitation.
The director of the Cambridge Energy Research Associates' Middle East and Africa Department, Leila Benali, says the move is an important first step. The provision of service agreements is the only creative way of circumventing the deadlocked talks in parliament. By negotiating agreements with a limited number of companies for at most one or two years, it will be possible to increase production from the current level of 2.5 million barrels a day to up to 3 million barrels. The Iraqis are hoping to produce 6 million barrels five years from now.

Big prize
The Saddam era and the US-led invasion of Iraq have left their marks on the country's oil fields. Ms Benali dos not think it will be easy to renew production at fields which are no longer operating. And, because of the security situation, insurance fees are enormous. However, the companies are willing to take the risk since, as Leila Benali puts it:

"Everybody is waiting for the big prize - the giant fields in the south. There have been a lot of talks between the authorities and the companies about whether they will receive contracts once their service agreements have ended, or if they will still have to compete with other companies. So of course it's an attempt to gain a foothold in an effort to win the big prize everybody is hoping for."

Effect on oil prices
Would increased Iraqi production lower oil prices? Ms Benali says it would take another few years to answer this question. The price of oil wouldn't be affected by a mere half a million barrels from Iraq. The Clingendael Institute's energy expert Van Geuns also does not expect an immediate reduction in oil prices:

"Maybe in five years when Iraq is producing more and heading towards six million barrels a day, which is what they are hoping to produce within five years. Surely those extra 3.5 million barrels would have an effect. But I doubt that oil prices will drop dramatically."


http://www.radionetherlands.nl/currentaffairs/region/middleeast/080620-oil-iraq

Oil 'would create budget surplus' Friday, 20 June 2008 15:21 UK


The SNP believes the figures back the economic case for independence
Scotland would be in budget surplus to the tune of more than 800m with a "geographical share" of North Sea revenues, government figures suggest.

However, if the country was to receive its per capita share of North Sea revenues in line with the rest of the UK, it would have a deficit of 6bn.

Excluding North Sea revenues entirely would leave deficit of 6.7bn.

The figures are contained in the Government Expenditure and Revenue in Scotland (Gers) report.

The report compares government spending with the amount of money raised.

Experts from Aberdeen University said a geographical share of North Sea oil revenues would give Scotland 83% of the revenues.

That would give the country a budget surplus of 837m (0.7% of GDP) in 2006/07 - compared with a UK deficit of 4.3bn. Finance Secretary John Swinney said the report showed Scotland was in surplus.

"The flow of resources from Scotland to the rest of the UK is some 1.2bn," he said.

"This year's Gers publication has been informed by an updated and detailed analysis of North Sea revenues by Aberdeen University, enabling a geographical share to be allocated to Scotland's accounts.

"Indeed, as North Sea oil revenues soar, city accountancy firm Grant Thornton estimates that Scotland's surplus would now stand at some 4.4bn."

Total non-North Sea public sector revenue in Scotland was estimated at 42.4bn in 2006/07, compared with expenditure of 49.9bn.

The figures were produced by government officials, but ministers were not involved in the process.

Officials said the figures were the most accurate picture yet of Scotland's fiscal position, with more than 3,000 budget lines having been queried with the Treasury since the last figures were produced.


http://news.bbc.co.uk/2/hi/uk_news/scotland/7465840.stm

Treasury is one of the few UK winners from the surge in oil prices
By Roger Bootle
Last Updated: 12:43am BST 23/06/2008

The rise in international commodity and oil prices is evidently having a serious impact on our economy. But unlike corn or rice, we are substantial producers of oil. Given this, why aren't we made better off by higher oil prices? And if the country as a whole is made better off, then given that most of us are clearly worse off, who are the gainers?

Over the past three-and-a-half decades, the UK's oil position has gone through a transformation. When the first oil shock occurred in 1973, the UK produced virtually no oil. But by the time of the second oil shock, which roughly coincided with Mrs Thatcher's election in 1979 (although, so far as I can tell, there was no causal connection) production had soared. At the peak, oil production was worth about 20bn per annum, or roughly 6pc of GDP. Moreover, the UK became a substantial net exporter of oil, with the oil surplus worth 8bn, or more than 2pc of GDP.

And oil had a major impact on the public finances. At the peak, the tax revenues from the North Sea amounted to 12bn, or 3.5pc of GDP and 8pc of overall tax revenues.

But the steady decline in North Sea production, set against the continued rise in UK demand for oil, has caused the position to change dramatically. Oil production is still worth about 20bn a year but this amounts to only about 1.5pc of our current GDP. And, as our chart shows, we are no longer net exporters of oil. Last year we were net importers to the tune of about 3bn, or 0.2pc of GDP. The Treasury still gains from tax on North Sea oil and again the nominal revenues are not far off what they were at the peak, but as a share of GDP they are only 0.6pc, and as a share of total tax revenues they are less than 2pc.

The net export position is critical. If a country is a net exporter of oil then, at least in a narrow, direct sense, it will be a net gainer from higher oil prices. This was the UK's position until 2005. Even in the days of high oil surpluses, however, there were adverse indirect effects. For a start, higher oil prices, at least for a time, increase the inflation rate, and if this threatens to become ingrained it could require higher interest rates to restrain it. This would have the effect of reducing output in the non-oil economy.

Second, the fact that a country is a net beneficiary from higher oil prices may tend to strengthen its currency, thereby worsening the country's non-oil trade performance. Moreover, this could be of much greater long-run significance, as the oil will some day run out.

Third, if you trade with other countries which will be made worse off by higher oil prices, then your exports to those countries may suffer.

Fourth, higher oil prices will make some production uneconomic. Offsetting this by shifting resources into other areas takes time and involves heavy costs.

Accordingly, it was never clear, even in the halcyon days of North Sea oil, that the UK was a net gainer from higher oil prices. And some have even argued that we would have been better off without the stuff.

More on oil
Whether that is true is not easy to establish because it demands an analysis of the counter-factual. The advent of North Sea oil was one of the factors which propelled the pound to ludicrous heights in 1979-81. This, in turn, was a major factor in the collapse of British manufacturing. On the other hand, though, much of manufacturing had to go anyway, and the economy derived some benefit from the shock treatment. This also helped inflation to come down quickly.

But where did the oil money go? Some countries have established reserve funds where the oil money is effectively stored. This is what Norway, Russia and some of the oil sheikhdoms have done. But not us. Since 1978, just totting the money up without allowance for inflation or interest, total Treasury revenues from the North Sea have amounted to 130bn. Where is it? It got lost in the general pot.

Yet given that we are still a substantial producer of oil and our trade is roughly in balance, isn't there a case for us pricing our oil more cheaply and thereby avoiding the adverse effects of higher international oil prices? No. While we are on the subject of liquids, because the French produce Chateauneuf-du-Pape, does that mean that they should sell it more cheaply internally than they charge for export? Of course not. It is more beneficial to France to sell much of its fine wine abroad and then use the proceeds to buy the output of other countries - even the liquid bits, for example Guinness. Mind you, we go to the opposite extreme and charge our motorists much more through the imposition of high petrol taxes. But this is a subject for another day.

Suppose, for a moment, that if the effect of higher oil prices on the economy overall were just about neutral, given that most of us lose from higher oil prices, who are the gainers? The answer is partly the UK Treasury, which means all of us at one remove - assuming that it does not just squander the money (pigs might fly).

The result of higher oil revenues is lower taxes, higher spending or lower borrowing than there would otherwise be. The problem is that it is impossible to perceive this benefit because the money gets lost in the general fund.

And, in any case, the amounts are now not huge. This year, North Sea taxes are officially forecast to bring in 10bn, some 2.2bn more than last year. That does not even quite pay for the bail-out of the losers from the abolition of the 10p tax band.

Other gainers are the international oil companies, some of which are UK-owned and hence pay dividends to UK owners, including pension funds. And then there are all those people employed directly and indirectly in the UK oil industry. They will tend to be better off as the demand for their services rises. It is no accident that Aberdeen is the boom town of the UK.

The end result is that, although higher oil prices undoubtedly do make the economy overall worse off, they are not quite the unalloyed disaster for the UK that they are for some countries. The biggest threat from them comes from the danger that what could be a temporary burst of higher inflation gets embedded because of the passage of inflationary pay claims.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/23/ccom123.xml

June 2008
UK Energy News
The Russians undermined Opecs attempts to talk down the oil market yesterday by warning that crude prices could almost double to $250 a barrel within 18 months.

The prediction from Alexey Miller, chairman of Gazprom, came as the price of oil leaped $2.75 to $137.10 a barrel even though Opec insisted everyone was already panicking unnecessarily and stressed there were no shortages.

The soaring value of crude yesterday pushed British wholesale gas prices to new record highs of 100.75p per therm for next winter deliveries. This will put pressure on domestic heating bills, while the current price of motor diesel has already reached 1.30 a litre.

Gazprom said the higher crude prices it expected would drag gas values up too. We think it [oil] will reach $250 a barrel in the foreseeable future, said Miller, insisting that high demand rather than financial speculation was the primary factor, an argument that runs counter to that put forward by Opec.

The comments came 24 hours after Tony Hayward, the BP chief executive, said supply constraints were partly responsible for the very high crude prices so far.

A spokesman for Gazprom, which is also one of Russias largest crude producers, expected the price to hit $250 some time in 2009. The company exports gas to Europe at prices linked to oil products for historic reasons and Miller said the current gas price was $410 per 1,000 cubic metres.

Analysts said the latest Russian energy estimates were hard to support and noted they were not backed up with specified research data. Its crazy maybe they know something we dont, said one. Abdullah al-Badri, the secretary general of Opec, had earlier appealed for calm. Really we need some calm. We are panicking too much, Badri told a global energy summit. The situation is unbearable as far as we are concerned. I want to say, there is no shortage now and in the future.

Saudi Arabia said on Monday it would soon call for a meeting to discuss what it called unjustified rises in prices.

Badri supported holding such a meeting, which he said might happen before the next scheduled Opec gathering on September 9. He hoped that measures could be taken to curb speculation in the oil market, a factor Opec believes is inflating prices to levels not justified by supply and demand.

We are not happy with the current level of price for one reason. It has nothing to do with the fundamentals, he said.

Speculators are playing a big role in high oil prices. Also there are other considerations, the value of the dollar and the geopolitical situation.

Original Source: The Guardian

Low reserves in Saudi!

Opec 'to earn US$1.251 trillion from oil exports'
Reuters | Wednesday, 09 July 2008

AdvertisementOpec's earnings from oil exports are expected to reach a record US$1.251 trillion ($NZ1.68 trillion) this year, about US$73 billion more than previously estimated, the US government's top energy forecasting agency said on Tuesday.


Net oil export earnings from the Organisation of the Petroleum Exporting Countries are projected to jump 86 per cent this year from US$671 billion in 2007 and then rise 6 per cent to US$1.322 trillion in 2009, the Energy Information Administration said in its new monthly forecast.

Opec members have been raking in the cash from soaring crude prices, which hit a record US$145 a barrel last week.

During the first half of 2008, Opec members raised US$645 billion from oil exports.

Saudi Arabia accounted for almost one-third of that total, bringing in US$192 billion, just US$2 billion less than the kingdom's total oil export revenues in 2007, according to the EIA.

Iraq's oil earnings reached US$39 billion through June of this year, already US$1 billion more than the country's total oil earnings last year.

750bn oil reserves remain untapped under North Sea


The North Sea could provide a major boost to the economy, but only if there is more investment :

Date: 09 July 2008
By Frank Urquhart
A POTENTIAL prize of 750 billion in unrecovered oil and gas reserves is in the North Sea and the Atlantic frontier west of Shetland, industry leaders said yesterday.
But they warned that without new technology and investment incentives from the government, the reserves will never be recovered to boost the ailing British economy.

Under the current fiscal regime and investment plans, only around ten billion barrels of oil and gas stand to be recovered over the next two or three decades.

However, the latest economic report by Oil and Gas UK, the pan industry trade body, claims a further 15 billion barrels or more could be pumped from the UK Continental Shelf. That equates to almost half that extracted from the North Sea so far.

Malcolm Webb, the chief executive of Oil and Gas UK, said: "Barrels left in the ground do not pay taxes, do not sustain jobs, do not help secure the nation's energy supply and provide no support to the country's balance of payments. While we may have produced nearly 38 billion barrels of oil and gas over the last 40 years, the UK still has substantial oil and gas potential.

"It is estimated that somewhere between 16 and 25 billion barrels of oil and gas remain to be recovered."

A spokesman for the Department of Business, Enterprise and Regulatory Reform said: "Our estimate is also between 16 and 25 billion barrels in normal circumstances.

"It is the most probable extent of the reserves but there is a potential high of 39 billion barrels based on various figures we have, to do with undiscovered resources, potential resources and current reserves."

Mr Webb added: "Plans currently in place should reach about 10 billion of those barrels so the challenge in the hands of the government and industry is how to achieve the remaining 15 billion barrels.

"While realising this goal will require massive further investment from the industry, at $100 per barrel it is worth $1.5 trillion to the British economy and this is a prize which the country should not contemplate losing.

"There need to be targeted incentives for companies wishing or willing to invest the very, very considerable sums that are going to be needed to get up to that 25 billion target but, my word, that is a target worth going for."

The latest economic report, however, reveals the cost of producing a barrel of oil or gas in the UK Continental Shelf has continued to soar to record levels.

Oil and gas prices have trebled in the past seven years but the cost of "developing" a barrel of hydrocarbons has risen fivefold while the operating cost per barrel has doubled. The report also reveals money spent bringing new reserves into production fell from 5.5 billion in 2006 to 4.9 billion in 2007.

The industry is expected to submit its detailed proposals to the Treasury for changes in the fiscal regime within the next few days. Mr Webb said: "What we are looking to government to do is to give further encouragement and incentives to those companies willing to invest.

"So we are suggesting that they need to have further targeted incentives in the form of uplifted capital and balances."

According to industry leaders it is also vital to "find the right economic way" to unlock the potential of the reserves west of Shetland, where there are believed to be between four and six billion barrels.

But new technology will have to be developed to explore and develop the Atlantic frontier fields and there is no gas infrastructure in the area.

FACT BOX

OIL was discovered in the North Sea in 1966, with the first year of full production taking place in 1976.

The city of Aberdeen became the centre of the North Sea oil industry and today it promotes itself as the "Oil Capital of Europe."

The oil and gas supply chain in the north-east of Scotland is estimated to be worth about 15 billion a year to the nation, with some 4 billion of that related to export activity.

Latest figures suggest that the north-east currently supplies around three-quarters of the UK's primary energy demand.

The UK is the world's 12th largest overall producer of oil and gas.

The oil industry in the North Sea is estimated to support some 40,000 jobs.

The oil boom is the main reason why the average weekly earnings in Aberdeen, at 606.30, are roughly 20 per cent higher than the Scottish average.

The full article contains 768 words and appears in The Scotsman newspaper.

Summary of Weekly Petroleum Data for the Week Ending July 4, 2008

U.S. crude oil refinery inputs averaged nearly 15.5 million barrels per day
during the week ending July 4, up 75 thousand barrels per day from the previous
week's average. Refineries operated at 89.2 percent of their operable capacity
last week. Gasoline production fell last week, averaging 8.9 million barrels per
day. Distillate fuel production increased last week, averaging 4.6 million
barrels per day.

U.S. crude oil imports averaged 9.5 million barrels per day last week, down 621
thousand barrels per day from the previous week. Over the last four weeks, crude
oil imports have averaged nearly 10.1 million barrels per day, 82 thousand
barrels per day above the same four-week period last year. Total motor gasoline
imports (including both finished gasoline and gasoline blending components) last
week averaged nearly 1.2 million barrels per day. Distillate fuel imports
averaged 142 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) decreased by 5.9 million barrels from the previous week. At
293.9 million barrels, U.S. crude oil inventories are below the lower boundary
of the average range for this time of year. Total motor gasoline inventories
increased by 0.9 million barrels last week, and are in the middle of the average
range. Finished gasoline inventories were unchanged last week while gasoline
blending components inventories increased during this same time. Distillate fuel
inventories increased by 1.8 million barrels, and are in the middle of the
average range for this time of year. Propane/propylene inventories increased by
2.6 million barrels last week but remain below the lower limit of the average
range. Total commercial petroleum inventories decreased by 3.3 million barrels
last week, and are near the bottom of the average range for this time of year.

Total products supplied over the last four-week period has averaged nearly 20.4
million barrels per day, down by 1.8 percent compared to the similar period last
year. Over the last four weeks, motor gasoline demand has averaged 9.3 million
barrels per day, down by 2.1 percent from the same period last year. Distillate
fuel demand has averaged about 4.2 million barrels per day over the last four
weeks, up by 1.3 percent from the same period last year. Jet fuel demand is 2.2
percent lower over the last four weeks compared to the same four-week period
last year.

Third oil shock warning
09 Jul 2008, 21:59 GMTThe world could suffer from a 'third oil shock' if oil price rises lead to increasing energy expenditures.

The warning came from the International Energy Agency (IEA) in a presentation to the World Petroleum Congress in Madrid on July 1.

The IEA has forecast that oil expenditures as a percentage of GDP have increased, in a similar pattern to the first and second oil shocks of the mid-1970s and early 1980s.

But despite the record high prices, demand has still been increasing for oil supplies, the IEA said.

The agency also weighed in on the debate over the impact of speculators in commodities markets such as oil.

http://www.bunkerworld.com/news/2008/07/72422

Oil sets new record near $147 a barrel
By PABLO GORONDI 56 minutes ago
July 11 2008

Oil prices spiked Friday as continued tensions in the Middle East and concerns of renewed violence in Nigeria pushed the price for a barrel of oil to a record near $147.

By midday in Europe, light, sweet crude for August delivery jumped $5.25 to $146.90 on the New York Mercantile Exchange.

Oil prices had fallen $10 over two days to start the week and as oil rebounded Friday, Dow Jones industrial average futures fell more than 120 points.

In London, August Brent crude soared $4.92 to $146.95 a barrel on the ICE Futures exchange after hitting a record $147.25.

"There's always a fear premium in pricing. The tensions in Iran and the threat of supply disruption will help support oil prices," said Jeff Brown, managing director of FACTS Global Energy in Singapore.

JBC Energy in Vienna, Austria, said the news about Iran, Nigeria, as well as a reported threat of a strike by oil workers in Brazil were "enough to wake the market from its two-day slumber."

A day after Iran tested a missile capable of reaching Israel, Secretary of State Condoleezza Rice warned the oil-producing nation that the United States will defend its allies. Iran then responded with another missile launch, drawing buyers back to jittery energy markets.

Both the U.S. and Israel have not ruled out a military strike on Iran.

Domestically, there was another disappointing report on U.S. stocks.

Heating oil futures on Friday rose to a record $4.15 In other Nymex trading, adding more than 11 cents a gallon.

The Organization of Petroleum Exporting Countries has warned that it cannot replace the shortfall if Iran is attacked and takes its crude supplies off the market. The fear is that Iran, OPEC's second-largest producer, could block the Strait of Hormuz, a passageway that handles about 40 percent of the world's tanker traffic.

Meanwhile, attacks on Nigerian oil facilities could again disrupt supplies in the oil-rich region.

Nigeria's main militant group vowed Thursday to resume attacks because of Britain's recent pledge to back the government in the conflict there. Unrest over the past two years have already slashed the country's normal daily oil output by a quarter.

Still, while supply worries abound and the U.S. dollar remains weak compared with levels a year ago, many investors are seeing reasons to believe that oil might be peaking because of resistance to the record-level prices.

"Here in the United States, airplanes are being grounded. Travel has definitely changed. People are looking at hybrids," said James Cordier, president of Tampa, Florida-based trading firms Liberty Trading Group and OptionSellers.com.

"It's been about a three- or four-year bull market, and anyone who has called a peak in this market has ended up with a red face," he said. However, "it appears that demand destruction is at a level where we might have seen the high in oil prices."

The U.S. Energy Department reported Wednesday that American demand for gasoline over the four weeks that ended July 4 was 2.1 percent lower than a year earlier, at about 9.3 million barrels a day.

"I don't think we're going to imminently fall out of bed here," said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos., referring to crude-oil prices. "But I'm finding it difficult to justify prices at much higher levels."

Natural gas futures rose 28 cents to $12.59 per 1,000 cubic feet.

Crude Oil Rises to Record on Speculation Israel May Attack Iran

By Alexander Kwiatkowski

July 11 (Bloomberg) -- Crude oil rose more than $5 to a record on concerns that Israel may be preparing to attack Iran, while a strike in Brazil and renewed militant activity in Nigeria threaten to cut supplies.

Oil rallied to a record high of $146.90 a barrel in New York after the Jerusalem Post said Israeli war planes practiced over Iraq, adding to speculation the country is preparing to attack Iran. A Brazilian union said it plans a five-day strike on platforms that pump 80 percent of the country's crude and Nigerian militants pledged to renew attacks on oil facilities.

``We are now in uncharted territory here with the Iranian situation,'' Tom James, head of commodities trading at Liquid Capital Markets Ltd., said in a phone interview ``People are just too scared to sell.''

Crude oil for August delivery rose as much as $5.25, or 3.7 percent, to an all-time high of $146.90 a barrel on the New York Mercantile Exchange and was trading at $146.59 at 1:46 p.m. in London.

Israeli war planes are conducting maneuvers in Iraqi airspace and using U.S. airbases in the country, possibly practicing for a strike against Iran, the newspaper reported, citing comments by Iraqi officials in local media. Israeli government spokesman Mark Regev denied the report.

Iran, OPEC's second biggest producer, this week tested missiles capable of reaching Israel.

Brent crude oil for August settlement rose as much as $5.22 a barrel, or 3.7 percent, to $147.25 a barrel and was trading at $146.94 at 1:46 p.m. local time on London's ICE Futures Europe exchange.

Falling Stockpiles

Yesterday, the contract gained $5.45, or 4 percent, to $142.03 a barrel. Prices climbed to a record $146.69 on July 3.

Oil may rise next week because of threats to supply from Iran and Nigeria and falling stockpiles in the U.S., the biggest energy-consuming country, according to a Bloomberg News survey.

Gasoline prices in the U.S. rose to a record. Futures for August delivery rose as much as 10.46 cents, or 3 percent, to $3.6155 a gallon on Nymex.

The average price of a gallon of gasoline at the pump in the U.S was $4.11 on July 8, according to AAA, 38 percent higher than a year earlier.

About 4,500 employees of state-controlled Petroleo Brasileiro SA will take part in a protest on platforms in the offshore Campos basin to get full pay for the day they return to the mainland after a 14-day shift at sea, a union official said yesterday.

Iran's Exports

The standoff has led to concern that Iran may come under attack from the U.S. or Israel, disrupting exports from OPEC's second-biggest producer.

``You could survive with one of these factors, but if they come all at the same time it will drive prices up,'' said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. ``As soon as violent attacks increase in Nigeria it is a threat to production.''

The Movement for the Emancipation of the Niger Delta said attacks will resume on oil facilities. The Nigerian militant group said it will call off its unilateral cease-fire beginning midnight on July 12.

MEND's attacks on pipelines and other installations have cut more than 20 percent of Nigeria's oil exports since 2006. MEND says it is fighting for a greater share of oil wealth for the impoverished inhabitants of the Niger Delta.

The group declared a cease-fire after a June 19 attack on Royal Dutch Shell Plc's Bonga deep-water oilfield, located 120 kilometers (75 miles) offshore that cut 190,000 barrels a day of oil output.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.netNesa Subrahmaniyan in Singapore at nesas@bloomberg.net.

http://www.bloomberg.com/apps/news?pid=20601086&sid=aZkEmveQew70&refer=latin_america

What a ever next !! : (

First hurricane of the season, wonder what impact it will have on oil ?http://news.yahoo.com/s/nm/20080711/sc_nm/storm_bertha_dc

Oil, gasoline rise to records
From Chicago Tribune news services
July 12, 2008




Crude oil and gasoline climbed to records on growing concern about violence in the Middle East and supply disruptions from Brazil to Nigeria.

Oil jumped as high as $147.27 a barrel in New York after the Jerusalem Post said Israeli warplanes practiced over Iraq, although Israeli government spokesman Mark Regev denied the report. A Brazilian oil workers union is planning a five-day strike.

Prices have jumped more than $10 a barrel since Wednesday.



"The Iran premium has come into the market over the last two days," said Adam Sieminski, Deutsche Bank's chief energy economist. "Nothing has changed except the perception about whether there will be a deal between the U.S. and Iran. The possibility of a conflict is of tremendous concern to the market."

About 40 percent of the world's tanker traffic passes through the Strait of Hormuz, raising fears that conflict in the Middle East could choke off some supply.

"The war of words is quite heated," said Michael Lynch, president of Strategic Energy & Economic Research Inc. "And it raises the possibility of some serious problems in the areaeither the cutoff of Iranian exports or Iranian strikes on tankers in the Strait of Hormuz."

Crude oil for August delivery rose $3.43, to $145.08 a barrel on the New York Mercantile Exchange. Futures, which fell 21 cents for the week, have doubled over the past year.

Gasoline for August delivery rose 5.23 cents, or 1.5 percent, to settle at $3.5632 a gallon in New York. Futures reached $3.631 a gallon Friday, an all-time high.

At the pump, the national average for regular gasoline fell 0.8 cents, to $4.096 a gallon, AAA said. Pump prices reached a record $4.108 a gallon on Monday.


http://www.chicagotribune.com/business/chi-sat-oil-prices-jul12,0,54213.story

Bush Continues Push For More Offshore Oil Drilling
By Scott Stearns
White House
12 July 2008

Stearns report - Download (MP3)
Stearns report - Listen (MP3)


U.S. President George Bush wants Congress to expand offshore oil drilling to help bring down record high gasoline prices. VOA White House Correspondent Scott Stearns reports, opposition Democrats say oil companies should start by using the offshore leases they already hold.


In this 28 Mar 2006 file photo, the Discoverer Deep Seas drillship sits on station off the coast of Louisiana as Chevron drills for oil in the Gulf of Mexico
President Bush says rising energy costs are hurting the U.S. economy, so he wants Congress to expand oil drilling on America's Outer Continental Shelf (OCS).

"Experts believe that the OCS that is currently off-limits could produce enough oil to match America's current production for almost ten years," he noted. "The problem is that Congress has restricted access to key parts of the OCS since the early 1980s. Since that time, technological advances have allowed us to explore oil offshore in ways that protect the environment."

In his weekly radio address, the president said once Congress lifts its legislative ban on more offshore drilling, he will remove presidential restrictions.

In the Democratic radio address, Maryland Congressman Chris Van Hollen said Democrats support more drilling but want oil companies to explore the more than 27 million hectares of land they have already leased from the federal government.

"What the president hasn't told you is that the oil companies are already sitting on 68 million acres of federal lands with the potential to nearly double U.S. oil production," he said. "That is why in the coming days congressional Democrats will vote on use-it-or-lose it legislation requiring the big oil companies to develop these resources or lose their leases to someone else who will."

President Bush also wants congressional Democrats to allow for drilling in an Alaskan wildlife refuge, action that environmentalists have successfully blocked for decades.


"Scientists have developed innovative techniques to reach this oil with virtually no impact on the land or local wildlife," he added. "With a drilling footprint that covers just a tiny fraction of this vast terrain, America could produce an estimated 10 billion barrels of oil. That is roughly the equivalent of two decades of imported oil from Saudi Arabia."

Van Hollen says the Energy Department estimates that drilling today in the Alaskan wildlife refuge would not deliver any petroleum to U.S. pumps for ten years. He says more drilling in Alaska would save consumers about two cents a gallon 20 years from now.

"When Americans are getting sticker shock every time they pull into the gas station, we don't have 20 years to wait. We need action, real action," he said.

Van Hollen says Democrats want President Bush to release some of the gasoline in the nation's Strategic Petroleum Reserve and focus more on alternative sources of energy.

Oil touched a record high of more than $147 per barrel Friday before closing at just over $145 per barrel. U.S. stocks fell for their sixth straight week, averaging loses of about 16 percent for the year so far.

Oil drops below $145 a barrel in Asia
By ALEX KENNEDY 1 hour ago

SINGAPORE (AP) Oil dropped below $145 a barrel Tuesday in Asia although a series of threats to supply in a finely balanced market continues to keep a floor under prices.

"The oil market right now is fundamentally tight, which is why prices have been high and volatile," said David Moore, a commodity strategist with Commonwealth Bank of Australia in Sydney.

In midday trading in Singapore, light, sweet crude for August delivery was down 26 cents at $144.92 a barrel in Asian electronic trading on the New York Mercantile Exchange.

The contract rose 10 cents in Monday's floor session to $145.18 a barrel, just over a dime short of the all-time settlement high.

Threats to supply in Brazil, Iran and Nigeria have been keeping oil near the record levels hit last week.

A five-day strike by Brazilian oil workers that began early Monday has cut the production of Petroleo Brasileiro SA, or Petrobras by about 4 percent, according to the state-run oil company. Oil workers are striking at 33 rigs in a dispute over pay but only two rigs were totally stopped, Petrobras said.

Petrobras produces about 1.6 million barrels of oil a day. It is estimated to be the world's sixth largest oil company in terms of market capitalization.

Also, tensions remain between Iran and the U.S. and Israel over what the two allies say are Tehran's suspicious nuclear programs. Investors worry that any worsening of the standoff has the potential to disrupt shipments from OPEC's second-largest oil exporter.

Still, some analysts say they expect an easing of pricing later in the second half of the year.

Oil prices that have doubled in the past year have begun to weaken demand, said Moore.

"We've started to see weaker demand in the U.S., but we don't expect this to help lower prices until the fourth quarter," he said. He expects the price of oil to average about $143 in the third quarter and about $137 in the fourth.

Also, a weakening of the dollar helped to support commodity prices Tuesday. Many investors view oil and other commodities as hedges against inflation and a weakening dollar, and their prices tend to rise as the currency declines.

The dollar fell to 105.79 yen in Asian currency trade, while the euro strengthened to $1.5940.

On Monday, U.S. President George W. Bush lifted an executive ban on offshore oil drilling. That alone is not expected to loosen global supplies in the short term since a Congressional prohibition remains in place and any new wells would take years to complete.

August Brent crude fell 6 cents to $143.86 a barrel on the ICE Futures exchange in London.

In other Nymex trade, heating oil futures fell 0.08 cent to $4.0641 a gallon (3.8 liters) while gasoline prices added 0.03 cent to $3.558 a gallon. Natural gas futures fell 0.4 cent to $11.955 per 1,000 cubic feet.

Oil Falls After Report Shows Unexpected Increase in Supplies

By Mark Shenk

July 16 (Bloomberg) -- Crude oil futures fell more than $5 a barrel in New York after a U.S. Energy Department report showed an unexpected increase in inventories.

Supplies rose 2.95 million barrels to 296.9 million barrels last week, the report showed. Inventories were forecast to drop 2.2 million barrels, according to the median of analyst estimates in a Bloomberg News survey. Prices tumbled 4.4 percent yesterday on signs that the slowing U.S. economy is cutting fuel use.

``The inventory numbers are starting to reflect the bad macro-economic news,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Not only did we get a surprise build in crude-oil stocks, the products were also up nicely.''

Crude oil for August delivery fell $5.60, or 4 percent, to $133.14 a barrel at 10:42 a.m. on the New York Mercantile Exchange. Prices are heading for the biggest two-day drop since January 2007. Oil traded at $137.53 a barrel before the release of the report at 10:35 a.m. in Washington.

Gasoline stockpiles rose 2.47 million barrels to 214.2 million barrels, the report showed. An 800,000 barrel decline was forecast. Inventories of distillate fuel, including heating oil and diesel, gained 3.19 million barrels to 125.7 million, the department said. A 2 million barrel increase was forecast.

Crude oil had the largest percentage decline yesterday since March as Federal Reserve Chairman Ben S. Bernanke said risks to U.S. expansion and inflation have risen.

Prices paid by U.S. consumers jumped 1.1 percent in June after a 0.6 percent gain the prior month, the Labor Department said today in Washington. It was the most since 2005. Excluding food and energy, so-called core prices climbed 0.3 percent, also more than anticipated.

Nuclear Negotiations

Plans by a high-ranking American diplomat to take part in nuclear negotiations with Iran have tempered speculation that the U.S. or Israel may attack OPEC's second biggest oil producer, in a dispute over its nuclear plans. Concern about a possible strike helped push oil prices to a record last week.

Undersecretary of State William Burns will participate in the European Union-Iran talks this weekend in Geneva, State Department spokesman Sean McCormack said today without giving details. This is a shift in the U.S. position on talks with a government it has shunned since 1980.

Brent crude oil for August settlement declined $4.92, or 3.6 percent, to $133.83 a barrel on London's ICE Futures Europe exchange. Prices climbed to $147.50 on July 11, the highest since trading began in 1988.

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

AP IMPACT: Big Oil profits steered to investors
By JOHN PORRETTO 21 July 2008

HOUSTON (AP) As giant oil companies like Exxon Mobil and ConocoPhillips get set to report what will probably be another round of eye-popping quarterly profits, just where is all that money going?

The companies insist they're trying to find new oil that might help bring down gas prices, but the money they spend on exploration is nothing compared with what they spend on stock buybacks and dividends.

It's good news for shareholders, including mutual funds and retirement plans for millions of Americans, but no help to drivers already making drastic cutbacks to offset the high cost of fuel.

The five biggest international oil companies plowed about 55 percent of the cash they made from their businesses into stock buybacks and dividends last year, up from 30 percent in 2000 and just 1 percent in 1993, according to Rice University's James A. Baker III Institute for Public Policy.

The percentage they spend to find new deposits of fossil fuels has remained flat for years, in the mid-single digits.

The issue has become more sensitive as lawmakers and Americans frustrated by high gas prices have balked at gaudy reports of oil industry profits. ConocoPhillips is scheduled to kick off the latest round of Big Oil earnings reports Wednesday.

Oil prices are set on the open market, not by the oil industry. But that hasn't stopped public protests, a series of congressional grillings for top oil executives, and a failed attempt by lawmakers to slap Big Oil with a windfall profits tax.

In the first three months of this year, Exxon Mobil Corp., the world's biggest publicly traded oil company, shelled out $8.8 billion on stock buybacks alone, compared with $5.5 billion on exploration and other capital projects.

ConocoPhillips has already told investors that its stock buybacks for April to June of this year will come to about $2.5 billion nine times what it spent on exploration.

Stock buybacks are common throughout corporate America, not just for Big Oil. They shrink the amount of stock on the open market, essentially increasing its value and giving individual shareholders a bigger stake in the company.

But some critics say Big Oil focuses too much on boosting stock prices, in an industry that sometimes ties executive pay to stock price.

And in focusing on buybacks and dividends over exploring for new oil, some critics say, oil companies jeopardize its already dwindling share of world supply.

"If you're not spending your money finding and developing new oil, then there's no new oil," said Amy Myers Jaffe, an energy expert at Rice University who's studied spending patterns of the major oil companies.

Investor-owned companies like Exxon Mobil and Chevron hold less than 10 percent of global oil and gas reserves, way down from past decades. And finding new oil has become harder and more expensive.

State-run oil companies, like those in Saudi Arabia and Venezuela, control about 80 percent of oil reserves and at today's prices, it's not surprising they're keeping a tight grip on what they have. Scarce equipment and hard-to-find labor also pose problems.

No one questions that Big Oil is rolling in cash. The cash the biggest oil companies bring in from running their businesses, or operating cash flow, is four times what it was in the early 1990s.

"It becomes a management decision," said Howard Silverblatt, a senior index analyst at Standard & Poor's. "It's not like they're going to the board and saying, 'Well, I can do one or the other or the other.' The balance sheets are flush with cash."

So what's Big Oil to do?

The companies say they are doing what they can to find more fossil fuels around the world, but the easy oil is gone. Exploring these days may mean expensive projects in thousands of feet of water in the Gulf of Mexico or costly ventures pulling petroleum from Canada's vast oil-sands deposits.

TransCanada Corp. and ConocoPhillips Co. just said they'd spend $7 billion to nearly double the amount of crude flowing through a pipeline from Canada's tar sands to the U.S. Gulf Coast.

And analysts point out that because there's no guarantee oil prices will stay in the stratosphere, oil companies should approach exploration projects with caution.

"There's only so much money you can throw at it without being ridiculous," said Joseph Stanislaw, a senior adviser to Deloitte LLP's Energy & Resources practice. "I think they're doing what they can."

It's also important to remember it can take several years before a company produces the first barrel of oil from a new field.

One example is an oil field in the Gulf of Mexico called Thunder Horse. Operated by BP and partly owned by Exxon Mobil, the platform only last month began producing oil and gas nine years after the field's discovery.

At its peak, the multibillion-dollar project is designed to produce 250,000 barrels of oil and 200 million cubic feet of natural gas each day, which would make it the Gulf's largest producer.

"When you look at the spending that's going on, the companies are bringing on a lot of long-term discoveries," said John Parry, a senior analyst with John S. Herold Inc.

At ConocoPhillips, the capital spending budget for 2008, which includes exploration and production, is $15.3 billion, more than double the spending of five years ago.

"Could we spend $20 billion or $25 billion? Absolutely," spokesman Gary Russell said. "Could we do it effectively, in a way that provides ultimate value to our shareholders? Probably not."

Exxon Mobil, known for its disciplined approach to investing in energy projects, has drawn criticism for its reluctance to invest in alternative energy sources like wind and solar power.

The company expects to spent $25 billion to $30 billion on capital and exploration projects each of the next five years. Last year, it spent about $32 billion on share buybacks.

"You fund your investments that make sense," said spokesman Alan Jeffers. "You have criteria, and you have to meet that to be a good investment for the shareholder. And then if you've got cash that's left over, you're going to return it to the shareholder because it's theirs."

Exxon Mobil often touts its $100 million contribution to Stanford University's Global Climate and Energy Project. By contrast, BP says it plans to spend $8 billion over the next decade developing alternative energy using wind, hydrogen and other means.

Big Oil isn't alone buying back large amounts of stock, but the companies are certainly some of the biggest indulgers.

A boom in stock buybacks has been under way in corporate America since 2004. In the first quarter of this year, Exxon, ConocoPhillips and Chevron were all among the top 10 companies for share buybacks in the S&P 500.

In Washington, one Democratic proposal would impose a 25 percent tax on "unreasonable" profits of the top five oil companies, which together made more than $120 billion in 2007, and put the money toward a trust fund for investment in alternative energy sources. Republicans say it's a gimmick that won't help at the pump and will discourage domestic oil production.

But Sen. Charles Schumer, D-N.Y., said the fervor for stock buybacks is a clear sign Big Oil isn't interested in new production or alternative energy.

"When you hear that," he said, "it screams out for a windfall profits tax."

http://ap.google.com/article/ALeqM5jdMq36pfzhyHeyexEU51JX5sr1egD922FK000

December 2008 oil prices will be in the region $197 - $210.

WHY?????PLEASE TELL/

Huge sell off again today before the open and now rallying, so far to the close. Inventories tomorrow.20 dollar drop in last week, has the bubble burst, through speculation restriction increased production, decreased demand or is it preparing for a rally on steroids with the next geopolitical/ climatic hiccup , time will tell

DITTO//

EASY MONEY

shadow is not renouned for his forecasting, or maybe he is, in as much as he has this uncanny knack of being totally wrong, but we shall have to wait and see on his 'look into the future'.
2517

Oil extends decline, drops below $128
By GILLIAN WONG 23.07.2008

SINGAPORE (AP) Oil prices slipped further Wednesday after tumbling more than $3 a barrel in the previous session as a hurricane looked likely to spare key oil installations in the U.S. Gulf of Mexico.

Traders in Asia awaited the release of U.S. oil supply data later in the day that was expected to show a rise in gasoline stocks amid weakening demand in the world's largest energy consumer.

Light, sweet crude for September delivery fell 82 cents to $127.60 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell $3.40 to settle at $128.42 in the previous session.

The August contract fell $3.09 to settle at $127.95 a barrel as it expired at the end of floor trade.

The overnight sell-off dragged oil prices to their lowest level since early June and was crude's fifth decline in the last six sessions.

Prices fell as Dolly a tropical storm that spun into a hurricane on Tuesday headed toward the U.S.-Mexico border but grew increasingly unlikely to threaten key oil supply in the Gulf. That gave traders one less reason to buy as a strengthening dollar helped keep prices in check.

The drop offered further evidence that investors are now quickly pulling money out of the market, after driving prices to a record above $147 only a week and a half ago. It was also a reminder that, with traders for the moment turning bearish, the absence of major news can push the market down just as incremental supply concerns previously drove prices sharply higher.

"Clearly, there's not a lot of price-supporting news in the market, and what was there has been diminished now with Hurricane Dolly," said Mark Pervan, a senior commodities strategist with ANZ Bank in Melbourne.

"This market's still fundamentally quite strong it's just that we've seen prices coming off from over-inflated levels. The market's letting steam out," Pervan said. "There's genuine reason to be taking profits in this market with the weak U.S demand numbers."

Crude oil inventories were expected to drop by 1.9 million barrels in the U.S. Energy Information Administration's weekly petroleum supply report, according to the average of analysts' estimates in a survey by energy research firm Platts.

The survey also showed that analysts projected gasoline stocks to rise by 500,000 barrels.

"I suspect we'll see another rise in gasoline stocks, highlighting again that demand is certainly weak," Pervan said.

In its weekly pump spending survey, MasterCard found U.S. gasoline demand dropped last week for the thirteenth week in a row. Demand fell 3.3 percent compared with the same week a year earlier, according to the survey. Since the start of 2008, gasoline demand is down 2.2 percent.

In other Nymex trading, heating oil futures lost 1.82 cents to $3.66 a gallon (3.8 liters) while gasoline prices dropped 0.74 cent to $3.1396 a gallon. Natural gas prices added 0.7 cents to $10.074 per 1,000 cubic feet.

September Brent crude fell 74 cents to $128.81 a barrel on the ICE Futures exchange in London.

Oil hits 7-week low on demand worries, dollar gain
By STEVENSON JACOBS 29 July 2008

NEW YORK (AP) Oil prices tumbled more than $2 a barrel Tuesday, finishing at their lowest level in seven weeks as a stronger dollar and beliefs that record prices are eroding the world's thirst for energy sparked another dramatic sell-off.

The drop which surpassed $4 a barrel at one point during the day was a throwback to oil's nosedive over the past two weeks and outweighed supply concerns touched off by a militant attack Monday on two Nigerian crude pipelines. It was oil's seventh decline in the last 10 sessions.

Light, sweet crude for September delivery fell $2.54 to settle at $122.19 on the New York Mercantile Exchange. It was the lowest settlement price for a front-month contract since June 10. Earlier, prices fell to $120.42, also the lowest level since June 10. Oil has now fallen more than $25 from its trading high of $147.27, reached July 11.

More concerns that crude's run-up over the past year has pushed prices to unsustainable levels fed Tuesday's decline. The U.S. Transportation Department said Monday that U.S. drivers logged 9.6 billion fewer vehicle miles in May or 3.7 percent compared to the same period last year, the biggest drop ever for the historically busy summer driving month.

And demand for oil in the U.S. the world's thirstiest consumer continues to fall, dropping by 891,000 barrels per day in May compared the same month a year ago, the Energy Department's Energy Information Administration said Monday.

"We're seeing both statistical and anecdotal evidence of a very rapidly weakening demand picture," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

The declines accelerated after oil briefly dipped below $122, a key resistance level that triggered technical selling by computers programmed to dump oil contracts once prices fall under a certain threshold.

"Once we break through $120, we could easily slide through to $100," said Darin Newsom, senior analyst at DTN in Omaha.

Also weighing on prices was a sharply stronger dollar compared to the euro, which made commodities less attractive to investors who have bought oil futures as a hedge against inflation and weakness in the U.S. currency.

The euro bought $1.5584 compared with $1.5752 late Monday in New York.

"It looks like oil is selling off today with the very, very strong dollar and nothing to drive it higher. Quiet seems to be bearish these days," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service in Wall, N.J.

In another sign that high prices are curbing Americans' consumption for fuel, retail gas prices fell further below the $4-a-gallon mark. The average price of a regular gas fell 1.7 cents to $3.941, according to auto club AAA, the Oil Prices Information Service and Wright Express.

Monday's attack in Nigeria targeted two pipelines believed to be owned by a unit of Royal Dutch Shell PLC and was the latest in a two-year campaign of attacks on the country's oil industry. Shell said a pipeline had been damaged in attacks and that some crude production had been shut down to prevent the oil from spilling into the environment.

The oil company said Tuesday it may not be able to fulfill some oil-export contracts because of the damage. Shell didn't specify how much oil production was cut by the attack or how long repairs would take.

The Movement for the Emancipation of the Niger Delta says it is acting to force the Nigerian federal government to send more oil industry funds to the southern region, which produces all of Nigeria's crude oil but remains impoverished after decades of corrupt and wasteful governance.

Analysts at JBC Energy in Vienna, Austria, estimated the repeated attacks on country's oil installations, Nigeria's output had fallen to just below 1.9 million barrels a day from more than 2.4 million barrels a day in 2005.

Oil market analysts are awaiting U.S. data later in the week for indications of how the world's largest economy could be expected to perform in coming months. Figures for gross domestic product for the second quarter will be released Thursday, while July auto sales and the July employment report are both due Friday.

In other Nymex trading, heating oil futures fell 8.98 cents to settle at $3.4722 a gallon while gasoline prices fell 6.23 cents to settle at $3.0077 a gallon. Natural gas futures rose 5.4 cents to settle at $9.217 per 1,000 cubic feet after trading lower most of the day.

In London, September Brent crude lost $3.13 to settle at $122.71 a barrel on the ICE Futures exchange.

thanks smiler o. always a good read cheers.

;)

Oil falls below $120 as Opec production risesPublished: Tuesday, 5 August, 2008, 01:15 AM Doha Time

LONDON: Oil fell below $120 a barrel yesterday, pressured by evidence of rising Opec output in the midst of declining demand in the US and Europe.
The losses, adding to a record slide from the mid-July peak over $147 a barrel, came despite a storm in the Gulf of Mexico that was curbing oil production, shipping and refining.
Crude futures are down despite a brewing storm and that shows you how momentum has shifted in this market, said Phil Flynn, analyst at Alaron Trading in Chicago.
US light crude fell $4.10 to $121 a barrel by evening after slipping as low as $119.50. London Brent crude dipped $3.55 to $120.63 a barrel.
The losses came after a Reuters survey showed Opec supply rose for a third consecutive month in July mainly because of increased output from the worlds top exporter Saudi Arabia.
The boost in production from Opec comes as soaring energy prices and an economic slowdown cut into consumption in the US and Europe.
The market is focused on falling demand with Opec seen producing more oil, said Alarons Flynn.
The bearish impact was countered by Tropical Storm Edouard, which was barreling across a major oil and gas producing area of the northern Gulf of Mexico.
Traders also were nervous supplies could be disrupted as a result of tension between the West and the worlds fourth largest oil producer, Iran.
Oil supplies already have been disrupted from Nigeria, the worlds No8 oil exporter, as a result of militant attacks that have cut about a fifth of its production. Reuters

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=233829&version=1&template_id=48&parent_id=28

ADRL - New Contract In United Kingdom: Drilling Of Gas Storage Caverns


Ability Drilling AS Date: 6 August 2008

New contract in United Kingdom: Drilling of gas storage caverns

Ability Drilling has been awarded a contract with an estimated value of NOK 100 million for drilling of gas storage caverns with Scottish and Southern Energy plc ("SSE"). The contract is for drilling operations related to the Aldbrough Gas Storage Project II, Eastern York. The project is a 50/50 joint venture between SSE and StatoilHydro.

The Aldbrough Gas Storage Project II is the second project for storage of natural gas underground in the area by the two companies. The development of the gas storage area was started in 2002, and the actual project is the second phase of the total development. The contract covers drilling of nine wells, which will subsequently be leeched to caverns (so far not part of the contract). The leaching contract will be awarded during drilling of these 9 wells. The caverns will have a storage capacity of 420 million cubic metres. This equals to the supply of gas in one day to more than 6 million homes. Ability Drilling's operations in this project will commence in Q4 2009 and will last for approximately two years with one rig.

CEO in Ability Drilling Hans Petter Eikeland comments: "We are proud to be awarded this important contract with such a well-reputed company as Scottish and Southern Energy. It is also a pleasure for the management and crew in Ability Drilling to again work with StatoilHydro, who we know very well from the Norwegian Continental Shelf".

Gas storage is a central part of the UK's strategy for handling more imports of gas. It secures the required flexibility in reserves for the country. Strategically, gas storage also increases energy independence. Other countries also evaluate development of more gas storage caverns. Says Mr. Eikeland, "we experience growing interest for the storage concept and believe this market will grow rapidly."

The gas storage caverns are created using well known and proven technology and drilling processes. Directional drilling is used from a central area down to the salt strata. In Aldbrough, this area is about 1700 metres underground. After drilling is completed, the leaching process starts by pumping seawater into the boreholes to dissolve the salt and form the cavern. The natural gas will then be pumped into the caverns and stored under high pressure.

"Some of Ability Drilling's competitive edges, high focus on QHSE and more environmental friendly operation, were crucial in winning this contract," says Mr. Eikeland, who expects the contract will pave the way for new opportunities in the gas storage market.

For further information, please contact:

CEO Hans Petter Eikeland, phone +47 56 32 43 43, or +47 93 20 81 77 CFO Kenneth Tunes, phone +47 56 32 43 43, or +47 91 54 49 01

About Ability Drilling ASA: Ability Drilling aims to become the preferred operator and provider of Rack & Pinion (R&P) rigs in its defined core markets, by combining fourth generation drilling technology with outstanding drilling experience from offshore North Sea exploration and production activities.

The Company currently targets onshore oil operations in the MENA (Middle East North Africa) market, the geothermal market in Europe, as well as the market for drilling of LNG reservoirs. Both the land rig market in MENA and the geothermal segment in Europe are markets with strong growth and significant potential, while the market for drilling of LNG reservoirs is an emerging growth segment. Ability Drilling targets extension of the geographical footprint within all current focus areas.

Ability Drilling has already ordered 11 rigs, of which 10 rigs are still under construction. In addition, the company has options for 33 additional land rigs and 40 additional workover rigs. Ability Drilling's target is to have 20 rigs in operation within 2010.

Ability Drilling is listed on Oslo Axess, with ticker ADRL.

Ability Drilling AS

http://www.ability-drilling.com/

Business, 8/7/2008 11:52 AM August 7, 2008
World oil prices move up slightly in Asian trade

Agence France-Presse

SINGAPORE - Oil prices were slightly higher in Asian trade Thursday after steep falls in recent sessions on worries about waning energy demand, especially in the United States, dealers said.

In morning trade, New York's main contract, light sweet crude for September delivery, rose 30 cents to 118.88 dollars a barrel.

London's Brent North Sea crude for September delivery added 45 cents to 117.45.

"I think it's partly that it has been such a big sell-off (in recent sessions)," said Jason Feer, from energy market analysts Argus Media in Singapore.

Oil prices have tumbled this week on new concerns about demand amid signs of slowing global growth. Crude is down almost 20 percent since reaching record highs above 147 dollars last month.

Prices fell Wednesday after an unexpected jump in US crude reserves but a bigger-than-expected drop in gasoline stockpiles was the other surprise element for the market.

The US Department of Energy announced in its weekly report Wednesday that American crude reserves increased by 1.7 million barrels in the week ended August 1.

The reading caught the market off guard because expectations had been for a 200,000-barrel decline. The weekly report often has an impact on market prices.

Motor fuel stockpiles plunged 4.4 million barrels, well beyond consensus forecasts for a drop of 1.5 million.

"The gasoline numbers have probably raised enough doubts in traders' heads... they probably want to see some more data to see if that is the trend," said Feer.

Traders are closely tracking the level of US gasoline stockpiles amid the ongoing peak-demand summer driving season, when many Americans take to the roads for their holidays

Oil dips to near $119 on stronger dollar
Staff and agencies
08 August, 2008




By ALEX KENNEDY, Associated Press Writer 13 minutes ago

SINGAPORE - Oil prices dropped to near $119 a barrel Friday in Asia as a strengthening dollar and worries about economic growth offset supply concerns over Turkish pipeline sabotage that was claimed by Kurdish rebels.

The gains Thursday in the U.S. came after pro-Kurdish news agency Firat said the separatist group Kurdistan Workers Party, known as PKK, admitted sabotaging the Turkish section of the critical Baku-Tbilisi-Ceyhan pipeline earlier this week.

But the dollar has also strengthened against the euro and yen after the European Central Bank and the Bank of England both left their benchmark interest rates unchanged under conflicting pressure from higher inflation and mounting concern about economic growth.

The central banks actions fed investors sentiment that economic growth is slowing in the developed world, cutting demand for crude, said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.

In London, September Brent crude was down 84 cents at $117.02 a barrel on the ICE Futures exchange.

"The disruptions to that pipeline have provided some support to oil prices," Moore said.

Nymex front-month crude futures are down about 18 percent from a record high of $147.27 hit on July 11.

Oil prices turn bearish, but bulls may yet return

9 Aug, 2008, 1000 hrs IST, AGENCIES

NEW YORK: In less than a month crude oil, which some saw hitting $200 a barrel by year-end, has plunged $32 but a rebound could happen, for example, over the Iranian nuclear crisis, analysts say.

From a record-high $147.27 on July 11, the New York futures contract slid to about $115 on Friday, losing almost 22 per cent in the course of four weeks.

In its wake, most other commodity prices, which were driven higher by the oil market surge, have fallen from their peaks: an ounce of gold has dropped to 800 dollars from 1,000; farm commodity prices are between 25 and 40 per cent lower and gasoline prices have dropped about 6.0 per cent.

"Oil is at a tipping point. It is an exaggeration to cry that a bubble has burst. It is a break," said Ellis Eckland, an independent analyst based in Chicago who insisted the "oil market was not in a bubble."

For James Williams at WTRG Energy, the law of supply and demand reins. "The market is simple reflecting the fundamentals of supply and demand. Markets participants are considering the world slowdown, the deterioration in expectations for the growth worldwide," Williams said.

Russian warships are deployed near ports along the Georgian Black Sea coast, including Poti, where Georgian officials say wheat and fuel shipments are being blocked. Russia insists there are no plans to stop oil exports, but says it reserves the right to search any ships. Later reports say the warships have been withdrawn.

UPDATE 1-Oil rises towards $116 on military conflict in Georgia
Mon Aug 11, 2008 6:09am Oil up on fighting between Georgia and Russia

* Shipments of oil and oil products from two Georgia ports suspended, according to a report


By Fayen Wong

PERTH, Aug 11 (Reuters) - Crude oil rose towards $116 a barrel on Monday, rebounding from the previous session's $5 decline on concern fighting between Russia and Georgia could disrupt energy exports from the Caspian region.

U.S. light crude for September delivery CLc1 was up 51 cents at $115.71 a barrel by 0026 GMT, after rising as much as $1.19 earlier.

The contract had finished $4.8 lower at $115.20 a barrel on Friday, before falling to $114.90 in post-settlement trade, the lowest level since early May.

Oil has shed about $31, or 21 percent, since its peak of over $147.27 struck on July 11 on concerns of a slowdown in demand.

London Brent crude LCOc1 rose 66 cents to $113.99 on Monday. Continued...

http://in.reuters.com/article/oilRpt/idINSYD9643720080811

Georgia, oil and gold
Published: August 11 2008 19:17 | Last updated: August 11 2008 19:17

War, what is it good for? Neither oil nor gold is the surprising answer. The explosion of the South Ossetian powder keg should have sent crude and gold prices soaring. Instead, both are down 4 per cent since Thursday. This is odd. Gold rises on geopolitical frisson. And Georgia is a transit route for Caspian oil to Europe.

Why are oil bulls and goldbugs so quiescent? With oil consumption falling in North America and recessionary signals coming from Europe, weak demand trumps geopolitics. Moreover, one of the pipelines crossing Georgia was shut down already and that had failed to support oil prices even before the shooting started.

EDITORS CHOICE
Explorers struggle to secure growth funding - Aug-10In depth: Oil - Apr-29Wildcatters come up to scratch - Jul-28Shell leads as big oil raises R&D by 16% - Jul-28Oil innovation after years of caution - Jul-28Brown seeks US support for action on prices - Jul-24

Oil falls to USD 114.45 a barrel


Oil prices tumbled on Monday, August 11 on worries about slowing global demand and a stronger dollar.

Light, sweet crude for September delivery fell 75 cents to settle at USD 114.45 a barrel on the New York Mercantile Exchange (NYMEX).

Gasoline futures fell 2.08 cents to settle at USD 2.8666 a gallon. The retail price of a gallon of regular gas stood at USD 3.81.

Heating oil futures fell 0.85 cent to settle at USD 3.1195 a gallon at the NYMEX.

In London, Brent crude futures fell 66 cents to settle at USD 112.67 a barrel on the ICE Futures exchange.

Natural gas futures rose by 10.1 cents to USD 8.349 per 1,000 cubic feet.

Oil steady near $113 ahead of inventory data
By ALEX KENNEDY 6 hours ago

SINGAPORE (AP) Oil prices were steady near $113 a barrel Wednesday in Asia ahead of weekly oil and gasoline inventory data that may show further evidence of declining crude demand in the U.S.

The U.S. Energy Department's Energy Information Administration was to report on U.S. oil stocks for the week ended Aug. 8 later in the day. The petroleum supply report was expected to show that crude stocks rose by 500,000 barrels, according to the average of analysts' estimates in a survey by energy research firm Platts.

Light, sweet crude for September delivery rose 7 cents to $113.08 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract dropped $1.44 overnight to settle at $113.01 a barrel.

Investors "have taken profits as they've seen demand destruction in the U.S. and they're seeing it spread a little into Europe," said Jonathan Kornafel, Asia director for brokerage Hudson Capital Energy in Singapore.

The Platts survey also showed that analysts projected gasoline inventories to have fallen 2.2 million barrels and distillates to have risen 1.9 million barrels during last week.

The International Energy Agency lowered its forecast on Tuesday for oil product demand from 30 developed countries, located mostly in Europe and North America, to 48.6 million barrels a day, down 1.3 percent from last year.

The Paris-based energy watchdog's report arrived a day after China said its crude imports in July, while historically strong, were down 7 percent from the same month last year.

The IEA cautioned that it is too early to determine whether the recent fall in oil prices is a longer-term trend. It said demand in developing countries could offset declines in developed nations, and that it sees Chinese oil demand continuing to grow at a robust pace.

"The question is where will the number level off at for China in the next few months," Kornafel said. "China is an enormous driver for the price of oil, along with India, Brazil and the Middle East."

In London, Brent crude for September delivery rose 40 cents to $111.55 a barrel.

Oil prices were supported by a weakening dollar. The euro rose Wednesday to $1.4927, while the dollar fell to 108.50 yen.

Nymex crude is down about $34, or 23 percent, from its high of $147.27 on July 11.

"I think a drop of 20 percent is a bit over done," Kornafel said. "We've fallen too far, too fast. I expect the market to sit between 110 and 120 in the short-term."

In other Nymex trading, heating oil futures rose 0.24 cent to $3.0805 a gallon (3.8 liters) while gasoline prices gained 0.93 cent to $2.8525 a gallon. Natural gas futures rose 4.8 cents to $8.378 per 1,000 cubic feet.

Crude oil prices continue to rise 14/08/2008

Oil prices hit record highs in July
Oil prices have continued to climb in early trade in Asia after US government weekly figures on Wednesday showed a drop in oil and petrol inventories.

After adding $3 following the news, US light sweet crude continued to climb on Thursday, adding 86 cents to stand at $116.86 a barrel in Singapore trade.

And London Brent climbed 72 cents to $114.19, extending overnight gains.

Disruptions to exports from the Caspian region following the Georgia-Russia clashes had also underpinned prices.

Opec option

Oil giant BP had closed an oil pipeline and a natural gas pipeline running from its Caspian Sea fields through Georgia but neither have been damaged.

On Thursday morning it said it had restarted pumping through the gas pipeline, known as the South Caucausus gas pipeline.

Another BP pipeline that runs through Georgia, the Baku-Tblisi-Ceyhan oil pipeline, was closed last week after an explosion in Turkey.

Meanwhile Iran's Opec governor Muhammad Ali Khatibi has said this week that the cartel of oil producing nations should trim its oil output if demand falls in industrialised nations.

Despite the recent rises prices remain well off the peak of $147 a barrel hit in July.

"There are not that many factors that can drive prices higher," said Gerard Burg, a commodities analyst at National Australia Bank.

Government data

As the US economy slows, demand for oil has fallen and there are predictions that this trend will continue.

On Wednesday the US Energy Department's (EIA) Energy Information Administration data showed that crude oil imports had been hit by tropical storm Edouard.

Petrol stocks fell 6.4 million barrels to 202.8 million barrels in the week ending August 8 - marking a fall three time greater than expected, the EIA data showed.

But data from the EIA also showed that demand for oil in the first half of 2008 saw its sharpest drop in 26 years, compared to a year before.

Gas prices not likely to go down much more, experts say
100 commentsby Ryan Randazzo - Aug. 14, 2008 12:00 AM
The Arizona Republic
The recent retreat in oil and gasoline prices has given drivers a much-appreciated break, but experts warn that the earlier record levels weren't a freak event.

In fact, the prices soared without any sort of major disruption in supply and even as U.S. demand was declining.

So, enjoy the small drop in pump prices for now. Experts say it even could last months, but don't be surprised if a hurricane, war or other event sends prices back up.
And don't expect them to fall much more, if at all.

The U.S. Department of Energy predicts gas prices to end 2008 at an average of $3.65 a gallon, rising to $3.82 next year.

"While the pressure on prices may continue . . . the fundamental picture has remained intact," Goldman Sachs analysts wrote recently, predicting oil would end the year at $149 a barrel.

Filling a sedan's 16-gallon gas tank in Phoenix today costs about $6.40 less than it did June 20, when prices broke records, according to AAA Arizona.

But even with the drop, that fill-up is $18 more than a year ago, when prices averaged $2.62 a gallon.

That's because oil still is about 60 percent more expensive today than a year ago.

Oil prices closed Wednesday at $116 a barrel. They were up for the day but were down more than $30 from a month earlier, when prices hit a record $147.27 a barrel July 11.


Consumption falling

The U.S. is using about 800,000 fewer barrels of oil a day, or 33.6 million fewer gallons, compared with consumption in 2007, according to the Department of Energy.

It is the largest consumption decline the country has seen in 26 years, according to the department.

"You are seeing demand destruction happen in a big way," said Phil Flynn, an analyst with Alaron Futures and Options in Chicago.

Flynn said that oil could fall to $95 a barrel in the short term but that the recent run-up in prices shows that $200 a barrel wouldn't be impossible amid a major catastrophe.

"This (oil-price decline) is a combination of demand starting to fall off and the value of the dollar getting stronger," he said. "We could have hit $200 with a major disruption."

Randall Werner, owner of Advanced Commodity Trading in Scottsdale, blames major investors for artificially pumping up prices earlier this year by purchasing expensive contracts, speculating that prices would rise.

"It's only good for our country that oil is dropping," Werner said. "It was inevitable it was going to happen. It is very good for everyone, except maybe these big fund managers that got stuck in there while it was dropping."


Global demand growing

One of the latest predictions of $200-a-barrel oil came from London's Chatham House institute, which said such prices are possible by 2013 because of current global demand and the failure of oil producers to invest in new resources.

The report by analyst Paul Stevens says many oil-exporting nations could reduce exports as their own domestic demand increases.

"To avoid a crunch, energy policy needs to reduce the demand growth of liquid fuels, to increase the supply of conventional liquids or to increase the supply of unconventional liquids," Stevens wrote. "Only extreme policy measures could achieve a speedy response - and these are usually politically unpopular."

He said governments will be more likely to act as prices rise.

"This (supply crunch) might do for energy policy what 9/11 did for U.S. military and security policy," he said.

During the next 18 months, growing demand in China, the Middle East, Latin America and India should more than offset the slumping demand in the U.S. and other countries, according to the Department of Energy.

Those statistics fuel predictions for continuing price increases.

"Going forward, people should not assume this is more than a temporary break in prices," said Steve Andrews, co-founder of the Association for the Study of Peak Oil & Gas in Denver.

"They should make buying decisions, the homes they buy, their vehicles. They should make those decisions with an eye toward more expensive petroleum in the future probably because there will be a little less of it."

ASPO-USA encourages "prudent energy management . . . during an era of depleting petroleum resources" and promotes the concept that global oil production is near its peak, after which easy-to-recover, inexpensive oil will be in shorter and shorter supply.

"The ceiling (for oil prices) can be enormously high and hard to predict, while the price floor will slowly and gradually keep moving up each year," Andrews said.

"It's impressive we have cut back driving as much as we have, but it's also probably somewhat painful for people. It means less money spent driving to the local mall or vacation spot."

In the next few months, prices should stay low but only to a point, he said.

"It seems likely that OPEC will cut supply a little when the price approaches $100 or $90 a barrel," he said. "That will tend to push prices back up."

Oil prices shoot higher on Venezuela call for output cut
7 hours ago

LONDON (AFP) Oil prices rose sharply on Tuesday after OPEC member Venezuela, concerned about recent lower prices, said it would ask the cartel to agree to a cut in output when it next meets in September.

New York's main contract, light sweet crude for September delivery, jumped 2.88 dollars to 114.65 dollars a barrel as a result, coming off early lows.

London's Brent North Sea crude for October rallied 2.65 dollars to 114.60 dollars.

"The market is reacting to reports that OPEC may cut production," said Veronica Smart, an analyst at the Energy Information Centre in Britain.

Venezuela will propose production cuts at the next OPEC meeting in September if oil prices continue to fall, Venezuelan Energy and Petroleum Minister Rafael Ramirez had said on Tuesday.

"If there is a trend or dynamic toward lower oil prices, Venezuela will consider the possibility of a cut in production," Ramirez said in an official government release.

"This is the position that we will take at the next OPEC meeting" in Vienna in September, he added.

Oil prices fell close to 110 dollars earlier on Tuesday as Tropical Storm Fay missed energy production facilities in the Gulf of Mexico while weak data on the US economy stoked concerns that demand in the world's biggest market will slow.

Prices have fallen significantly since hitting record highs above 147 dollars last month. Yet on Tuesday, they were still almost 15 percent higher compared to the start of the year when oil broke through 100 dollars for the first time.

A leading British energy consultancy, CGES, had on Monday said that the Organization of Petroleum Exporting Countries (OPEC) might decide to cut output next month should the price of crude fall under 100 dollars.

Oil prices were down on Monday owing to the reduced threat from Tropical Storm Fay to energy installations and on news that the Baku-Tbilisi-Ceyhan pipeline would soon reopen.

Fay on Tuesday hit Florida with severe winds and drenching rains but it did not strengthen into the potentially devastating hurricane residents had been dreading.

The Miami-based National Hurricane Center said Fay, which claimed dozens of lives around the Caribbean over the weekend, should begin to weaken now that it was over land.

Turkey had on Monday said that it expected to reopen the Baku-Tbilisi-Ceyhan oil pipeline in a few days after completing repairs to a fire-damaged link.

Inaugurated in 2006, the 1,774-kilometre (1,109-mile) pipeline carries Azeri oil from the Caspian Sea fields via Georgia to Turkey's Mediterranean port of Ceyhan. It is capable of transporting 1.2 million barrels of crude per day.

20/08/2008

LONDON: Oil prices extended recent gains Wednesday, with New York crude climbing above 115 dollars a barrel, on prospects of a possible cut to OPEC production, traders said.

New York's main contract, light sweet crude for September delivery, climbed 55 cents to 115.08 dollars a barrel.

London's Brent North Sea crude for October delivery advanced 54 cents to 113.79 dollars a barrel in electronic deals.

Crude oil prices had already closed up by more than one dollar on Tuesday after OPEC member Venezuela said it would ask the cartel at its September meeting to cut production if downward price pressure continues.

Despite the latest price gains, world oil prices are down from record highs of above 147 dollars, reached in July, as weak US economic data raise fears for oil demand and dim investor appetite for commodities.

The Organization of Petroleum Exporting Countries (OPEC), which is steered by Saudi Arabia, produces about 40 percent of the world's oil.

The US Department of Energy was to release its latest weekly snapshot of energy stockpiles in the country later Wednesday.

Oil prices, which broke through the 100-dollar level at the start of 2008, remain well above year-ago levels.

Oil prices rise as petrol stocks fallFont Size: Decrease Increase

August 21, 2008

OIL prices rose today after a larger-than-expected decline in US petrol stocks but gains were likely to be limited, analysts said.

New York's main oil futures contract, light sweet crude for October delivery, rose $US1.01 to $US116.57 a barrel.

The September contract expired at the close in New York yesterday at $US114.98 a barrel.

Brent North Sea crude for October delivery was 89 cents higher today at $US115.25.

The increases followed the US Department of Energy's (DoE's) report that crude oil stockpiles in the United States climbed 9.4 million barrels in the week ending August 15. Analysts had forecast a much smaller gain of 800,000 barrels.

The DoE said US gasoline, or petrol, reserves slumped 6.2 million barrels last week, compared with market expectations for a drop of 2.4 million barrels.

"People are looking at the gasoline inventory drawdown,'' said Tetsu Emori, fund manager at Astmax asset management in Tokyo.

Gasoline stocks are closely watched at this time of year when American motorists are on the highways for their summer holidays, typically pushing up demand for gasoline.

But analysts say the overall demand for oil in the US, the world's biggest energy consumer, has fallen heavily and there are fears of slowing demand elsewhere.

World oil prices have tumbled sharply from record highs above $US147 set in July as economic stagnation dents global demand for energy.

Prices broke through the $US100 level at the start of the year and Mr Emori said demand worries could help pull oil back towards a range of $US90 to $US105 by year's end.

"I think the price is going to be heading to the downside for the medium term, to the end of the year,'' he said.

Traders said interest was rising about the Organisation of the Petroleum Exporting Countries' (OPEC) position at its September meeting. OPEC, which is steered by Saudi Arabia, produces about 40 per cent of the world's crude.

A leading British energy consultancy, CGES, said Monday that OPEC might decide to cut output next month should the price of crude fall below $US100.

Oil extends losses after biggest drop since 2004Reuters, Monday August 25 2008 *

By Fayen Wong

PERTH, Aug 25 (Reuters) - Oil deepened losses on Monday, hovering just above $114 a barrel, on diminishing supply concerns as Tropical Storm Fay crossed over land and on easing geopolitical tensions as Russia withdrew the bulk of its troops from Georgia.
But analysts said geopolitical tensions between United States and Russia, the world's second-biggest oil producer, would continue to lend support to prices until Moscow withdraws its troops completely from Georgia.
U.S. light crude for October delivery fell 34 cents to $114.25 a barrel by 2343 GMT. The contract fell $6.59, or 5.4 percent, to settle at $114.59 a barrel on Friday -- the biggest one-day fall in percentage terms since Dec. 27, 2004.
Oil has fallen about 22 percent since its peak of above $147 struck mid-July on concerns high energy costs are taking a toll on global fuel demand.
"The easing of Tropical Storm Fay and the pullout of Russian troops from Georgia has taken some risk premium out of the market," said Toby Hassall, chief analyst at Commodity Warrants Australia in Sydney.
"But there will be some degree of geopolitical tensions as long as Russia still has troops stationed in Georgia."
Russia, which began to pull out the bulk of its forces from Georgia last week, said on Saturday its troops would patrol one of Georgia's main Black Sea ports, defying Western demands for a complete pullback to positions held before fighting broke out over a Georgian rebel region.
The easing of Tropical Storm Fay, which poured rain along the U.S. Gulf Coast on Sunday, also diminished concerns the storm might disrupt oil and natural gas production at the Gulf of Mexico production areas.
Energy companies, including Chevron Corp ExxonMobil Corp, BP Plc, ConocoPhillips and Royal Dutch Shell said they were keeping track of the storm but their operations were not affected.
Analysts said the market would also keep a close watch on the U.S. dollar, after its surge on Friday helped push oil prices lower.
Oil's sharp fall on Friday was also prompted by reports that showed an uptick in OPEC crude oil output and another showing an expected decline in U.S. travel over the Sept. 1 Labor Day holiday weekend as high fuel prices hit consumers.
Industry consultant Petrologistics said on Friday OPEC oil output was expected to rise in August by 450,000 barrels per day, to 32.95 million bpd, a factor that could further beef up inventory levels in consumer nations. The U.S. auto and travel group AAA said Labor Day holiday travel was expected to fall this year by the largest amount in at least eight years as consumers struggle with higher gasoline prices and airfares. (Reporting by Fayen Wong; Editing by Anshuman Daga) BusinessAds by Google

Oil firm above $115 on tropical storm, Russia tension

Tue 26 Aug 2008, 5:33 GMT

(Reuters) - Oil extended gains to stay above $115 a barrel on Tuesday, supported by worries that tropical storm Gustav in the Caribbean would turn into a hurricane and disrupt oil output in the Gulf of Mexico.

Crude for October delivery rose 37 cents to $115.48 a barrel by 0225 GMT, while London Brent crude gained 42 cents to $114.45 a barrel.

Tropical Storm Gustav, the seventh tropical storm formed in the central Caribbean, could strengthen into a hurricane before striking vulnerable Haiti, the U.S. National Hurricane Center said.

It was expected to hit Hispaniola, the island shared by Haiti and the Dominican Republic, on Tuesday. At least one computer forecasting model showed the storm could enter the Gulf.

A drop in the dollar against the yen, pressured by sharp losses in the U.S. equities market, also helped buoy oil prices.

Jonathan Kornafel, Asia director at U.S.-based options trader Hudson Capital Energy, based in Singapore, said concerns about a possible hurricane had "a lot to do" with the gains in the past two days.

Support also came from ongoing tension between the West and Russia over Georgia and expectations that oil exporter group OPEC, which meets on September 9, could trim production should prices fall further.

"I think overall the trend of the market is bearish right now, but the hurricane premium as well as the Russia-NATO premium is what's keeping the market from dropping further," Kornafel said.

Russia's parliament urged the Kremlin on Monday to recognise two rebel regions of Georgia as independent states, raising alarm in the West.

Britain said on Monday it believed it would be wrong for all NATO-Russia contacts to be suspended despite widespread concern in the alliance about Russian military action in Georgia.

OPEC OUTPUT

Iran's oil minister said on Monday he expected OPEC to work on preventing the falling trend in crude prices and also to study oversupply in the market when it meets on September 9 in Vienna.

An OPEC source, however, said, the cartel is likely to keep oil output policy unchanged.

Another key piece of data on Wednesday will be U.S. crude oil inventories, which are likely to have risen 1.4 million barrels last week, a Reuters preliminary poll showed.

In the previous week, crude stocks shot up by 9.4 million barrels as crude imports rose after delivery delays caused by Tropical Storm Edouard.

The poll of eight analysts showed an average forecast for a 400,000-barrel gain in distillates.

Analysts expect U.S. gasoline stocks to show a drop of 2.8 million barrels, a fifth straight weekly decline, as refiners drained storage of summer-grade supply ahead of the Labor Day holiday weekend, which marks the end of the summer driving season.

what do you think the floor for oil will be over the next few months. 90, 100$?

Worth watching bloomberg at 715-730pm as they report from Nymex which can indicate sentiment especially on a Wednesday from inventory reaction.Today they reported that Gustav was a worry as well as US/ Western escalations in tension and said that many traders would not want to be short over this weekend with Gustav potentially turning into a Katrina with associated platform evacuations and damage. On the other hand it may fizzle away to nothing. In brief perhaps not the best time to be short

You may be right.

I've got a feeling that one good hurricaine this year might see $147 a distant memory.

The rise earlier this year seems to have been due to a weak dollar and speculation on a massive scale with a bit of supply/demand thrown in. If there was a nasty hurricane, Ras Tanura and the straits of Hormuz got hit, we'd all become Chis Hoys!

AP Business Writer
Published: August 27, 2008

NEW YORK (AP) - Oil prices are rising after the government reported that U.S. crude supplies fell unexpectedly last week.
The Energy Information Administration says crude stockpiles fell slightly by 100,000 barrels to 305.8 million barrels for the week ending Aug. 22. That compared to the 1.5 million barrel increase forecast by analysts surveyed by Platts, an energy research firm.
The EIA also says gasoline stocks fell less than expected last week, dropping by 1.2 million barrels compared to the 2.8 million barrels analysts expected.
Supplies of distillates, which includes heating oil and diesel, were flat at 132.1 million barrels.
Light, sweet crude for October delivery is up $2.82 at $119.09 a barrel in morning trading on the New York Mercantile Exchange.


http://www.wsls.com/sls/business/consumer/article/oil_prices_rises_after_crude_supplies_fall_unexpectedly/16380/

Oil prices rise as Gustav threat looms
29 August 2008
LONDON (AFP) Oil prices rebounded on Friday as Tropical Storm Gustav risked becoming a hurricane once more and threatening energy production in the Gulf of Mexico, home to US refineries.

New York's main contract, light sweet crude for delivery in October, jumped 1.40 dollars to 116.99 dollars per barrel in electronic deals.

London's Brent North Sea crude for October gained 1.15 dollars to 115.32 dollars per barrel.

British oil groups BP and Shell and US rival ConocoPhillips had Thursday evacuated workers from their energy installations in the Gulf of Mexico, as Gustav loomed.

ExxonMobil said it was preparing for the storm and "identifying personnel for possible evacuation to shore."

About a quarter of US crude oil installations are located in the Gulf of Mexico.

Oil prices had fallen sharply on Thursday as traders discounted the threat of the storm. But on Friday, Newedge energy analyst Ken Hasegawa warned: "Still we have to worry about the hurricane's effect on this market."

Tropical Storm Gustav battered Jamaica on Friday, dumping rain and ripping roofs off homes and threatened to grow into a hurricane after leaving 59 people dead in Haiti and the Dominican Republic.

Anxiety also grew on the US Gulf Coast on the third anniversary of Hurricane Katrina and authorities in New Orleans were planning a possible mandatory evacuation to prevent a repeat of the devastation and deaths wreaked earlier.

Authorities in Louisiana and Mississippi have already declared states of emergency before Gustav's expected landfall late Monday as a hurricane.

Gustav had made landfall in Haiti on Tuesday as a Category One hurricane -- the lowest on the five-level Saffir-Simpson scale -- before weakening into a tropical storm.

Meanwhile, the eighth tropical storm of the hurricane season, dubbed Hanna, was churning in the Atlantic on Friday and has the potential to become a hurricane.

Informative map that BA, have you got one of where the rigs are please?

Afraid not, Stan, but the route will cut through probably the majority of the Golf Coast fields. They're no doubt downmanned by now

OK thanks, lets hope the damn thing runs out of puff.

MMS information on Gustav - production shut in.

Oil gains over $1 as Gustav shuts U.S. output
Mon 1 Sep 2008, 2:13 GMT

* Oil over $116 as Gustav shuts U.S. Gulf fields, refineries

* Gustav expected to make landfall mid-Monday as Category 3

* Some traders wait to weigh up damage in hurricane's wake (Updates prices, adds details)

By Fayen Wong

PERTH, Sept 1 (Reuters) - Oil prices rose more than $1 on Monday after energy firms in the U.S. Gulf shut down nearly all offshore oil output and a host of flood-prone coastal refineries ahead of Hurricane Gustav, the biggest threat since 2005's devastating Katrina.

But prices pared some bigger earlier gains as traders waited to see whether Gustav would leave lasting damage in its wake after it slams into the Louisiana coast later in the day as a major Category 3 hurricane.

U.S. light crude for October delivery rose $1.11 to $116.57 a barrel by 0303 GMT, having briefly surged above $118 a barrel when the New York Mercantile Exchange (NYMEX) opened for electronic trading several hours earlier than usual.

London Brent crude rose 97 cents to to $115.02.

U.S. RBOB gasoline futures outpaced crude gains to rise 5.08 cents, or 1.8 percent, to $2.9050 per U.S. gallon, as traders feared the refining sector could be harder hit.

But oil prices have still barely recovered from last month's over three-month low of nearly $111, with buyers cautious even after the steep slump from mid-July's record high $147.27.

"This is definitely a dangerous storm but I think most of the market is in a wait-and-see mode, waiting to see (if there are) disruptions to oil facilities and pipeline infrastructure before they make a big move," said Gerard Burg, a commodities analyst at the National Bank of Australia in Melbourne.

"Investors are a lot more cautious now, given the general bearish sentiment in the market."

Energy companies are taking no chances, shutting down more than 96 percent of U.S. Gulf oil production and 82 percent of natural gas output as of Sunday afternoon, the U.S. Minerals Management Service said. The Gulf normally pumps a quarter of all U.S. production and about 15 percent of its domestic natural gas.

At least nine oil refineries with a combined capacity of 2.2 million bpd were shut down and a half-dozen other refineries had reduced throughput because of the storm. [ID:nN31518910]

The shutdown of key infrastructure, including the Henry Hub delivery point and the Louisiana Offshore Oil Port, prompted NYMEX on Sunday to declare force majeure on all delivery obligations under its August and September natural gas futures.

Forecasters predicted Gustav will make landfall west of New Orleans around midday on Monday, with top winds expected to be around 200 kph (125 mph), making it a Category 3 storm on the five-step intensity scale. (See [nN31508750] for more details)

GEOPOLITICS, OPEC IN BACKGROUND

Geopolitical tensions between Russia and the West also lent support to oil prices.

Russia does not want a confrontation with the West but will hit back if attacked, Kremlin leader Dmitry Medvedev said on Sunday, a day before EU leaders meet to draft a response to Moscow's actions in Georgia. [ID:nLV125768]

Russia, the world's largest exporter of natural gas and the second-largest oil exporter, supplies more than a quarter of Europe's gas needs.

Iran's oil minister said on Sunday $100 a barrel was the lowest acceptable price for crude oil. Iran, the second-largest producer in the Organization of Petroleum Exporting Countries, has said the oil market is oversupplied in recent weeks as oil prices have plunged more than $30 a barrel from their peak.

OPEC meets in Vienna on Sept. 9 to discuss output policy but other member nations have not come out and publicly backed Iran. Venezuela and Ecuador said on Friday that they expect the oil exporters group to maintain current output levels.[ID:nN29457783] (Editing by Clarence Fernandez)

Oil price plunges as fears of Gustav devastation recede

By Sean Farrell
Tuesday, 2 September 2008

The price of oil plunged more than $4 yesterday as fears receded that Hurricane Gustav would inflict severe damage on the US oil sector when the storm weakened off the Louisiana coast.


The price of oil had jumped by more than $1 earlier in the day as US offshore production in the Gulf of Mexico was shut down almost entirely ahead of Gustav's expected bombardment of the country's key oil production region.

Gustav weakened to a category two storm as it approached the coast near Port Fourchon, Louisiana, which supports 75 per cent of the Gulf's drilling operations.

US crude fell $4.19 to $111.27 a barrel in afternoon London trading yesterday as concerns about the potential damage from the storm were discounted.

Gustav had been forecast to hit the Gulf as a category four storm in the first test of the country's preparedness since Hurricane Katrina wreaked havoc in 2005. Trade in the United States was shut due to the US Labor Day holiday.

London Brent crude fell $4.31 to $109.74 a barrel.

At least 12.5 per cent of total US refining capacity was shut down ahead of the storm and other plants cut rates. The Louisiana Offshore Oil Port, the only US port capable of offloading the biggest oil tankers, halted all operations.

Hurricanes Katrina and Rita wrecked more than 100 offshore oil platforms and closed many large refineries for months in the region, which houses a quarter of US oil output and 15 per cent of natural gas output.

Nearly two million people fled the Louisiana coast and more than 11 million residents in five American states were threatened by the storm.

Potential upward pressure on the oil price remains. Iran's oil minister said on Sunday that $100 a barrel was the lowest acceptable price for crude. Iran, Opec's second-largest producer, has said the oil market is oversupplied after prices dropped from July's record high of more than $147 a barrel.

5/09/2008

prices held relatively stable Friday, gaining 35 cents on the New York Mercantile Exchange to $106.65 per barrel.

The volatile commodity dropped $3.05 per barrel Thursday, as analysts predict oil will soon fall to less than $100 per barrel.

Heating oil prices fell slightly, down 0.0262 cents to $2.99 per gallon. Reformulated gasoline prices fell 0.0251 cents to $2.6999 per gallon, while natural gas prices rose slightly, up 0.109 cents to $7.46 per million British thermal units.

At the pump, U.S. motorists were paying an average of $3.674 for a gallon of regular, unleaded gasoline, down slightly from Thursday's $3.678, the AAA said. Gasoline prices have fallen from a peak of $4.114 on July 17 but remain well above the price of $2.807 per gallon from a year ago.

Oil surges $2 to near $109 on hurricane threat
Mon 8 Sep 2008, 5:37 GMT

(Reuters) - Oil jumped than $2 to near $109 a barrel on Monday, rebounding from a five-month low on worries that Hurricane Ike would tear through the Gulf of Mexico, and on hopes that a U.S. bailout of its top mortgage lenders would help temper an economic downturn.

Expectations that the Organisation of the Petroleum Exporting Countries (OPEC) ministers would leave agreed output targets unchanged at a meeting on Tuesday also lent support to prices that had slumped 10 percent over the past six sessions.

U.S. light crude for October delivery rose $2.49, or over 2.3 percent, to $108.72 by 0105 GMT, snapping a losing streak that knocked prices to their lowest since April after last week's Hurricane Gustav left most Gulf oil and gas facilities intact.

London Brent crude rose $2.21 to $106.30.

Hurricane Ike weakened to a Category 3 hurricane as it bore down on Cuba on Sunday, but was expected to retain strength, entering the Gulf of Mexico as a severe Category 4 storm, a U.S. Federal Emergency Management Agency official said.

It may threaten Gulf energy rigs that account for a quarter of U.S. oil output and 15 percent of natural gas production. Nearly 80 percent of the Gulf's oil production remains shut in following Hurricane Gustav, and Ike's approach has forced Shell Oil Co. to stop returning workers to its platforms.

"There is a concern these storms could impact refineries and production more significantly than Gustav did and we might see more buying when London opens as investors cover themselves in case of damage," said Gerard Rigby, analyst at Fuel First Consulting in Sydney.

He said the U.S. government's weekend move to bail out mortgage finance companies Fannie Mae and Freddie Mac also lent support, raising hopes that the latest effort to prop up the ailing housing market would help quell the credit market crisis that has pushed economies toward recession.

For more stories on the bail-out click:

A meeting of OPEC on Tuesday could support prices, but many analysts said it was unlikely that the producers' group would cut output to shore up oil prices.

"I don't think there will be any change from the meeting. There might be a lot of talk, especially from Venezuela, about production cuts, but I don't think we will see any," Rigby said.

OPEC is estimated to be pumping 790,000 barrels per day (bpd) above the collective ceiling of 29.67 million bpd for its 12 members with output limits, leaving some room for manoeuvre before it needs to consider any formal cut.

Hurricane Ike may affect oil prices
Wed, 10 Sep 2008 05:06:00 GMT



Texas braces itself for Hurricane Ike after the storm moved through Cuba and onto the Gulf of Mexico, threatening oil-rig operations.

Ike is rated a Category 1 storm strengthened with winds of 130 kph as it moved across the Caribbean. Meteorologists say Ike could muscle up to a Category 3 storm in the warm Gulf waters with winds of up to 178 kph.

Latest forecasts predict Ike's path leads to the middle of the Texas coast, skirting past the Gulf region which produces 25 percent of US oil and 15 percent of its gas. According to predictions, oil futures may decrease by more than $2 a barrel, to below $105.

New Orleans, hit by Hurricane Gustav only a week ago, will be spared a visit by Ike.

Ike charged into eastern Cuba Sunday at 195 kph and left a trail of destruction across the island, barely giving authorities and residents any time to prepare after still trying to pick up the pieces following Gustav's charge across the island.

Electricity grids, buildings and crops were severely damaged and destroyed by Ike and after pelting down 40 centimeters of rain, the storm moved away leaving an aftermath of flooding on Tuesday.

Four fatalities have been reported so far in Cuba because of Ike and 2.6 million people were evacuated ahead of the storm's arrival.

JC/BGH

Oil rebounds on move by OPEC 10/09/2008
From wire reports

NEW YORK After closing Tuesday below $104 a barrel for the first time since early April, oil prices jumped in New York on the OPEC presidents call to stop overproducing and match output to the groups set limits.

The Organization of Petroleum Exporting Countries left its production target unchanged at 28.8 million barrels a day after concluding its meeting in Vienna. Bringing output in line with the limits would lower supplies by 520,000 barrels a day, President Chakib Khelil said.

"Its definitely a defensive measure to keep prices above $100," said Jonathan Kornafel, a director for Asia at Hudson Capital Energy. "They dont want to see us go back to $140 or $150, but they want us over $100. Its a bit of a shock to the market, and thats why were up."

Oil prices rallied after OPECs announcement, rising as much as 1.4 percent to $104.67 in aftermarket trading on the New York Mercantile Exchange.

Prices fell earlier Tuesday, hitting a five-month low of $101.74 in aftermarket trading, as traders bet that Hurricane Ike would miss crucial Gulf Coast oil installations.

Oil bounces above $103, weighing Ike vs dollar
Thu 11 Sep 2008, 5:31 GMT


SINGAPORE - Oil prices bounded above $103 a barrel on Thursday after falling to another five-month low the previous day, drawing support from Hurricane Ike and OPEC's surprise output cut while wary traders watched the U.S. dollar.

The dollar briefly touched a new one-year high against the euro on Thursday but weakened versus the yen, lending a touch of support to a commodities complex that has been battered by the unwinding of the short-dollar/long-commodities trade.

U.S. light crude for October delivery firmed 72 cents to $103.30 a barrel by 0547 GMT, after rallying more than $1 earlier in the session.

That came after it dropped as low as $101.36 a day earlier after the pressure of a rising dollar and concerns about global demand outweighed earlier bullish news that OPEC had agreed to cut output by about 500,000 bpd.

London Brent crude rose 48 cents to $99.45 a barrel.

"While OPEC has certainly drawn a line in the sand around the $100 level, it remains to be seen if the cartel can actually achieve the cuts outlined in the announcement," said Jonathan Kornafel, Asia director at U.S.-based options trader Hudson Capital Energy.

Oil prices have tumbled 30 percent since hitting a record high above $147 a barrel three months ago, a descent barely slowed by a pair of hurricanes whipping through the U.S. Gulf, home to a quarter of U.S. oil production.

Oil companies kept shut almost all U.S. offshore production for a second week and began shutting coastal refineries in Texas as Hurricane Ike headed toward the key U.S. energy hub.

Oil output from the region was less than 5 percent of normal as Ike approached just over a week after Hurricane Gustav spun through the same area.

Combined, Gustav and Ike have reduced Gulf production by 14.1 million barrels of oil, 67.9 billion cubic feet of natural gas, cutting into both fuel and crude oil inventories.

U.S. refinery utilisation plunged to 78.3 percent of total capacity in the week ending September 5, the lowest level since October 2005 when hurricanes Katrina and Rita ravaged Gulf coast refineries, data showed on Wednesday.

Prices also fell on Wednesday after the International Energy Agency cut its world oil demand forecasts for this year and the next as high prices and mounting economic troubles drive consumers and businesses to conserve..

U.S. oil demand is already running about 3.8 percent below last year, according to government data.

NEW YORK (CNNMoney.com) -- Oil prices fell Thursday, testing a 5-month low, as the market remained focused on the stronger dollar and slumping demand but also watched the threat that Hurricane Ike poses to the Texas Gulf Coast.

Crude futures traded down $2.03 at $100.55 a barrel, having been as low as $100.18 earlier.

On Wednesday, U.S. light sweet crude for October delivery settled down 68 cents to $102.58 a barrel, the lowest closing price since April 1.

Oil prices slide to six-month lows under $97
9 hours ago

LONDON (AFP) Oil prices tumbled to six-month lows below 97 dollars on Thursday as the dollar rallied and the likelihood of a sharp global economic slowdown loomed over demand growth, traders said.

Prices had risen earlier in the day as Hurricane Ike headed toward key energy facilities on the southern US coast and after OPEC on Wednesday reduced output to curb falling prices, they said.

Brent North Sea crude for delivery in October dropped to 96.99 dollars a barrel on Thursday -- its lowest level since March 5. It later recovered to 97.30 dollars, down 1.67 dollars from Wednesday's close.

New York's main contract, light sweet crude for October, slid 1.96 dollars to 100.62 dollars.

"Crude oil futures slipped further ... as the market focused on demand concerns and the strengthening dollar," said Sucden analyst Michael Davies.

A strong dollar makes goods, such as oil, priced in the US unit more expensive for foreign buyers, dampening demand. The euro on Thursday slid below 1.39 dollars for the first time in a year on heightened concerns about a weak European economy.

Concerns about oil use in a slowing global economy were meanwhile highlighted by the latest monthly report from the International Energy Agency (IEA), which cut its estimate for demand growth this year by 100,000 barrels per day and for 2009 by 140,000 bpd.

The IEA monthly report, published Wednesday, highlighted shrinking oil demand in North America, saying consumers there were cutting back energy use in response to high prices.

The same day, the US Department of Energy said that stockpiles of distillates, which include heating fuel, had dropped by 1.2 million barrels in the week ended September 5. The consensus forecast was for a bigger decline of 2.2 million barrels.

Distillates are being watched closely by the market ahead of the northern hemisphere winter.

With oil prices falling below 100 dollars this week, the oil producers' group OPEC decided to cut production to prevent a further drop.

"It looks like they are willing to defend 100 dollars (as a floor)," Mike Wittner, an analyst at Societe Generale, commented following OPEC's decision.

Oil prices topped a record 147 dollars in July but have since fallen some 30 percent, dropping below the symbolic 100-dollar mark for the first time in five months on Tuesday.

The Organization of Petroleum Exporting Countries reacted to the fall by cutting its total daily output by 520,000 bpd.

Oil prices had risen in Asian trading on Thursday as Ike strengthened to a Category Two storm in the Gulf of Mexico and headed toward the southern US coast after ravaging Cuba and the Caribbean.

In anticipation of Ike, Anglo-Dutch oil giant Shell evacuated personnel from offshore installations. The bulk of US oil refineries are in the Gulf of Mexico.

Elsewhere, British Prime Minister Gordon Brown confirmed that he would host a summit of oil producer countries and consumers on December 19, warning that the world must move away from the "dictatorship of oil."

Don't forget:

CHICAGO, Sept. 10 /PRNewswire-FirstCall/ -- CME Group, the world's largest and most diverse derivatives exchange, has announced that it will extend trading hours for energy futures and options contracts on the CME Globex and ClearPort electronic trading and clearing platforms due to the potential impact of Hurricane Ike on the US Gulf Coast this weekend.

CME Globex and ClearPort trading sessions for energy products only will begin on Sunday, September 14 at 10:00 a.m. (all times in Eastern time) with a 9:30 a.m. pre-open on CME Globex. All trades will be for the Monday, September 15 trade date.

All other products listed on CME Globex will follow their regular trading hours on Sunday.

"After extensive discussions with the energy trading community, including clearing member firms and independent software vendors, CME Group is modifying its Sunday trading hours to allow customers access to the markets that may be impacted by Hurricane Ike," said CME Group Chief Operating Officer Bryan Durkin. "Collectively, we recognize the need for the global energy markets to manage their risk during this potentially volatile time and felt this was in the best interest to serve their needs."

SINGAPORE: Oil prices were steady Thursday in Asia below US$106 a barrel as investors weighed supply delays in the Gulf of Mexico against concerns that the U.S. credit crisis will slow global economic growth and hurt crude demand.

Light, sweet crude for November delivery was down 3 cents to US$105.70 a barrel in electronic trading on the New York Mercantile Exchange midday in Singapore. The contract fell overnight 88 cents to settle at US$105.73.

About 66 percent of oil production and 61 percent of natural gas output in the Gulf of Mexico remains shut-in after the passage of Hurricane Gustav and Ike, according to the U.S. Minerals Management Service. The Gulf area is home to a quarter of U.S. oil production and 40 percent of refining capacity.

Mexico's state oil company said Tuesday it temporarily reduced oil production because U.S. refineries damaged by Ike have canceled shipment orders.

Petroleos Mexicanos, or Pemex, lowered its daily output by 250,000 barrels a day. The company said it expects production to be back to normal by the end of the week. Pemex produced an average of 2.75 million barrels a day in August, the latest available output figure.

OPEC's decision earlier this month to cut production by 520,000 barrels a day and militant threats to Nigerian oil operations have added to the supply shortage.

Traders are also concerned about the turmoil in the U.S. financial system will impact economic growth and crude demand from the world's biggest economy.

President George W. Bush strongly urged Congress to act quickly to pass a $700 billion financial industry bailout, warning Americans in Wednesday speech that failing to act fast risked dire economic consequences such as disappearing retirement savings, rising foreclosures, lost jobs and closed businesses.

With the administration's original proposal considered dead in Congress, top House leaders issued an upbeat statement late Wednesday saying there was progress toward revised legislation that could pass. Bush summoned presidential candidates Barack Obama, John McCain and legislative leaders to an extraordinary White House summit in hopes of hashing out a deal.

Oil investors are also eyeing the impact the bailout plan may have on the value of the dollar. Investors often buy crude futures as a hedge against a weakening dollar and inflation. The 15-nation euro was steady Thursday at US$1.4721. The dollar was little changed at 105.80 yen.

In other Nymex trading, heating oil futures fell 1.03 cents to US$3.003 a gallon, while gasoline prices rose 1.05 cents to US$2.605 a gallon. Natural gas for October delivery dropped 2.7 cents to US$7.652 per 1,000 cubic feet.

In London, November Brent crude rose 16 cents to US$102.81 a barrel on the ICE Futures exchange.

Oil falls below $94 after dive on financial turmoil
Tue 30 Sep 2008, 6:22 GMT

[-] Text [+] * Oil falls below by more than $2 to below $94

* U.S. lawmakers reject $700 billion bailout

* U.S. Gulf infrastructure still recovering (Updates prices, adds Asian stocks moves)

By Fayen Wong

PERTH, Sept 30 (Reuters) - Oil fell by more than $2.00 a barrel on Tuesday, extending losses after slumping almost 10 percent in the previous session, as fear gripped financial markets in the wake of U.S. lawmakers' shock rejection of a $700 billion rescue plan.

Asian stocks chalked up the biggest monthly decade in more than a decade and Japan's Nikkei share average < .N225> ended down 4.1 percent at a three-year low. Major European markets opened down as much as 2 percent.

U.S. light crude for November delivery fell $2.50 to $93.87 a barrel by 703 GMT, after losing $10.52 on Monday to $96.37 -- the second biggest fall since April 23, 2003.

London Brent crude was down $2.50 at $91.48.

"It was a surprise that Congress rejected the bailout and it's just reinforcing the belief that the U.S. economy is really heading towards a downward spiral. That means the demand side of the equation for oil will deteriorate rapidly," said Toby Hassall, chief analyst at Commodity Warrants Australia in Sydney.

"It's just getting worse and worse and no one knows when this is going to end."

Oil has fallen about 35 percent since its $147 peak in mid-July, amid signs that high energy prices and the U.S. financial crisis have cut into crude demand in the United States and other industrialised nations.

In addition, oil has also been dragged down as investors, who had rushed into commodities earlier this year as a hedge against inflation and the weak dollar, sold crude for safer havens.

The House voted 228-205 to reject the bailout bill, which would have authorized the Treasury Department to purchase broken mortgage-backed bonds from banks with the goal of jump-starting stalled capital markets. [ID:nLT436737]

Analysts said the spread of credit problems to Europe was also stoking fears that the financial turmoil, which started with risky lending to the overheated U.S. property market, had gone rapidly global.

"Slower international economic growth is bound to dent oil demand," said David Moore, a commodities analyst at the Commonwealth Bank of Australia.

Separately, oil and gas production in the Gulf of Mexico continued to increase on Monday as companies brought their facilities back on line after Hurricane Ike, the Minerals Management Service said.

Some 48 percent of U.S. oil production in the Gulf of Mexico and 47.4 percent of the region's natural gas output remained shut, down from 57.4 percent and 52.8 percent respectively on Friday. (Additional reporting by Maryelle Demongeot in Singapore; Editing by Ben Tan)

Oil steady at $93 as market awaits US bailout vote
The Associated PressPublished: October 3, 2008

SINGAPORE: Oil prices were steady above US$93 a barrel Friday in Asia as investors waited to see if a reworked US$700 billion bailout package will pass the U.S. Congress and help stabilize the economy of the world's biggest crude consumer.

Light, sweet crude for November delivery was down 35 cents to US$93.62 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. Prices fell overnight US$4.56 to settle at US$93.97, the lowest level since Sept. 16.

The U.S. House of Representatives is expected to vote later Friday on the bank rescue package after the Senate overwhelmingly approved it Wednesday. House lawmakers stunned investors Monday by rejecting the bailout plan, although the Senate added $100 billion in tax breaks and other sweeteners in a bid to win over enough dissenting House votes.

"Approving the bailout may create a little bounce and alleviate the negative sentiment temporarily," said John Vautrain, an energy analyst with consultancy Purvin & Gertz in Singapore. "The problem is U.S. gasoline demand has been off one heck of a lot."

Statistics from the U.S. Labor Department released Thursday showed more signs of a weakening economy, adding to concerns about falling oil demand.

The Labor Department reported that initial claims for jobless benefits increased by 1,000 to a seasonally adjusted 497,000, significantly above analysts' estimate of 475,000 and a seven-year high.

Also Thursday, the Commerce Department said factory orders in August plunged by 4 percent compared to July, a much steeper decline than the 2.5 percent drop analysts expected and the biggest setback since a 4.8 percent plunge in October 2006.

"All the indicators have been very negative," Vautrain said. "There's been an economic wallop, and people don't have as much money to spend."

Significant gains over the past days by the dollar against the euro have also helped push down prices. Investors tend to buy commodities like oil to defend against dollar weakness and a hedge against inflation, but return to the U.S. currency as it strengthens.

The 15-nation euro rose to US$1.3863 in trading Friday while the dollar was little changed at 105.06 yen.

In other Nymex trading, heating oil futures fell 0.4 cents to US$2.71 a gallon, while gasoline prices dropped 2.5 cents to US$2.23 a gallon. Natural gas for November delivery fell 8.0 cents to US$7.40 per 1,000 cubic feet.

In London, November Brent crude fell 43 cents to US$90.13 a barrel on the ICE Futures exchange.

Oil prices drop on credit crisis turmoil
20 hours ago

NEW YORK (AFP) Oil prices sank Thursday, with worries about a global financial crisis overshadowing news of an emergency OPEC meeting next month to discuss its impact on oil demand.

With prices far below record highs around 147 dollars in July, analysts said the Organization of the Petroleum Exporting Countries could cut output to defend prices.

New York's main contract, light sweet crude for delivery in November, fell 2.36 dollars to close at 86.59 dollars a barrel.

In London, Brent North Sea crude for November settled 1.70 dollars lower at 82.66 dollars.

The price of crude oil slid as nervous traders watched fresh falls on global equity markets amid the worst financial crisis in seven decades.

OPEC said it would hold an emergency meeting in Vienna on November 18 to discuss "the global financial crisis, the world economic situation and the impacts on the oil market."

"The organization is concerned about the deteriorating economic conditions," said a statement from OPEC, whose 12 member nations pump around 40 percent of world oil supplies.

The cartel said the deepening financial turmoil that erupted in August 2007, stemming from a US subprime mortgage crisis, had spread to many regions across the globe and "created even more uncertainties for the world economy."

"The organization reiterates its determination to ensure that oil market fundamentals are kept in balance and market stability is maintained," it said.

"Falling prices have caught OPEC's attention," said Mike Fitzpatrick at MF Global.

"If prices continue to fall until then, pressure for an output cut will doubtless be very high. If prices begin to stabilize, a call for stricter compliance regime will probably be the outcome," he said.

Traders remained concerned that OPEC could slash output in November to battle slowing oil demand.

"Market participants are still very much concerned that demand will continue to dwindle as global economies continue to slow sharply," said Sucden analyst Nimit Khamar in London.

"However, increased expectations that OPEC may ... cut output is underpinning the market."

Oil prices briefly fell to one-year lows on Wednesday as slumping stock markets generated demand concerns in a cooling global economy.

The market also had ended lower as news of an unexpectedly sharp jump in US crude reserves signaled weaker demand in the United States, the world's largest energy consuming nation.

The Department of Energy said on Wednesday that US crude oil inventories had risen by 8.1 million barrels in the week that ended October 3, far more than market expectations of a 2.3-million-barrel gain.

Roger Wiegand: Oil to Reach New Highs by Year-End
by: The Energy Report posted on: October 10, 2008 |

Despite severe economic turmoil, demand for oil is rising significantlyin fact, it will land somewhere in the range of $150 to $157, according to Roger Wiegand, editor of Trader Tracks.

A native of Michigan, Roger has had an interest in precious metals and futures since the commodity rallies of the late 1970s and early 1980s. His background in a 25-year real estate development and construction career specialized in forward planning, consulting, and using creative skills for conceptual project thinking. His present work is focused on the precious metals, currency, energy and interest rate markets for trading on the primary American exchanges. Experience in land, development and base material projects has evolved into consulting for mining companies and analyzing those markets. He has developed longer-term ideas for finance and mining marketing doing work on behalf of private and public mining companies. Rogers consulting work is to focus on concepts and big picture forward planning for mining companies. His newsletters utilize the global news, and his personal research and knowledge for expressing personal trading ideas.

In this exclusive interview with The Energy Report, Wiegand takes a close look at the untamed commodities bull and names some of his favorite buys.

The Energy Report: How does you think oil will play out in current economic scenario?

Roger Wiegand: The big sell-off during the past month or two was triggered when the funds bailed out. Roughly 50% of the CRBthe commodities indexis in oil. When oil moves, it moves the index. The sell-off brought oil down from a high of $147 to roughly $90. It bounced back up to $108 to $110; $108.50 is a good support and resistance level for oil today. The next price up should be $112.50, then $122.50, followed by a couple of more increases. I think the top is going to be $150 to $157. That was our forecast.

Since our initial discussion, oil prices dropped further into the $80s on credit crisis-related problems. Analysts and traders view this recessionary onset as bearish for oil prices as business and commerce worldwide slows down. While this shorter term selling is cause for concern, we still expect crude oil to come back with a rush when the stock market is propped and recovers for the elections. Since this latest selling event, OPEC had an emergency meeting to discuss reducing production to prop prices. In our view they will do it.

For the past two to three weeks, Goldman Sachs has had two prices on oil. The general analyst group, which covers all the markets, says oil will top out at $140. But the commodities divisionand these guys are the smartest of the groupis holding fast to their $149 price by the end of the year. This price doesnt take into account any potential problems in the Middle East, or any hurricaneseither of which could affect oil prices between now and the end of December. So these analysts are forecasting a price thats very close to my forecast, of $150 to $157 by the end of 2008.

TER: Thats quite a move up from where we are now.

RW: It is. A lot of that increase is inflation related, and lot of it has to do with diminishing supply. Were currently running at a shortfall of about two million barrels a day worldwide. Demand has fallen somewhat because of high gasoline prices in the U.S., but those prices are starting to come down a bit. The supply/demand picture has been further confused by hurricane Gustav. When Gustav shut down a number of oil refineries and natural gas facilities, oil prices dropped because refineries couldnt buy oil from the oil producers. At the same time, hedge funds were getting out of oil. All of this contributed to lower prices. What happens next? Inflation is going to be big next year, not only in the U.S., but also worldwideand that will lead to higher oil prices.

TER: How high?

RW: Charlie Maxwell, in Barrons, says $300 oil in about five yearsthats the long view. Inflation adjusted, hes probably right. I think were only about halfway into the commodity bull market. Despite the credit problems in the U.S., Asia is not going to be economically buried to the extent that we are. And thats a continuous growing market for gas and oil. Even among the oil and gas exporting nations in the Middle East, there are countries like Iran that oddly enough have no refining capability. They have to import all their gasoline. Iran is trying to solve that problem by building two new refineries. Chinas building more domestically. Kuwait offered to build a $6 billion refinery in the U.S. and we foolishly declined. This complex is now underway in China.

TER: Were in a recession right now, yet that doesnt seem to be affecting demand.

RW: You would think that the demand worldwide for energy products would be off in a recession. However, the demand growth side in Asia and India has risen significantly. The net result is that demand is not only holding; its growing. On top of this growth, we have a shortage of refining capacity. Using the barrel model set out by the CEO of Shell Oil, gasoline comes off the top of the barrel. Heating oil, diesel, and jet fuel come out of the middle, and the lower grades from on the bottom. The middle-of-the-barrel prices are holding fairly well and we see them going higher simply because of lack of refining capacity. About 35% to 40% of the gasoline coming into the U.S. is not refined here; its refined overseas and it comes in as a finished product on a tanker. That, to me, is an Achilles heel for the U.S. If we start having problems importing refined gasoline, weve got big trouble. So thats a key part of the puzzle. But for now, the combination of increased demand, a shortage of refining capacity and inflation will force oil prices up.

TER: You were also intrigued with natural gas when last we spoke.

RW: We had a price drop here about 12 to 18 months ago, where natural gas really took a dive. It fell from $12.14 to $5 or $6. But we had a mild winter, the supply kept coming and it had to get back into balance. Now the balance has been achieved. The price has climbed back to $7 or $8. A very cold winter, which is in the forecast, will drive natural gas a lot higher again. And, inflation is at work here, too.

TER: Heating oil prices, especially in New England, where its too rocky to install gas pipe, have doubled. When you factor in inflationincreases in the cost of food, gas, and heating oilcouldnt that push us into a depression? What happens if people just cant afford to pay for food and heat anymore? Wont demand for oil drop along with prices?

RW: I think prices will come down, but I dont think theyre going to drop to the floor.

TER: If the U.S. goes into depression, how will that impact growth in countries like China and India?

RW: I think its going to be a disaster for those countries because much of their credit is tied to our New York banks. Chinas direct sales to the U.S., which are already slowing, would fall off dramatically. And many of the products that Japan sells to the U.S. are manufactured in Chinaso both countries would suffer. If the U. S. sinks into a depression, the winners in the stock market are Sams, Wal-Mart, and McDonaldsthats where people will shop when they downsize their spending. However, those nations are growing markets domestically, which should help to carry them through and support commodity imports.

TER: You said earlier that continued growth in Asia would spur demand for oil. What happens if a depression in the U.S. throws China, India and others into recession? Do we still have a commodity bull market?

RW: I still think youre going to have a commodity bull market in that case, but its not going to have near the strength that it had before. The critical things to watch are copper pricesbecause most of the copper is going to Chinaand crude oil. China has a big enough building-buying machine within the country to sustain ongoing growth. India may be a little more vulnerable because of its unique problems. The key point here is a China-India energy slowing not a depressive complete stop.

TER: Are you recommending any oil or tar sands, or alternative energy plays?

RW: I have one right now, Empire Energy Corporation International [OTCBB:EEGC], which I consider a wildcat deal at $.15 a share. Empires property is on the island of Tasmania, off Australia. This little company has some fabulous geology and, in fact, the previous owners of the property spent between $10 to $15 million doing the preliminary work. If Empire can work around some management issues, theres backup financing waiting in the wings that can step in for help. The first well is now being drilled.

TER: Any coal companies?

RW: The coal companies, despite the fact there is a global supply shortage, are going full bore. Their prices are coming off a little bit lately but I think that has to do with the credit crisis and finance more than demand. But Peabody Energy Corp. (NYSE:BTU), Massey Energy Co. (NYSE:MEE), and two or three other large coal companies look good.

TER: What about agriculture?

RW: The corn biodiesel craze, in my opinion, was nothing more than a ploy by the government to drive up corn prices for farmers. It worked, but its finally going away. A lot of these plants cant make money now. The math just doesnt work, because of the high cost of fertilizer, seeds, and diesel fuel to run the equipment.

Weve made a lot of money on the soybean trade early this year. We recommended small traders take their profits, which they did. They made well over 100% on the trade in just two or three months. Those with multiple positions, myself included, we said sell half and hold half, thinking we were going to get a higher price this fall. But the sell-off in the commodity funds gave us a whack and knocked our second trade leg bean prices way back. So it looks as if the second leg of our soybean trade is going to be worthless. The net outcome is that we broke even, or made a small amount, but we didnt make the larger gain we expected. Next year I think well see soybeans at $20 a bushel, which is crazy. With inflation and the demand for food and the cost of energy and fertilizer and seeds, I think thats where its going. And, of course, because of the interest in bio diesel fuel, we wont see anymore $2.50 corn. Its now $5 or $6 and we predict $6 to $8 by the end of the year. We hit $8 in July, but the price pulled back on the credit crunch. Food prices are high, and only going to go higher.

In summary, the commodity bull market remains in play and we forecast it continues for at least another six to ten years. The structural bull market demand will not disappear especially in Asia, Russia, parts of Europe and sections of South America. Canadas western provinces should continue to do well, along with Quebec mining. Ontario, which is tied to the U.S. with manufacturing, will undergo the most recessionary pressures.

When the credit crisis hit and those funds sold out major commodities positions they sold it all. Most of these funds were long only and internal selling was triggered as investors demanded redemption. The key point here is that not all of that money is gone but on stand-by. New reports also tell us the redemptions were not as widespread as first believed. Yes, the selling event was a cascade and sold down commodities with speed, but many funds remain invested waiting for prices to base and begin new rallies.

The U.S. dollar was the key driver component of gold and silver prices as well as the other commodities. When Europe and Asia skidded lower, the dollar stood still and those other currencies sold down around it giving the dollar the appearance of a new rally life. Risk, credit and finance are new pressures on the commodity market players, but food and energy of all kinds should continue to rise with inflation and providers of those commodities should recover and return in new bull markets.

The world has not ended. However, it certainly endured a terrible negative event. We think the sun shines tomorrow and better days are ahead for those in the correct markets.

Oil prices rise on global talks
October 13, 2008

World oil traded more than $US3.00 ($4.50) higher in Asia on Monday after world leaders united to tackle a global financial crisis.

New York's main contract, light sweet crude for delivery in November, was $US3.10 higher at $US80.80 a barrel, recovering from one-year lows reached on Friday.

The contract had plunged $US8.89 to $US77.70 at the end of last week, in tandem with a global equities meltdown on fears of recession that would crimp demand for energy.

Brent North Sea crude for November traded $US2.58 higher at $US76.67.

On Friday in London, Brent fell by $US8.57 dollars to settle at $US74.09 dollars.

Oil prices have already plunged from record highs above 147 dollars, reached in July, because of demand worries, dealers said.

But Monday's recovery followed weekend signals by US and European leaders that they have a growing commitment to take joint action to end the turmoil, two weeks after the Wall Street collapse of investment bank Lehman Brothers unleashed a worldwide crash on stock markets.

French President Nicolas Sarkozy, who oversees the French presidency of the European Union, said governments would buy into banks to boost their finances and guarantee inter-bank lending.

The European announcement came after the Group of Seven leading democracies proposed an action plan at weekend meetings in Washington.

In another move to confront the crisis, Australian Prime Minister Kevin Rudd said Sunday that his government will guarantee all deposits in domestic banks.

The 12-nation Organisation of Petroleum Exporting Countries (OPEC) announced Thursday that it would hold an emergency meeting in Vienna on November 18 to discuss the effects of the international financial crisis.

Iran, the world's fourth-largest oil producer, on Sunday predicted that OPEC would cut oil output at the meeting, the state-run television news website reported.

Asian Stocks, U.S. Futures Advance as Governments Back Banks

By Kyung Bok Cho and Shani Raja

Oct. 13 (Bloomberg) -- Asian stocks rose, rebounding from the worst week since at least 1987, after Australia guaranteed bank deposits and European leaders agreed to support lenders in a global effort to end the credit crisis. U.S. index futures gained.

National Australia Bank Ltd., the country's largest, surged 8.9 percent and Woori Finance Holdings Co. jumped 5.4 percent after Australian funding costs and Asia-Pacific bond risk eased. Leaders of the 15 countries using the euro pledged over the weekend to guarantee bank borrowing. Cheung Kong Holdings Ltd. paced gains in Hong Kong after the government said the city may use its foreign reserves to stabilize financial markets. BHP Billiton Ltd. climbed 5.9 percent after crude oil surged.

The MSCI Asia Pacific excluding Japan Index added 1.6 percent to 258 at 10:37 a.m. in Hong Kong. The index tumbled 20 percent last week. Financial stocks accounted for more than half of today's gain. Japan is shut for a holiday. Standard & Poor's 500 Index futures advanced 4 percent.

``The measures are improving sentiment,'' said Hugh Dive, Who helps manage about $3 billion at Sydney-based Investors Mutual Ltd. ``It may prevent a depression, but a lot of companies are facing tough times, so you're unlikely to see them reporting stronger outlooks and earnings. The economy is still slowing.''

Treasury futures fell for the fourth time in five days, while the euro rose the most in three weeks against the dollar and the yen.

Australia's S&P/ASX 200 gained 3.7 percent, led by National Australia Bank. South Korea's Kospi added 1.1 percent. Hong Kong's Hang Seng Index advanced 0.6 percent.

Market Rout

World leaders are working to support financial systems to unlock credit markets and stop the rout in global stock markets. About $25 trillion in value has been erased in value this year on concern that frozen credit markets will trigger a global recession. The world's financial firms have reported almost $600 billion in losses and writedowns from U.S. mortgage-related investments since the beginning of last year.

In the U.S., Dallas Federal Reserve President Richard W. Fisher said the Fed will ``consider every option'' to restore confidence.

U.S. stocks fell on Oct. 10 in volatile trading, with the Dow Jones Industrial Average swinging the most in its history. The S&P 500 lost 18 percent last week, its worst drop since 1933.

National Australia Bank, the country's largest lender, added 8.9 percent to A$22.66 after Prime Minister Kevin Rudd said the government will guarantee all bank deposits for the next three years.

Money Injection

Funding costs fell. The premium charged to exchange floating- for fixed-rate interest payments in Australia for a period of one year shrank to 75 basis points, or 0.75 percentage point, as of 11:56 a.m. in Sydney, from 157 on Oct. 10, the biggest decline since 2000.

A gauge of funding availability also eased as the central bank added A$2.85 billion ($1.9 billion) to the financial system.

Woori Finance climbed 5.4 percent to 10,850 won after the cost of protecting corporate and government bonds in Asia and the Pacific from default dropped.

The Asia index of 50 investment-grade borrowers outside Japan plunged 55 basis points to 295. Declines indicate perceptions of creditworthiness are improving.

Cheung Kong, Hong Kong's second-largest developer, rose 3 percent to HK$69.55.

Hong Kong may use all of its foreign reserves to support its financial markets, Julia Leung, under secretary for financial services, said in an interview with Hong Kong Commercial Broadcasting. China will boost domestic demand to sustain the nation's ``fast and stable'' economic growth, central bank Deputy Governor Yi Gang said.

BHP Billiton, Australia's biggest oil producer, advanced 5.8 percent to A$29.35. SK Energy Co., South Korea's largest oil refiner, rose 4.8 percent to 70,200 won.

Crude oil rose 3.7 percent to $80.60 a barrel today in after-hours trading, on speculation the actions to support the financial system will ease the credit turmoil that threatened global growth and demand for resources. The contract plunged 10 percent to $77.70 on Oct. 10 in New York.

Gas Prices Down 35 Cents Over Two Weeks
Falling Oil Prices A Key Factor


The tumbling price of crude oil has turned into a price break at the pump.

The Lundberg Survey released this weekend shows the average price of a gallon of self-serve regular has gone down by 35 cents over the past two weeks.

It's now $3.31. Mid-grade was $3.45 as of Friday and premium was $3.57.


The cheapest gas is in Wichita, Kan., at $2.79 for a gallon of regular. Honolulu is the most expensive at $3.91.

The Lundberg Survey averages prices from 5,000 gas stations around the country.

The price of crude last week dropped below $78 a barrel, reflecting investor pessimism.

On Monday, oil prices were rebounding from a 13-month low, rising above $80 a barrel in Asia.

It's happening on expectations that a pledge by European countries to keep banks from collapsing will stabilize the global financial system.

By midday in Singapore, light, sweet crude oil for November delivery was up $2.76 to $80.46 a barrel in electronic trading on the New York Mercantile Exchange. Friday, the contract fell $8.89 to $77.70. That was the lowest price since Sept. 10, 2007.

Energy analyst Victor Shum credits the turnaround mainly to the European bank rescue plan.

At a summit in Paris on Sunday, leaders of the 15 euro-zone nations agreed to guarantee new bank debt through next year. They also vowed to rescue important banks in danger of failing.

Oil rallies in Print October 14, 2008 03:03pm

OIL prices rallied further today after world leaders rolled out measures to tackle the global financial crisis.

Prices had slumped to one-year lows beneath $80USD ($112.96 AUD) per barrel on Friday during a global equities meltdown that sparked fears of recession that would crimp demand for energy.

New York's main contract, light sweet crude, rose $2.02 to $83.21, at the New York Mercantile Exchange, where it closed at $81.19.

Brent North Sea crude for November gained $1.51 after rising $3.37 to $77.46 on Monday, in London.

"There was a certain amount of panicking going on,'' said David Johnson, an oil analyst with Macquarie Securities in Hong Kong.

But traders may have felt prices fell too far in the short term, sparking this week's rise while the market reassesses which way to move, Mr Johnson added.

Sucden analyst Nimit Khamar said prices turned higher after world leaders rushed out plans over the weekend to help stabilise their banking systems.

Efforts have intensified this week, with Britain pumping 37 billion ($65 billion USD) into three struggling banks. Germany and France also unveiled massive rescue packages.

Oil prices have plunged from record highs above $147, reached in July, because of worries over demand in a slowing global economy, dealers said.

Mr Johnson said any recovery in oil prices will depend partly on moves by the Organisation of the Petroleum Exporting Countries (OPEC) cartel, which is to told an emergency meeting in Vienna on November 18 to discuss the effects of the international financial crisis.

Once the global banking crisis is surmounted, a recovery in oil will also depend on whether there is a slowdown in growth next year, and what impact that would have on demand for energy, Mr Johnson said

Gordon Brown calls on energy firms to pass on gas and oil price falls
Gordon Brown has called on energy firms to pass on falls in gas and oil costs to customers.

By Rosa Prince and Harry Wallop
Last Updated: 10:04AM BST 20 Oct 2008

As winter approaches, the Prime Minister said it was important that suppliers cut fuel bills to reflect the savings they had made as a result of declining wholesale prices.

Writing in The People newspaper, Mr Brown said: "As the nights get colder, British families will be turning up their central heating.

"I know the increase in gas and electricity prices will be on their minds - and it's on mine too. My first priority is looking after the most vulnerable people.

"Now that global oil and gas prices are falling, we will demand that energy companies pass on these cuts to their customers as price reductions as soon as possible."

Consumers have been hit with two sets of price increases so far this year, taking up the average dual fuel gas and electricity bill from 912 at the start of the year to 1,303. Energy companies have recently warned that they could climb yet further in the New Year if Britain's ancient power stations fail to cope with a difficult winter.

However, the price of gas on the wholesale market which is closely tied to oil has started to fall.

With the cost of oil half that of its $147 dollar-a-barrel high in July, wholesale gas has fallen by around 20 per cent from its record levels in the summer.

The energy companies argue that they have already bought the majority of the gas that they need for this winter and they will not be able to take advantage of lower prices until next year.

Last week, the Prime Minister said that falling oil prices should be reflected at the petrol pumps.

Mr Brown is said to have given the energy firms until the start of December to voluntarily pass on price cuts or face Government action.

The gas companies have also been ordered by Ofgem to make their tariffs fairer. They have until December to tell the industry regulator how they will ensure customers who do not pay by direct debit either because they are on a pre-payment meter or because they pay be cheque are not disadvantaged.

Crude Oil Rises a Second Day as OPEC Prepares to Cut Production

By Grant Smith

Oct. 20 (Bloomberg) -- Crude oil rose for a second day on speculation OPEC will cut production to halt a 50 percent slide in prices from July's record.

OPEC, supplier of about 40 percent of the world's oil, may pare output by 2 million barrels a day in stages to stabilize prices, said Chakib Khelil, the group's president. Deutsche Bank AG cut its 2009 crude oil price estimate by 35 percent to $60 a barrel, citing the possibility of a ``major world recession.''

``OPEC are going to step in and try to protect their price,'' Robert Laughlin, senior broker at MF Global Ltd. in London, said in a television interview. ``They have to do a million -- anything less and it might backfire against them.''

Crude oil for November delivery gained as much as $2.15, or 3 percent, to $74 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $73.19 at 9:30 a.m. in London.

Oil dropped to a 14-month low of $68.57 a barrel on Oct. 16. Options contracts to sell oil at $50 by December soared 28- fold in the past two weeks on the New York Mercantile Exchange.

Contracts that allow holders to sell 1,000 barrels of oil for $50 each by December closed at $280 on the Nymex on Oct. 17, up from $10 on Oct. 3.

China's economy grew 9 percent in the third quarter, the slowest pace in five years, underscoring concern that the spreading financial crisis threatens the biggest contributor to global growth.

`Significant Cut'

The Organization of Petroleum Exporting Countries brought forward to Oct. 24 a Vienna meeting planned for November to discuss output levels.

While there is a consensus among the group's members to cut output, there's no agreement on the size of the reduction, and that could range between 1 million and 2 million barrels a day, Khelil, the group's president said in an interview on Algerian television yesterday.

``A one to 2 million barrel cutback is quite likely,'' Tom James, an independent commodity trading adviser, said in a Bloomberg Television interview. ``It's important we do hold around $60 to $70. If we see $50 or below for many, many months, this is going to hurt investment in the industry.''

OPEC's 13 members produced 32.2 million barrels a day in September, according to a survey of analysts and producers.

Brent crude oil for December settlement rose as much as $1.97, or 2.8 percent, to $71.57 a barrel on London's ICE Futures Europe exchange, and traded at $70.42 at 9:31 a.m. London time.

OPEC Risks Split Over Oil Cuts as Economies Reel, Prices Drop

By Grant Smith and Margot Habiby

Oct. 22 (Bloomberg) -- OPEC, founded five decades ago to unify oil producers, risks dividing members as the group plans to cut output and raise prices just as developed nations face their worst recession since 1983.

Iran's energy minister, Gholamhossein Nozari, said yesterday OPEC may slash output quotas by 2.5 million barrels a day, or 8.7 percent, an amount about equal to what's pumped from Kuwait. The Algerian minister and OPEC president, Chakib Khelil, said two days earlier the reduction may be only 1 million barrels.

The debate in the Organization of Petroleum Exporting Countries pits Saudi Arabia, the group's biggest producer and a U.S. ally, against Venezuela and Iran, two nations that oppose U.S. foreign policy and advocate higher oil costs. Crude plunged 52 percent to $70.89 yesterday from its July 11 record of $147.27 on the New York Mercantile Exchange.

``The divisions arise in OPEC because what countries need and want varies,'' said Gareth Lewis-Davies, an oil analyst at Dresdner Kleinwort Group Ltd. in London. ``The Saudis are playing a long-term political game. Other countries have higher costs.''

Saudi Arabia needs oil prices of less than $30 a barrel to balance its government budget, according to Merrill Lynch & Co. estimates. The United Arab Emirates requires $40 a barrel and Qatar $55.

Iran, with double the population of Saudi Arabia, has a breakeven point of about $100 a barrel, according to Edward Morse, managing director and chief economist at Louis Capital Markets LP in New York. In Venezuela, where President Hugo Chavez's government is spending oil revenue on social programs, the figure is about $120, he said.

Below $50

Oil options trading shows the probability that crude will fall below $50 a barrel by June has more than doubled in 10 days, Deutsche Bank AG said in an Oct. 17 report. There is a 9 percent likelihood that June 2009 crude oil contracts will expire below $50, up from 4 percent, Deutsche said.

The world's industrialized economies will expand next year at the slowest pace since 1982, the International Monetary Fund said Oct. 8. Growth will weaken to 0.5 percent in 2009, from 1.5 percent this year, sending U.S. unemployment to its highest level in 16 years, the agency said.

Oil demand may fall for the first time in 15 years this year as the worst financial crisis in decades tips economies into recession, according to the Centre for Global Energy Studies, a London-based consulting company.

Different Agendas

``OPEC members have completely different agendas,'' Merrill Lynch analysts led by Francisco Blanch said in an Oct. 20 report. ``History shows that it is difficult to maintain discipline in a falling price environment, and OPEC cohesion has already started to decline.''

Eleven years ago, OPEC members bickered about output quotas as oil slid 28 percent in 10 months amid the onset of the Asian financial crisis. At a meeting in Jakarta in November 1997, they raised quotas, ignoring the turmoil that slowed Asian economies and cut oil demand. Prices fell another 44 percent by December 1998 to below $11 a barrel.

``OPEC members are worried that they will be slow to react and oil prices will drop to $50 or $40 a barrel,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts.

After the late 1990s price drop, Saudi Arabia, Venezuela and non-OPEC nation Mexico led efforts to cut production to boost prices.

``The death of OPEC typically comes up as a question or a theme at times when prices are falling dramatically,'' said Tim Evans, an energy analyst at Citi Futures Perspective in New York. ``It is exactly at those moments when the OPEC membership tends to recognize that they need to come up with a combined response to the market.''

`Consensus to Reduce'

Algeria's Khelil said ``there is a consensus to reduce production, but there is no agreement on how much to cut'' on Algerian television Oct. 19.

Saudi Arabia, where officials haven't made any comments before this week's meeting, is likely to resist a cut of more than 1 million barrels because it's conscious of the political response in the U.S. and other consuming countries, said John Sfakianakis, chief economist at Saudi British Bank in Riyadh.

``I don't think we will see a 2 million-barrel cut, given the reaction that this will have both by the market and by the politicians,'' Sfakianakis said in a phone interview.

Saudi King Abdullah said at a June 22 oil summit in Jeddah that the world's largest oil-exporting nation seeks ``reasonable'' prices to producers and consumers.

`Absolutely Scandalous'

U.K. Prime Minister Gordon Brown said last week that it was ``absolutely scandalous'' that OPEC is considering cuts as the global economy risks falling into a recession.

At OPEC's last meeting in September, the group's members agreed to adhere more strictly to production quotas, trimming output by about 500,000 barrels a day.

Saudi Arabia produced 9.45 million barrels a day in September, according to Bloomberg estimates. Its output target is set at 8.94 million barrels. Iran, OPEC's second-largest producer, trimmed production by 130,000 barrels to 3.95 million barrels day, close to its quota of 3.82 million barrels, according to Bloomberg estimates.

Saudi Arabia will probably forge a compromise for production cuts to be taken over coming months instead of all at one time, analysts said.

``Everyone recognizes that oil needs to be taken off the market,'' Morse said in a phone interview. ``If they cut a million, they will almost certainly have to go in for a second round of cuts.''

OPEC members will meet again in Algeria in December.

I don't agree with some of these statistics.

Iran set its budget based on $45 pb rather than $100. Where do they get 100???????

It says a breakeven point of $100.

Cost of oil production in that region is from $8 up to a macimum of $20, not $100.

Maybe the $100 takes into account investment required or already put in place in replacing reserves, production technologies etc?

Lifting cost is not the whole cost is it.

Humm,

You are saying the cost of any new production is above $100. So the prie fall results in loss for those countries invested in oil. Thos who plan to invest, like USA will stop doing so. The mid east countries will dominate the market again.
Is that right?

Oil Falls to 16-Month Low, Gasoline Tumbles, as Demand Declines

By Mark Shenk

Oct. 22 (Bloomberg) -- Crude oil fell more than $5 a barrel to a 16-month low and gasoline tumbled as weakening fuel consumption outweighed prospects of a production cut by OPEC at a meeting this week.

U.S. fuel demand during the past four weeks was down 8.5 percent from a year ago, an Energy Department report today showed. The financial crisis that's curbed the nation's energy use is spreading to emerging markets. OPEC will decide on Oct. 24 to lower output by at least 1 million barrels a day, according to a Bloomberg News survey.

``The market is more concerned about the economy than anything else,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``Until there is a recovery of the financial system and the economic picture, oil will trend lower, even if OPEC makes a cut of 1 million barrels plus.''

Crude oil for December delivery declined $5.07, or 7 percent, to $67.11 a barrel at 12:55 p.m. on the New York Mercantile Exchange. Futures touched $66.83, the lowest since June 14, 2007. Prices, which have tumbled 54 percent since reaching a record $147.27 on July 11, are down 23 percent from a year ago.

Gasoline for November delivery declined 12.94 cents, or 7.7 percent, to $1.5625 a gallon in New York. Futures touched $1.5588, the lowest since February 2007.

Pump prices are following futures lower. Regular gasoline, averaged nationwide, declined 3.1 cents to $2.858 a gallon, AAA, the nation's largest motorist organization, said today on its Web site. Pump prices have tumbled 31 percent from the record $4.114 a gallon reached on July 17.

Emerging Markets

Argentina's planned seizure of $29 billion of private pension funds stoked concern the nation is heading for its second default in a decade. President Cristina Fernandez de Kirchner's decision hurt markets already reeling from slumping commodity prices and slower growth.

China's gross domestic product increased 9 percent in the third quarter from a year earlier, the weakest pace in five years, as the slowdown in the U.S. and other markets saps demand for Chinese products. China is the world's biggest oil consumer, after the U.S.

``I think the economic news from Asia is knocking the last leg from under the bulls,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``We're now getting evidence that China isn't immune to the financial crisis after all.''

Energy prices also fell because the euro sank to an almost two-year low against the dollar as stock markets declined around the world. The euro dropped 1.6 percent to $1.2848 from $1.3063 yesterday, after touching $1.2743, the lowest since Nov. 7, 2006.

U.S. Fuel Consumption

Fuel demand in the U.S. averaged about 18.7 million barrels a day during the four weeks ended Oct. 17, according to today's Energy Department report. Consumption in the four weeks ended Oct. 10 was the lowest since June 1999.

``The projections of a deep economic slowdown are scary,'' said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``Demand for every segment of the oil barrel is going to take a hit.''

U.S. gasoline demand averaged 8.8 million barrels a day over the past four weeks, down 4.3 percent from the same period last year, the report showed. Consumption of distillate fuel, a category that includes heating oil and diesel, averaged 3.9 million barrels a day, down 5.8 percent.

``The industrial slowdown will reduce use of diesel, people will cut back on discretionary driving, hitting gasoline demand, there will be less travel, hitting jet fuel demand, and there will be less shipping, which hits bunker-fuel demand,'' Mueller said.

Inventories

Crude oil inventories rose 3.18 million barrels to 311.4 million barrels, the report showed. It was the fourth-straight increase. A gain of 2.65 million barrels was forecast, according to the median of responses by analysts in a Bloomberg News survey.

The Organization of Petroleum Exporting Countries may disregard pleas from oil-consuming nations on the brink of recession and cut output this week, a Bloomberg survey showed.

Thirty of 33 analysts surveyed this week forecast that OPEC will lower production by 1 million barrels a day or more at the meeting in Vienna, which was brought forward from November. That's more oil than Australia consumes. OPEC also may signal plans for an additional reduction of at least 500,000 barrels a day by early 2009.

Brent crude oil for December settlement fell $4.73, or 6.8 percent, to $64.99 a barrel on London's ICE Futures Europe exchange. Futures touched $64.76, the lowest since May 9, 2007.

Negative ramifications of downward spiral could be considerable for oil sands and Canadian economy as a whole
NORVAL SCOTT

With files from Kevin Carmichael in Ottawa, David Parkinson and The Canadian Press

October 23, 2008

CALGARY -- The threat of a deeper recession triggered by the global financial crisis has pushed oil prices to a low not seen for 16 months, destabilizing the economics of new energy projects around the world.

Crude prices fell $5.43 (U.S.) to $66.75 a barrel yesterday - the lowest price since June 13, 2007 - after the U.S. Energy Information Administration said its oil reserves rose by 3.2 million barrels last week, well above industry expectations. The figures indicate slumping demand in the U.S., the world's largest oil consumer.

The pricing fall comes even though the Organization of Petroleum Exporting Countries will likely cut production at an emergency meeting on Friday. OPEC is expected cut its output by as much as two million barrels a day, a huge amount in historical terms, but the market doubts whether even a reduction of that magnitude would shore up sentiment.

"The worry is that what we're seeing in the U.S. will take place in the rest of the world too," said Bart Melek, senior economist with BMO Nesbitt Burns. "OPEC will no doubt respond, but it'll take some time for its cuts to have any impact."


If oil prices remain at these levels, planned projects around the world, including some in Alberta's oil sands, may be in jeopardy. Many newer developments in hard to reach areas are based on prices of at least $70 a barrel.'

These include projects in deep sea waters and the Arctic and, in many cases, are based on even higher oil prices.

Already, several Canadian companies including Nexen Inc., OPTI Canada Inc. and BA Energy Inc., have delayed or postponed the construction of new upgraders in the oil sands, reasoning that the projects are too expensive to proceed in the current environment.

Other projects, including Petro-Canada's $25-billion (Canadian) Fort Hills development, are also believed to be at risk. Analysts believe a long-term oil price of somewhere between $85 (U.S.) and $100 a barrel is needed to justify building an oil sands development including an upgrader now.

For the Canadian economy, the impact of the fall could be considerable. The commodity boom has helped offset the effects of weaker demand for Canada's manufactured goods by creating a windfall of wealth from its exports of oil and farm products. But the current decline in oil prices will reduce corporate profits and put strains on government coffers that swelled as the cost of crude surged to its peak of $147 a barrel in July.

The drop in the value of the loonie, which is tied to the price of oil, will also make imports more expensive, threatening to raise the cost of consumer goods when Canada is already in the midst of its weakest economic growth in 17 years.

But some argue that the fundamentals that drove oil to $147 - strong demand for crude from Asia, combined with an increasing scarcity of easy-to-develop crude - aren't about to disappear. Some analysts believe oil will find a floor at around its current levels, unless the global economy enters total meltdown.

"Is this [price] here to stay? Definitely not," said Martin King, a Calgary-based analyst for FirstEnergy Capital Corp. "OPEC will act to some degree, and the supply side is not going to be able to keep up. There's no bailout coming from non-OPEC production, and a [price rise] will come in a matter of months, not years."

Still, demand for gasoline in the U.S. is now down some 4 per cent from the same time in 2007, as consumers cut back on spending, leading to higher inventories and lower prices.

For Canadian companies, sluggish growth in global demand likely means a slowdown as new projects are pushed back, Mr. King said, adding that there could also be widespread layoffs.

Husky Energy Inc. chief executive John Lau said large oil companies with strong balance sheets will continue to develop oil sands projects, but smaller players may suffer.

"I'm quite sure major developers with deep pockets will continue to focus on oil sands development," Mr. Lau said. "Oil sands developments are very special projects. [But] in view of the high costs and also labour shortage, most of the of the small projects are facing a lot of challenges."

Oct. 23 (Bloomberg) -- Crude oil rose from a 16-month low as OPEC's president said that members had reached a consensus on the need to trim production and Iran said the cut may be as much as 2 million barrels a day.

There's no agreement on how big the reduction needs to be, the group's president, Chakib Khelil, told reporters in Vienna, where OPEC ministers arrived before a meeting tomorrow. Iranian Oil Minister Gholamhossein Nozari said OPEC must ``balance'' the market, after prices tumbled 54 percent from a record in July.

``If OPEC makes a cut of 1 to 2 million barrels tomorrow, prices should firm up and move higher in the short term,'' said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. ``Unless there is something huge announced, the market will eventually start moving lower again because of the weak economy.''

Crude oil for December delivery rose $1.06, or 1.6 percent, to $67.81 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $65.90, the lowest since June 13, 2007. Prices are down 21 percent from a year ago.

``Prices have fallen a great deal, so a gain should be expected,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut.

Oil producers to slash output
11 hours ago

Oil cartel Opec has agreed to cut production in a move that is likely to halt the recent slide in UK petrol prices.

Members of the organisation decided to cut output by 1.5 million barrels a day from next month in an attempt to shore up sagging prices.

Explaining the reasons for the move, a statement read at the end of the meeting in Vienna said prices had witnessed a dramatic collapse unprecedented in speed and magnitude.

Crude oil has tumbled to less than 70 US dollars a barrel amid global recession fears - less than half the 147 dollar high seen in July.

That has led to falling petrol prices at UK forecourts. Supermarket giants Asda, Tesco and Sainsbury all announced a new round of cuts.

The retailers joined oil firm Total in slashing 3p off a litre of unleaded to take the price down to 94.9p. Morrisons is also cutting petrol costs.

The last time petrol was 94.9p at Asda was last October, and the supermarket said the announcement marked the third time it had cut its petrol prices in a fortnight.

But the decision by Opec ministers failed to halt the slide in oil prices on Friday. Light, sweet crude on the New York Mercantile Exchange - the benchmark price - was at 64.51 US dollars, a drop of more than three US dollars in the session as global recession fears continued to depress world markets.

Oil prices had edged up from their 16-month low below 67 dollars a barrel to around 69 dollars ahead of Friday's meeting.

Motoring body the Automobile Association (AA) welcomed the latest price cuts, but warned that moves by Opec to slash production meant that the recent easing in petrol price could be brought to an end.

Drivers face rise in price of petrol
Motorists have been warned that the price of petrol could rise by up to 5 pence a litre after members of the OPEC oil cartel threatened to cut production.

By David Millward, Transport Editor
Last Updated: 12:44AM BST 24 Oct 2008

Russia is likely to join with OPEC in restricting supply in an attempt to drive up the cost of oil. This will lead to a rise in petrol prices just weeks after drivers finally began to see costs on the forecourt come down.

Over the last month motorists have benefited from the slump in world oil prices, following pressure from Gordon Brown on retailers to pass on savings to their customers.

But analysts now believe the end is in sight for drivers' recent honeymoon which has seen the cost of unleaded drop to less than a pound a litre .

OPEC production is almost certain to be reduced at the cartel's emergency meeting in Vienna today (Fri). As a result even the most conservative analysts expect a rise of $10 a barrel.

A two dollar increase in the price of petrol adds roughly a penny to the pump price, so motorists could face a five pence a litre rise by Christmas, experts have warned.

The rise - equivalent to another 22.5p on a gallon of petrol - means filling up an average family car, such as a Vauxhall Astra, will cost around 2.50 more at 50.

An AA spokesman said: "Our fear is that they will cut production to either hold prices where they are or start pushing them up.

"If prices do go up then people will be travelling less and have less disposable income for things like Christmas presents for their children.

"But the oil market is hostage to a number of things from political instability, the failure of a refinery or a natural catastrophe."

"I think OPEC will cut production," said Ray Holloway, director general of the Petrol Retailers Association.

"That and the fall in sterling means that forecourt prices could start rising in November and will remain high until the end of the year."

Having hit $147 a barrel in July, oil has been trading at less than $65 a barrel as demand has fallen amid fears of a global recession. Iran - one of the biggest OPEC producers - has already called for output to be slashed by two million barrels per day as they want the cost to rise to $100.

Mr Holloway's prediction for the OPEC meeting was endorsed by other analysts.

"From their point of view, OPEC members will have to increase prices," said Azfar Shaukat, director of oil and gas at consultants, Mott MacDonald.

"The price of oil has come down to a level that is not sustainable, especially given that during the middle of the year people were committed to projects that needed high revenue.

"We will see an increase and if I was to put my finger into the air, I would suspect it would be a figure of $75 to $80 a barrel.

"But it is a difficult market now and people don't want to be seen to be profiteering."

Mr Shaukat also believed that the prices could go even higher next year, with oil prices approaching $100 a barrel in the spring.

A similar view was expressed by David Smith, an analyst with Celerant Consulting.

"I am surprised that the Saudis haven't intervened more actively already," he said.

"It is pretty certain that they will cut production as they have enjoyed the benefit of high oil prices for some time.

"The more hawkish members will be determined to get prices up and I think many would be comfortable with prices at around $80 a barrel."

"But in the end you can't beat market forces, even though if there is some sabre-rattling, it will have an impact."

The only factor which could tie OPEC's hands is the fear that demand for oil would slump if it forces up the price too high.

At the same time petrol prices could also be forced up by the collapse of sterling against the dollar, which is the currency in which oil is traded.

This is not only bad news for the motorist, but the economy as a whole.

More costly fuel also pushes up the price of delivering goods to shops and supermarkets, which will add to inflation.

Despite accusations that retailers have been slow to pass on the full amount of recent price falls to motorists, the forecourt war has seen Sainsbury's announcing another cut, bringing petrol down to 94.9 pence, the same price as ASDA.

In addition ASDA promised that it would hold petrol down irrespective of the outcome of the OPEC meeting in Vienna.

But this could be only short term relief for motorists, especially with growing fears that the Government could also be ready to impose the delayed two pence a litre increase in the fuel levy in April.

In July Alistair Darling, the Chancellor, bowed to pressure from motoring groups shelved the rise due to come into force at the start of this month.

But the collapse in oil prices has cost the Treasury dear in recent months.

Having enjoyed a 2.5 billion windfall in the first half of the year, when oil prices soared above the $84 a barrel it budgeted for, the slump means that revenue is now less than it predicted.

Motoring groups fear that this and falling pump prices may make the temptation to impose the levy irresistible.

The world is running out of oil....not.

smiler o---------'Over the last month motorists have benefited from the slump in world oil prices, following pressure from Gordon Brown on retailers to pass on savings to their customers'.

It was inevitable that petrol prices were going to fall as the ppb fell, Gordon Brown new this as did my aunt Muriel (92), he was trying to get the credit for it, another cheap shot from this shrewd cookie who sold our gold at the bottom, put us all in hock, reneged on his promise of a referendum, sold out to europe and shrewdly paid 100 for a haircut.
2517

Aye ;) , out of Interest what is the price down in sunny Cornwall, its 98/97 ish this End

NORTH WEST LONDON 98.9 TO 101.9P

OCTOBER 27, 2008 OPEC Cut to Be Felt Eventually

The Organization of Petroleum Exporting Countries' move to pump less oil in the presence of shaky demand growth will result in higher prices -- eventually.

For now, the cartel's decision Friday to trim 1.5 million barrels a day from its output target won't put the brakes on oil prices' nose dive, analysts said. The reasons have to do with oil-supply dynamics and global financial markets.

smiler o--------sorry for the delay in responding but not been near a petrol station 'till today, in not so sunny Cornwall (just) 99.9 & 102.9, robbin' b's, but just across the border in Devon 94.9.
2517

Thanks 2517, and yes they are : )

Oil falls below $65 on US contraction
By STEPHEN WRIGHT 3 hours ago

BANGKOK, Thailand (AP) Oil prices slipped below $65 a barrel in Asia Friday, extending declines after data showed the U.S. economy contracted in the latest quarter, reinforcing expectations of a prolonged slump in demand.

Light, sweet crude for December delivery was down $1.44 to $64.52 a barrel in electronic trading on the New York Mercantile Exchange by midmorning in Singapore. The contract overnight fell $1.54 to settle at $65.96. Oil prices have fallen about 55 percent since peaking above $147 a barrel in mid-July.

U.S. gross domestic product, the broadest barometer of a nation's economic health, shrank at a 0.3 percent annual rate in the July-September quarter, the Commerce Department said overnight. It marked the worst showing for the world's largest economy since it contracted at a 1.4 percent pace in the third quarter of 2001.

The negative cue provided by the U.S. data continued into Asian trade, compounding the pressure from a generally strong dollar, said David Moore, commodity strategist with Commonwealth Bank of Australia in Sydney.

Investors often buy commodities such as crude oil as an inflation hedge when the dollar weakens and sell those investments when the greenback rises. Oil investors have also been tracking equity indexes as a barometer of global economic health.

The euro eased to $1.2833 from $1.3181 in late Asian trade Thursday. The region's stock markets were mixed after a blistering rally the previous day with Hong Kong's Hang Seng index down 1.8 percent and South Korea's benchmark index up 1.5 percent.

"The dollar has been relatively firm and that has taken some of the edge off the market. There's also the other issues that have been in the market for a while such as worries about demand and consumption patterns," Moore said.

"A further fall in the oil price cannot be ruled out. It is difficult to predict where the bottom could be," he added. "An important factor over the next few months will be whether OPEC can achieve its output cuts. If it can that will certainly tighten market conditions."

Last week, the Organization of Petroleum Exporting Countries announced plans to cut 1.5 million barrels of production per day at an extraordinary meeting in Vienna called to address plummeting prices.

Venezuela's Oil Minister Rafael Ramirez says that OPEC, which controls about 40 percent of world crude oil production, will need to cut production at least another 1 million barrels per day to boost falling prices.

In other Nymex trading, heating oil fell 2.96 cents to $1.9545 a gallon and natural gas for December delivery was down 5.9 cents at $6.37 per 1,000 cubic feet.

In London, December Brent crude fell $1.41 to $62.30 a barrel on the ICE Futures exchange

Oil prices rise as confidence improves
From correspondents in Singapore

November 03, 2008 03:50pm

+ -WORLD oil prices were higher in Asian trade today, mirroring gains in equity markets on improved investors confidence, dealers said.
New York's main contract, light sweet crude for December delivery, advanced $US1.08 to $US68.89 a barrel from Friday's close of $US67.81 in the United States.

Brent North Sea crude for December delivery rose 60 cents to $US65.92 a barrel.

"Lately the oil markets have looked to the equity markets for implications to the macroeconomic outlook so there may be a bit of a bounce,'' said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.

Mr Shum said prices were likely to trade within the $US60-$US70 range with more downside bias seen as longstanding worries about the global economy remained on investors' minds.

"Downward volatility is still greater than upward volatility at this point,'' said Mr Shum.

"There is still a lot of concern about the impact of economy deceleration on oil demand,'' he said.

"The US economy contracted at a 0.3 percent annualised pace in the third quarter as the global credit crunch saw consumers and businesses cut back on spending.

NEWS.com.au, 28 Oct 2008 Analysts say a weak economy in the United States, the world's biggest energy user, will result in lower oil consumption, which will pressure prices lower.

Meanwhile, OPEC chief Chakib Khelil said Sunday the recent oil production cuts taken by the cartel in an attempt to boost prices will take a while to have an impact on the market.

This decision "will take a long time to take hold'' because the demand for oil has still not reached OPEC's revised production level, Mr Khelil, who is also the Algerian Energy Minister, told local radio in Algiers.

At an emergency meeting in Vienna last month, the Organisation of the Petroleum Exporting Countries (OPEC) agreed to reduce output by 1.5 million barrels a day to 27.3 million bpd from yesterday in a bid to prevent prices falling further.

"A number of countries including Algeria, the United Arab Emirates, Iran and Nigeria, have already announced a decrease in production,'' Mr Khelil added.

Oil prices have more than halved since reaching record highs above $US147 in July as investors grew increasingly worried about energy demand amid a deteriorating economic environment.

HOW FAR DO YOU SEE OIL FALLING TOO.

IMHO I dont think it will drop to far from what it is now (60$) it may well steady up around the 60 to 50 mark ? give or take 5/10$ we will see ?? Still I dont think it will take much for it to go the other way next year ?

'Fair oil price $US70 to $US90 a barrel'
AdvertisementEmail Print Normal font Large font November 3, 2008 - 7:04AM


Qatar's Prime Minister Sheikh Hamad bin Jassem bin Jabr al-Thani said he believed that between $70 and $90 would be a fair oil price for a barrel of oil.

He was speaking at a news conference after talks with British Prime Minister Gordon Brown, who is touring the oil-rich Gulf trying to attract extra funding for the International Monetary Fund (IMF).

"The price level we think is a fair is $70 to $90 price," he said, speaking in English.

"We wish that we had fixed price but that's a market... High prices affecting the economy and low prices affecting the economy, so it's very important to think about prices that can be workable for both sides."

Qatar belongs to the Organisation of the Petroleum Exporting Countries (OPEC), which clashed with Brown over the cartel's decision to cut oil production at an emergency meeting last month in a bid to buoy up prices.

Brown again said during the news conference that he wants "a stable energy market," adding: "It's not a question of interest in a high price or a low price".

Qatar's Energy Minister Abdullah bin Hamad al-Attiyah last week stridently rebuffed criticism from countries including Britain over the oil production cut.

He said they could not label OPEC as "the bad boy" for taking such action without suggesting an alternative.

Oil rises as Saudis turn off taps

By Upstream staff


Oil rose above $64 today, after industry sources said Saudi Arabia had already made substantial cuts in supplies and helped the market recoup earlier losses.


Saudi Arabia, the world's biggest oil exporter, has reduced exports by around 900,000 barrels per day from a peak in August, one source said.

US light crude for December delivery was up 69 cents at $64.60 a barrel by 7:07 a.m. EDT. It had touched a session low earlier of $62.25. Oil suffered its biggest monthly drop ever in October.

London Brent crude was up 42 cents at $60.90 a barrel. Earlier Brent had touched a 20-month low of $58.38 a barrel.

"Saudi Arabia cutting supplies could be supportive," Christopher Bellew at Bache Commodities told Reuters.

"But it could also be bearish, pointing to reduced demand from customers."

Earlier, the market had fallen more than a dollar, pressured partly by expectations that oil refiners will have to cut output because of weak demand for fuel.

All markets were awaiting the outcome of the US presidential election.

Saudi Arabia's supply cut eases doubts about whether the world's top exporter would comply quickly with a 1.5 million bpd output cut agreed by Opec in Vienna last month.

Other Opec members have also cut back.

The United Arab Emirates has reduced its production to around 2.3 million bpd from around 2.5 million bpd, a top state oil company official said today.

Qatar has cut exports to Asia by about 40,000 bpd from this month, Energy Minister Abdullah al-Attiyah told Reuters.

Crude oil has plummeted from a record above $147 a barrel in July as the credit crisis in the global banking sector has started to hit the wider economy. This has already dampened fuel consumption in the US, the world's top oil consumer, and other major consumer nations.

US car sales plunged 32% in October to lows unseen in a quarter century, while US factory activity - a barometer for future oil demand - fell to its lowest in 26 years.

Oil holds above $60 on weak dlr; demand fears linger
Fri 7 Nov 2008, 8:18 GMT

By Fayen Wong

PERTH (Reuters) - Oil hovered above $60 a barrel on Friday, as support from a weakening U.S. dollar was countered by an increasingly gloomy economic outlook that weighed on near-term energy demand.

Comments by OPEC-member Libya that the oil-producing cartel was not considering cutting production again also kept the commodity at a 1- year low.

U.S. light crude for December delivery fell 9 cents to $60.68 a barrel by 0702 GMT, having earlier fallen to $59.97, its lowest since March 22, 2007. London Brent Crude shed 18 cents to $57.25 a barrel.

"The pullback in the U.S. dollar is a key driver for oil's gains," said Toby Hassall, chief analyst at Commodities Warrants Australia in Sydney.

"But a weak global demand outlook will continue to be the primary driver in oil market. With the U.S. non-farm payroll expected to be abysmal, there is nothing much on the demand side that can lift prices."

The dollar extended losses against the Japanese currency on Friday, falling more than 1 yen from the day's highs on risk aversion.

Oil prices have tumbled more than 9 percent this week, as a raft of dismal economic data from the United States heightened worries about a protracted global recession and growing U.S. fuel stockpiles underscored slackening energy demand.

The International Monetary Fund said on Thursday it expected 2009 global economic growth of 2.2 percent, down 0.8 percentage points from its October forecast. It also cut its 2009 baseline oil price projection to $68 a barrel from $100.

Asian stocks fell on Friday on fears of a global recession, as layoffs and corporate profit warnings piled up in the face of a slowing global economy.

Traders will be looking towards U.S. economic indicators due later on Friday, including government reports on October unemployment data and September wholesale inventories, to gauge how the world's largest economy is faring.

OPEC NOT CONSIDERING MORE CUTS

OPEC is not actively considering cutting production again as oil markets are still volatile, but the group could opt to meet before its next scheduled meeting in December, Libya's top oil official said on Friday.

Shokri Ghanem also warned that continued low oil prices could force companies to cancel new projects, risking a shortage of oil in two years.

In about three months, oil prices have plummetted nearly $90 from record highs above $147 a barrel, as the worsening global economic crisis erodes energy demand in the United States, the world's largest energy consumer, and other industrialised nations.

Slowing demand and the sharp price declines drove the Organization of the Petroleum Exporting Countries to agree to cut output by 1.5 million barrels per day (bpd) at an emergency meeting last month.

OPEC's seaborne oil exports, excluding Angola and Ecuador, will drop 310,000 bpd in the four weeks to November 22 and will have fallen 700,000 bpd from an August supply peak, an oil analyst who tracks future flows said.

Opec could cut supply again
Wire services

Opec will cut oil output again if the trend towards lower prices and slowing demand growth are unchanged when the group meets in December, Iran's Opec Governor Mohammad Ali Khatibi said yesterday.

The credit crisis and economic slowdown could shave as much as 3 million barrels per day (bpd) from global crude demand, Khatibi told Reuters.

"If everything is the same and the trends continue like this then Opec will have to do something," Khatibi said in an interview by telephone.

"We have to balance the market. Recent indications are that demand could have fallen by 2 to 3 million barrels per day. Stocks are rising."

Oil dipped below $60 a barrel last week, the lowest since March 2007, and has tumbled nearly 60% from its July peak over $147.

Opec agreed at an emergency meeting on Oct. 24 to chop production by 1.5 million bpd, or around 5%, to halt the price slide, but the cut has had little effect to date.

Opec President Chakib Khelil said on Saturday the producer group would probably move to cut again at its December meeting if prices stayed low and members had fully met their existing pledges to reduce supply.

Some members of Opec would propose at the December meeting that the group look to maintain prices within a $20 range, Khatibi said.

That range could be either $70 to $90 per barrel or $80 to $100 per barrel, he added, declining to name the countries that would propose or support the price band or to say if Iran would support it.

Venezuela's oil minister said last month it would propose Opec adopt one of those two price bands. Venezuela has already proposed a further cut of another 1 million bpd in Opec supply at the December meeting.

Current prices were too low to encourage investment in unconventional oil projects such as oil sands and in expensive conventional oil projects in the deep sea, Khatibi said.

"In the short-term the crisis is affecting demand," Khatibi said. "But in the medium term this will affect supply. We need a price that will ensure we build capacity today to meet tomorrow's demand."

Iran's plans to expand output were unaffected as it had neither deep sea nor unconventional projects, he said. "But if this continues, it will affect all producers, and Iran will be no exception".

Oil companies are already reconsidering some projects that looked profitable when oil was higher.

Iran, the world's fourth-largest oil producer, has cut around 200,000 bpd from output of around 4.04 million bpd in line with Opec's October agreement, an Iranian oil official said on Friday.

World needs to tap oil reserves more quickly-IEAReuters, Wednesday November 12 2008

By Jane Merriman
LONDON, Nov 12 (Reuters) - The world is not about to run out of oil, but there is a risk its reserves may not be exploited fast enough to meet global demand growth in the years ahead, the International Energy Agency said on Wednesday.
The agency's World Energy Outlook for 2008 stopped short of sounding the alarm that oil supplies may have peaked, but highlighted obstacles to accessing new fields that include the increasing dominance of national oil companies.
"Some 30 million barrels per day of new capacity is needed by 2015," said the IEA, which advises industrialised countries.
"There remains a real risk that under-investment will cause an oil-supply crunch in that timeframe."
The IEA estimated the world needs investment of more than $26 trillion in the next 20 years to ensure adequate energy supplies, an increase of more than $4 trillion from estimates in its 2007 World Energy Outlook.
The Executive Summary of its latest Outlook was released last week ahead of the full report.
In oil, upstream investment spending has risen in nominal terms, but much of the increase was due to high costs and also because cheaper reserves were off-limits to international oil companies.
"Today, most capital goes to exploring for and developing high-cost reserves, partly because of limitations on international oil company access to the cheapest resources."
The gap between what was being built in terms of new capacity and what would be needed to keep pace with demand was set to widen sharply after 2010, the IEA said.
The IEA's projections pointed to a rise in world oil supply to 106 million barrels per day (bpd) in 2030 from 84 million bpd in 2007.
NON-OPEC PEAK
Most of the increase would come from members of the Organization of the Petroleum Exporting Countries, whose share of world oil output was projected to rise to 51 percent in 2030 from 44 percent in 2007.
Outside OPEC, production has already peaked in most countries and would peak in most others before 2030.
The need to invest enough to ensure supply meets demand has been a recurrent theme in the IEA's annual outlook.
The 2008 report highlighted again the urgent need for investment, but also shifted the focus to dwindling reserves.
It looked at decline rates for 800 of the world's oilfields, where it expected the average rate of decline to increase to 8.6 percent in 2030 from about 6.7 percent currently for those that have passed their production peak.
Given the high cost of bringing on new output and the struggle to match supplies with demand, the IEA assumed consumers would pay an average of $100 a barrel for oil over the next seven years and more beyond that.
The agency was careful not to predict prices, but makes price assumptions in its assessments.
Oil reached a record peak of more than $147 a barrel in July, but has fallen back below $60, a drop of more than 50 percent in just over three months.
The IEA saw more price volatility ahead.
"Pronounced short-term swings in prices are likely to remain the norm," the IEA said.
"The sudden drop in oil prices in August and early September 2008 - in the absence of any obvious major shift in demand or supply - lends support to the argument that financial investors have been playing a significant role in amplifying the impact of tighter market fundamentals on prices."
The report's projections for world oil demand were for a 1 percent increase per year on average, to 106 million bpd in 2030 from 85 million bpd in 2007.
World energy demand was expected to grow by 1.6 percent per year on average, with China, the world's second biggest energy consumer, together with India, accounting for just over half the increase.

Tuesday November 18, 2008 Oil will continue to dominate energy field for decades
TAN TENG-HAI

Oil will continue to play a major part in meeting the energy needs of the world to 2030 and beyond, according to the projection of the International Energy Agency (IEA).


The IEA estimates that meeting its forecast will require around $3 trillion worth of global investment in finding, producing, transporting and refining the oil required by 2030.


The global production of crude oil will not peak before 2030, if necessary investment is made in exploration and production.


Nearly $500 billion in investment includes refining but excludes investment in tighter fuel specifications, which has absorbed most of the refinery investment in Europe over the last decade.


Meeting tighter product specifications requires refiners either to use more expensive low-sulphur crude or to invest in new hydrofining units to reduce sulphur content in product. The units needed are major investments and take several years to plan and build.


At the same time, the changing expectations in refining globally have resulted in a strong push for cleaner fuels, biofuels and carbon dioxide emission reductions.


More clean-refiners have to adapt for operational excellence, giving due consideration to the complexity and scale of any new expansion or construction. This desire is tempered, however, by concerns about crude oil supply, quality and cost of production.


At Shell Global Solutions, we believe that conventional crude resources are not in imminent danger of running out. There are sufficient reserves to last for 40 to 100 years, given new technology to extend recoverable oil reserves and "yet to be found" oil.


We also feel there is the potential to recover unconventional reserves, such as heavy oils and oil sands. Output of liquid fuels will be supplemented by gas-to-liquids technologies, which convert stranded gas from remote areas into transport fuels.


Closure of refineries will exacerbate any shortage as it will affect the supply side. Refineries will also have to process different crude oils. Initially, other low-sulphur crudes may be used, but over time the crude oils available will become heavier and sourer (i.e. containing more sulphur) and low-sulphur crude will carry an even greater premium. Hence, refineries will have to adapt processing to serve that trend.


By 2030, there will be fewer oil-producing nations than today, and Opec countries will supply half of the world's oil needs. Consequently inter-regional trade in oil will double to 65 million barrels a day by 2030.


As we struggle to understand the increases in margins and differentials, we have to ask: What changed? World refining utilisation has gone up 2% from 2003 to an average of 86.3% worldwide.


The exceptional margins result from four drivers: strong demand, nearly full utilisation rates of refineries, length in global fuel oil supplies and high oil prices.


Most of the refinery expansions being announced are in the strong-demand regions of Asia and the Middle East. In Europe and the US, the focus is more on using heavy feedstocks, adjusting the product mix, and improving cost efficiency. More expansions are planned for the end of the five-year period.


There is an increased interest in achieving top-quartile performance. A refiner can invest to improve reliability, energy cost and other operational factors to achieve improved competitive cost structures. The improvement will lift the refiner's income, as energy cost is tied to crude price, and returns on reliability and operational improvements are margin-dependent.


Three factors have been influencing them to increase capacity, including the need to boost profitability, widen the price gap between light and heavy products, and increased cash and personnel availability as companies finish their low-sulphur fuel investments.


In Asia and the Middle East, state-owned companies mostly hold the majority of refining assets. These companies have expressed a strong need for new capacity and believe that the current tight capacity situation will ensure higher margins. The Middle East refiners also see that they can improve the value they receive from their heavy crude by refining it themselves.


On the question of over-expansion, in general the boom will drop utilisation regionally, and Asia and Middle East are at highest risk of over-expansion. Other regions, given their slow demand, will keep their expansions to a minimum. Yet, in the next few years, prior to that capacity coming online, refining capacity will remain tight since new construction will take more than five years.


Tan Teng-Hai is regional manager for consultancy at Shell Global Solutions East.

Oil Rises a Second Day on Speculation OPEC Will Prevent Glut

By Gavin Evans and Christian Schmollinger

Nov. 24 (Bloomberg) -- Crude oil rose for a second day in New York on speculation further production cuts by the Organization of Petroleum Exporting Countries will prevent a glut in supplies.

Slowing global demand has left a 1 million-barrel-a-day oversupply that needs to be removed by the year-end, Venezuela's Oil Minister Rafael Ramirez said yesterday. Prices below $50 a barrel risk stalling new developments by smaller oil companies, Total SA Chief Executive Officer Christophe de Margerie said.

``The market now sees that OPEC is more likely to cut production,'' said Clarence Chu, a trader with options dealer Hudson Capital Energy in Singapore. ``To be effective, it must be a 1.5 million-barrel-a-day cut or more. Even 1 million won't be enough because the sentiment has been so bearish.''

Crude oil for January delivery rose as much as $1.41, or 2.8 percent, to $51.34 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $50.32 a barrel at 3:29 p.m. in Singapore. Prices are down 66 percent from the record $147.27 a barrel on July 11.

Oil gained 1 percent to $49.93 a barrel on Nov. 21, the first increase in six days, as a report forecast a 3.8 percent decline in OPEC shipments this month and the Standard & Poor's 500 Index climbed from an 11-year low. Oil traded at a three-year low of $48.25 earlier that session.

OPEC ``have got to be pretty careful how they attempt to manipulate this,'' Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne, said in a Bloomberg Television interview. ``There's some expectation they'll cut production further, but they're likely to look to the new year before assessing it again.''

Recession, OPEC

Brent crude oil for January settlement rose as much as 81 cents, or 1.7 percent, to $50 a barrel on London's ICE Futures Europe exchange today. It was at $49.50 a barrel at 3:27 p.m. in Singapore. The contract gained 2.3 percent to $49.19 on Nov. 21.

OPEC ``needs higher prices, so they will intervene,'' said Total's de Margerie during an interview on RTL radio and LCI television yesterday. He called an oil price below $50 a ``danger'' as it will curtail investment in new oil fields.

New York oil futures have fallen as the U.S., Japan and much of Europe slipped into recession, equity prices slumped and a rising U.S. currency reduced the appeal of dollar-priced commodities.

Heads of state from the 21-nation Asia-Pacific Economic Cooperation group, including the U.S., China and Japan, promised to act ``quickly and decisively'' to resolve the global economic crisis, without offering specific steps. The leaders issued their comments following a two-day summit in Lima.

Double Whammy

Oil ministers from the 13-nation OPEC group meet in Cairo on Nov. 29. Venezuela, OPEC's fifth-largest producer, will be seeking a 1 million-barrel-a-day cut and assurance that the 1.5 million-barrel reduction agreed on Oct. 24 is being implemented, Ramirez said.

OPEC's ``not having a lot of leverage on prices,'' ANZ's Pervan said. ``The large cutbacks we've seen in the last month or two really haven't impacted positively on prices. And I think they're concerned that as they cut production and prices fall, they're getting a double whammy on revenue.''

Oil inventories in the U.S., the world's largest consumer, are at their highest in six months after rising for eight straight weeks, according to Energy Department data. Reports tomorrow will probably show the world's largest economy contracted more than earlier forecast in the third quarter.

Of all commodities, oil is the most exposed to the U.S. economy, which is the ``epicenter'' of the global slowdown now under way, Pervan said. Prices may drop below $40 a barrel in the first quarter as the contraction continues, he said.

``As far as we can see, demand conditions are likely to get weaker before they get stronger in oil over the next six months,'' he said.

Tuesday, December 2, 2008, 14:02Oil rebounds after fall to 3-year lows


Oil pared losses today after an earlier fall to a new 3-1/2-year low below $48 a barrel, weighed down by heavy losses in global stock markets after confirmation that the United States was in recession.

But a rally in European shares and expectations of a bounce on Wall Street helped oil move up from its lows.

US light crude for January delivery was up 3 cents at $49.25 a barrel by 1pm. It earlier touched a new 3-1/2 year low of $47.36, its lowest since May 2005.

Prices had dropped nearly 10 per cent today. London Brent crude was up 5 cents at $48.02 a barrel after touching a low of $46.02, its lowest since February 2005.

"Today's equity market rebound is preventing oil from going lower," said Olivier Jakob, of consultancy Petromatrix.

"The equity market has been a main input for oil," he said. "Because the slowdown in oil demand is linked to the global economy - that's why the correlation is very strong."

Oil prices had tumbled today after Opec decided to wait until later this month to take more supply off the market to try to defend prices.

"Opec was the key reason for the sell-off at first and then the poor performance on equity markets helped it follow through," said Rob Laughlin, oil analyst at MF Global in London. A key economic research body found today that the United States economy had slipped into recession in December 2007.

The Organization of the Petroleum Exporting Countries is ready to cut production by a significant amount when it meets later this month in Algeria to try to shrink rapidly building stocks, Opec's secretary-general said yesterday.

thankyou

Nicked from the Hawk board over on another site. Good news for many O&G Co's

USA Oil Windfall Tax Shelved

"...The switch drew applause from industry. The judgment to withdraw the concept of a windfall profits tax is an important recognition that developing America's oil and natural gas would be seriously damaged by such a tax policy," said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America, which represents independent oil and gas producers..."

Full article here:

http://www.reuters.com/article/vcCandidateFeed2/idUSTRE4B206W20081203

Oil now under $45 heading south?

Quite strange considering the markets have been quite buoyant and dollar weakening today must be close to the lower trendline now or is it a reverse blow-off!

Quite strange considering the markets have been quite buoyant and dollar weakening today must be close to the lower trendline now or is it a reverse blow-off!

Quite strange considering the markets have been quite buoyant and dollar weakening today must be close to the lower trendline now or is it a reverse blow-off!

December 4, 2008


Oman to assume $45bbl oil price in 2009 budget



Oman will amend its 2009 budget to assume an average oil price of $45 a barrel following a sharp decline of around $100 in international crude prices since July.


Omans official news agency said the Persian Gulf Arab oil producers council for financial affairs and energy resources agreed at a meeting to amend the oil price assumed in the budget.

The council agreed the amendments, the most important of which is to calculate oil revenues based on an average of $45 a barrel in line with the recent developments in the oil markets represented by a significant decline in the price of oil compared to the level reached in the first half of the year, the statement said.

It did not say what the previous oil price assumed in its 2009 budget was. Oman is a small oil producer and is not a member of OPEC.

(Source: Trade Arabia)

Just watched some presenter on the news rabitting on about how $25 oil will "help us all at the pumps"

MOTHER OF ALL LOL's

Haven't they a CLUE what damage that will do to the price of oil? With exploration, development, upkeep on ice or just plain abandoned they would soon after see $200 as a result. Oh jeez are they really that stupid!?!?

Yes!

With demand falling, there is no way oil will reach $200 in the short to medium term...



Oil to hit $25 a barrel as global recession deepens, Merrill Lynch predicts

Oil prices could tumble below $25 a barrel next year if the global recession reaches China, investment bank Merrill Lynch has predicted.

The prediction that the crude prices could revisit lows last seen in 2002 led to a plunge in energy shares on Wall Street and sent the Dow Jones index down 215 points - or 2.5pc.

"With demand vanishing across all key oil consuming regions, benchmark crude oil prices continue to plummet," Merrill said in a research note. "A temporary drop below $25 a barrel is possible if the global recession extends to China."

Oil fell below $43 barrel overnight as crude oil heads for its biggest weekly decline since March 2003. Since the US was declared to be in recession earlier this week the price has fallen 19pc.

"The connection is pretty clear - fewer people in jobs is a clear sign of a weakening economy,'' said Toby Hassall, a research analyst at Commodity Warrants Australia in Sydney.

"As unemployment rises, GDP falls and oil demand falls. It's not likely to show much hope for the economy.''

However, low prices are not expected to last.

"With demand vanishing"

WTF?!? What planet do these people live on?

Kilduff: Expect Rebound In Oil Prices Early 2009
Posted By:John Kilduff


John Kilduff
CNBC Contributor

Crude oil prices are now mired well below $50 per barrel, and they look to be heading lower still. While some of the price pressures are obvious, there is one that may be less so: hedge fund liquidations. The list of funds that have had to enact capital preservation measures is growing by the day, and the names are notable: Tudor Investments, Fortress Investments, and D.E. Shaw have all reported that several of their funds have thrown up the gates preventing further investor redemptions, due to being swamped by requests for redemptions from investors that must be met by year-end.

These are probably the most notable instances of what is happening, but they are hardly alone. I believe the liquidations underway to meet these year-end cash payouts are putting tremendous pressure on commodity prices across the board. This wave of liquidations should be expected to continue over the next several weeks, and could easily result in crude oil prices dipping down into the mid-30s. However, once this round of selling is concluded, I would expect a significant rebound in prices as we enter 2009.

I reviewed the historical price chart for crude oil, when it collapsed it 1998 to around the $10 level. History may be repeating itself. On October 1, 1998 crude oil fetched just over $16 per barrel and quickly fell to a low of $10.35 on December 21st. By May 1, 1999, prices rebounded to well over $18 per barrel. Fast forward to today, and we have crude falling from $102 from October 2nd to the mid-40s, this morning.

Obviously, the economic landscape is much more challenging today than it was in late 1999, as the economy was enthralled in early part of the dot com boom.

However, even with Chinas economy slowing and the dim economic data before us, the extent of the sell-off seems to have over shot, the same way $147 per barrel did on the upside. With more and more expansion plans being shelved by energy companies and production cutbacks from both OPEC and Non-OPEC producers looming, energy supplies will quickly tighten, as the global economy turns back up, even modestly.

Investors should also take note of the performance of the oil majors like ExxonMobil [XOM 76.60 0.33 (+0.43%) ] , Chevron [CVX 74.42 2.66 (+3.71%) ] , and BP [BP 43.52 0.19 (+0.44%) ] . Their shares prices never went hyperbolic with the price of oil, but even with the nearly $60 dollar drop from October, their share prices have been relatively stable and their recent lows probably represent long-term bottoms.

The crash in energy prices is incredibly simulative to the economy. I submit that the energy price shock of last summer had as much as anything to do with our current economic straits. Each of the last several recessions, including the relatively tame circa 2001 recession, have been preceded by a spike in energy prices.

This mornings devastating employment report, which showed a loss of 533,000 jobs, certainly represents a challenge to my thesis that prices can rebound in the first quarter of next year. However, it appears everyone from investors to hedge fund to companies are clearing the decks ahead of the New Year. With the worst of the news being put behind us, and prices declines for oil into the $30s, the case for a rebound remains

http://www.rigzone.com/news/article.asp?a_id=71745

Why We'll See $200 Oil Soon

Done marky ;) .... IMHO 2009 Will be slow things need to settle down, but oil will tic up slowly in the next 12/18 months !


The "Era of Cheap Oil Prices"
is Ending Soon ( from MoneyMorning)


When the global recession ends in 2009, all of the factors that drove oil prices to record highs last summer will again be exposed and oil prices will again hit triple digits.


Here's why oil prices will rebound and the six oil plays the best investors are making now while oil prices are at historic lows

Enjoy oil prices now while they're cheap, because a cadre of analysts is calling for oil to rise as much as 113% in 2009.

Among the many reasons oil producers, importers and exporters are bracing for a serious oil price hike !!

The "easy" oil has already been found.
The world's largest fields are declining - from the Persian Gulf, to the North Sea, to the Gulf of Mexico, to Alaska.
Two major oil exporters - Indonesia and China - have begun importing oil.
New growth in Asia is demanding nearly 10 billion barrels every year while
There's hasn't been an "elephant oil field" discovery (one that yields at least 1 billion barrels) in 40 years.
This report outlines - in plain English - when oil prices will begin climbing again and how high the top oil experts say oil prices are going to go in 2009, 2015 and 2030.

Only 113%?

'Oil storage at 25 year high'

By Upstream staff


Norway's Frontline, one of the world's biggest oil tanker owners, said today oil companies were storing "about" 80 million barrels of crude oil at sea, possibly the highest in a quarter of a century.


"We think it's about 80 million barrels...but we are not 100% certain," the acting chief executive officer Martin Jensen told Reuters.

He said some 30 to 35 very large crude carriers capable of carrying two million barrels each and 10 Suezmaxes with a capacity of a million barrels each were being used by oil companies for floating storage in the last few months.

The figures include oil tankers owned by oil companies which were being used to stockpile oil.

Jensen said most of the supertankers being used for "floating storage" were anchored in the US Gulf, with others laid up in Asia and the Middle East Gulf.

"The Iranians have some and others are around Fujairah," he said.

Oil majors and independent trading companies have booked tankers in the last three months for storage to take advantage of a steep contango in the oil market.

Major ship broking houses and industry sources contacted by Reuters since oil majors and traders began storing oil late last year give more conservative estimates for storage.

Most say oil companies are storing some 60 to 70 million barrels in total, more than 3O VLCCs worth of oil equivalent.

"The truth is no one really knows exactly how much is being stored," one said.

"We have a total of 14 VLCCs chartered in from the spot market, what the oil majors are doing with their own fleets we just don't know," he said.

Futures nudge $48 as Opec cuts bite
News wires

Oil rose towards $48 a barrel in US trade, supported partly by perceptions the supply cuts by Opec producers may have put a floor under prices.


US crude rose $1.31 to $47.78 a barrel by 1623 GMT, after earlier rising to a session high of $48.59.

London Brent was up 50 cents at $48.87 a barrel.

"Opec is cutting output, as per their December mandate, by a lot more than discounted by the market - 70% (compliance) rather than 50%," Nauman Barakat, senior vice president at Macquarie Futures USA in New York, told Reuters.

"US crude, at least technically, is showing signs of bottoming out," he said.

Gains in US equity markets also provided a more positive backdrop to the energy markets.

Key US stock market indexes advanced after a report showed the pace of sales of existing homes in the US rose 6.5% in December.

The Dow Jones industrial average, for example, was up more than 90 points.

Oil has fallen more than $100 from a record peak above $147 a barrel in July, depressed by steep falls in energy demand as the world economy slides towards recession.

The International Monetary Fund has cut its forecasts for 2009 global growth to 0.5% from 2.2% in its previous economic outlook on the world economy issued in November.

Crude had jumped more than 6% on Friday boosted by evidence that Opec was making good on most of its pledged 2.2 million barrel per day cut in production this month.

Oil rebounds on smaller stocks hope

By Upstream staff


Oil rebounded above $42 a barrel today from a 9%t fall a day ago, as worries over demand due to the faltering global economy eased.


Traders will watch for weekly US inventory data from the Energy Information Administration due later in the day, after the American Petroleum Institute reported a much smaller than expected crude stockbuild yesterday.

US crude rose 50 cents a barrel to $42.08 by 0611 GMT, and London Brent crude climbed 60 cents to $44.33.

"It's just an illiquid dead cat bounce," said Jonathan Kornafel, Asia director of US-based options house Hudson Capital Energy.

Oil prices had plunged 9% yesterday on fresh indications that the world's top energy consumer the US was still deeply mired in recession.

Consumer confidence in the world's top consumer fell to a record low in January, a survey showed, and US home prices plunged a record 18.2% in November from a year earlier, according to data from Standard & Poor's.

Governments pledged billions of dollars yesterday to rescue their battered economies, with US President Barack Obama approaching opposition lawmakers to support his $825 billion stimulus proposal.

Most Republicans in the US House of Representatives were expected to oppose the proposal, saying it needs more tax cuts and less spending, but Democrats were confident they had the votes to push it through.

Traders will also watch for the results of a key two-day Federal Reserve meeting due out later in the day, with policy makers expected to hold their target for official borrowing costs in a range of zero to 0.25%.

The global economic crisis has weakened crude demand, especially in developed economies, and knocked prices off peaks of over $147 a barrel hit in July.

US crude stocks are expected to have risen for the fifth straight week last week by 2.9 million barrels, an expanded Reuters poll showed, much higher than the 800,000-barrel build the API reported yesterday.

The API has begun releasing its weekly inventory report on Tuesday afternoons, a day ahead of the official EIA report.

Supply cuts by Opec since second-half 2008 have given oil markets some support against the gloomy demand backdrop.

Kuwait said yesterday it would support a further output cut if needed, echoing comments by some other Opec members, while smallest member Ecuador said it would comply with the production cuts agreed by the cartel.

Opec next meets on 15 March 5 to decide on output policy. Some analysts say current cuts may be insufficient to end the steep drop in prices.

"You have a tug-of-war. Opec following through hardcore (with the output cuts) has given a bit of push to the market but in the meantime it's going to be demand," Kornafel said.

http://seekingalpha.com/article/117315-using-dbo-uso-and-oil-to-play-crude-oil

wierdly wti March is down 47 and april 147 not sure why convergence like this occurs

Tue, Feb 3 2009, 17:02 GMT
http://www.afxnews.com



By John Kemp


LONDON, Feb 3 (Reuters) - Perhaps the most significant development in financial markets over the last month has been the steepening of the yield curve for U.S. Treasury debt.


Like other indicators based on market expectations, the yield curve is not an infallible guide to the future. But the shift suggests investors are beginning to brace for higher inflation rates between 2010 and 2012, with rising commodity and energy prices likely to drive the increase.


Curve steepening represents a balance between intense demand for security and liquidity in the short term, matched by longer-term concerns about the cost of bank rescues and fiscal stimulus, and possible emergence of inflation as a result of all the liquidity being pumped into the banking system .


Investors are increasingly convinced liquidity will remain too high for too long, with the Fed hesitating to end emergency programmes until there are firm signs of recovery. Whisper it quietly, but there is also widespread suspicion the Fed would welcome a modest increase in inflation as one way to ease the burden of debts which built up during the late 1990s and early 2000s.


In recent weeks, officials have considered committing the central bank to an inflation target, but seem to have rejected the idea for now. One reason is probably that it would fuel suspicions about the central bank's willingness to tolerate faster inflation, pushing bond rates up just when the Fed wants them to come down. But the other is lack of agreement on what the target itself would be.


For fifteen years, central banks have defined their loosely worded "price stability" objective as an inflation rate of about two percent. But there is nothing special about this number either in economic theory or the operating statutes.


Most economists have expressed a preference for low but positive inflation. But there is no specific reason to prefer a rate of two percent rather than three percent or four percent.


Arguably, disinflationary forces in the late 1990s caused the major central banks to set inflation targets that were artificially low and over-ambitious. Policymakers and investors became obsessed by minute changes in the measured inflation rate (down to tenths of a percentage point), blinding them to mounting signs of instability elsewhere.


So the Fed and other central banks could probably tolerate an increase in inflation to three or even four percent in the medium term, and still label it "price stability", if it would help stabilise the banking system and promote a strong and sustained recovery.




A DISTANT MIRROR


It might seem odd to be writing about inflation and rising commodity prices amid the worst slump in the global economy since the 1930s. But past experience and economic theory both point to a sharp rise in inflation and commodity prices as part of a strong cyclical recovery during the three years from 2010 to 2012.


Popular perception of the Great Depression is one long unending slump lasting a decade from the stock market crash in 1929 and ending with outbreak of the Second World War. Nothing could be further from the truth.


While the whole decade was grim, the depression was actually two separate downturns (1929-33 and 1937-39), both deep, punctuated by one of the strongest cyclical upswings on record (1934-37).


This cyclical pattern (wrenching declines in output and prices, followed by equally spectacular recoveries) was fairly typical of the economy's cyclical behaviour before the rise of post-1945 Keynesian demand management.


The chart here (https://customers.reuters.com/d/graphics/CYCLE2.pdf) illustrates the deep cyclical swings that characterised the pre-war economy, with more detail on its behaviour during the 1930s here (https://customers.reuters.com/d/graphics/CYCLE3.pdf).


Between July 1929 and July 1933, manufacturing output in the United States declined at an average rate of 7.1 percent a year. Wholesale prices fell 6 percent. What seared the "Great Contraction" of 1929-1933 into popular consciousness was not the speed of decline but the fact it went on for four long years, seemingly unendingly, and culminated in the spectacular nationwide banking failures of early 1933, in which more than 8 percent of all U.S. bank deposits became frozen in suspended banks.


But once the economy stabilised in early 1933, a powerful cyclical recovery got underway. From July 1933 to the next peak in July 1937, output surged by an average of 9 percent a year, while wholesale prices rose 6 percent.


By the July 1937, wholesale prices had reversed about three quarters of their previous decline and were fast approaching levels that had prevailed at the end of the Roaring Twenties.


Crucially, reflation was driven by raw materials. Between 1933 and 1937, steel prices rose 40 percent. By 1937 billet was more expensive than before the crash. The price of copper halved between 1928 and 1933. But by 1937 it had risen almost 90 percent, and was fast approaching the pre-slump level.


Consumer prices rose half as fast (3.4 percent per year) as producer ones (6.4 percent per year). But the surge in steel, especially in 1936 and the first half of 1937, was enough to convince Fed officials policy needed to be tightened.


Senior officials were particularly worried rising materials prices would intersect with the large amount of excess liquidity in the banking system to fuel even further price increases in future. The Fed estimated U.S. banks were holding around $3 billion of potentially inflationary "excess reserves". So the central bank set out to drain the system, hiking reserve requirements three times in the space of less than a year, from 13 percent to 26 percent.


The direct result was previously excess reserves were "absorbed" and suddenly became required ones. The indirect one was a massive crippling contraction in credit. Subsequent observers have accused the Fed of killing the recovery, tipping the economy into a renewed and vicious recession from which it did not fully recover until the onset of war.


For a full discussion of the cyclical credit and commodity dynamics of the 1930s see the chartbook here (https://customers.reuters.com/d/graphics/DSTMIRROR.pdf).


Bernanke is unlikely to want to repeat the error. If commodity and energy prices begin a strong recovery in 2010-12, the Fed will almost certainly deflect calls to raise interest rates and withdraw excess liquidity, claiming it is a one-off realignment rather than ongoing inflation.


Experience in the 1930s as well as more recently, suggests the Fed will accommodate raw materials prices rather than risk ending the expansion prematurely. Liquidity conditions will remain highly favourable to commodity-driven reflation.


The full-impact of second round effects of the recession (as job losses and fear dampen consumer spending, and investment falls) have yet to be felt. But downturns do not last forever. The average business cycle contraction in the United States has lasted 17 months. Only one contraction in the modern era (1929-1933) lasted more than two years, and that was compounded by policy errors that led to the almost total evisceration of the banking system, which have not been repeated.


With the banking apparently stabilising, albeit on central bank life-support, and the current downturn starting in December 2007, it is reasonable to assume the cyclical trough will occur sometime in H2 2009.


Once activity has hit the trough, past experience suggests a powerful rebound, driven by the need to rebuild depleted inventory along the supply chain, and accompanied by a resurgence of raw materials prices.


While commodities are unlikely to regain frothy peaks recorded in the first half of this year, the normal recovery pattern makes it quite conceivable they will regain the relatively high levels reported in 2006 and 2007 (ie crude oil prices of $60-100 per barrel) by 2012-2013.


In a policy environment that will prioritise growth and jobs, the Fed could easily re-label an inflation rate of 3 or even 4 percent as consistent with stable prices, noting it is a recovery from a low base, and tighten only slowly, even as raw materials prices climb.

Opec warns of demand dive
News wires

World oil demand will contract more than expected this year due to the deepening economic crisis, Opec said today, an outlook that may bolster the case for further supply cuts.


Opec said global demand will fall by 580,000 barrels per day in 2009 to average 85.13 million bpd. Its previous forecast was for demand to contract by 180,000 bpd.

Oil use is falling this year and in 2008, the first drop in more than 20 years as recession triggered by the banking crisis spreads through all continents. Crude prices have fallen below $40 a barrel from a record near $150 last year.

"World oil demand continues its steep decline from last year and is expected to follow this strong negative pattern at least for the first three quarters of the year," Opec said in its monthly report written by its economists.

Still, Opec's prediction of falling demand is less severe than that of the International Energy Agency, adviser to consuming countries, which said on Wednesday that consumption in 2009 would fall by 980,000 bpd.

Slumping demand is leading to higher oil inventories, which Opec said were likely to weigh on prices as demand slows for seasonal reasons later in the year.

A US government report on Wednesday showed crude stocks in the world's top consumer rose for a seventh consecutive week to 350.8 million barrels.

"The high and growing stock levels - particularly for crude oil-- are likely to continue to disrupt the overall stability of the market," the Opec report said.

"Their impact will become even more pronounced with the onset of low seasonal demand as well as the upcoming refinery maintenance period."

Opec now expects demand for its oil to fall "significantly" in 2009 by 1.7 million bpd compared to 2008. That is steeper than its previous forecast of a year-on-year fall of 1.4 million bpd.

The group has agreed at meetings since September to cut its oil output by 4.2 million bpd, equal to 5% of daily world demand, to combat the slump.

In January, the 11 members subject to production cut deals, all excluding Iraq, cut output by 965,000 bpd to 26.33 million bpd, according to data from secondary sources cited by Opec in the report.

Production remains above Opec's 24.84 million bpd implied target and the cutback indicates that Opec met 65% of its pledge to lower output, according to a Reuters calculation based on the producer group's data.

Opec oil ministers are next scheduled to meet to set policy on 15 March in Vienna.

Crude hits $43 as UAE cuts Asia supplies
News wires

Oil rose to $43 a barrel today after the United Arab Emirates announced deeper cuts in crude supply to Asia for April in a possible signal that Opec will cut output further at its next meeting in March.


Abu Dhabi National Oil Company (Adnoc), the main oil supplier in the UAE, said it will sell customers less of its flagship Murban crude oil and three other main grades in April than in March.

The move came as a surprise to traders, who had expected the UAE to keep April supply curbs largely unchanged.

US crude for April delivery was up 60 cents at $43.10 a barrel by 0937 GMT, after surging $2.54 on Wednesday.

London Brent crude gained 50 cents to $44.79.

Edward Meir, analyst at MF Global in New York, told Reuters the market was expecting further cuts in Opec production:

"Crude oil prices could work slightly higher from here, (likely in fits and starts), as we approach the Opec meeting, and as participants begin to discount another likely cut," he said.

"However, even if Opec was to go ahead with its cut, we have our doubts that prices will move substantially above the $50 mark; that seems to be a fair price for oil right now given the poor macro backdrop," Meir added.

US crude futures jumped more than 6% on Wednesday after US government data showed a larger-than-expected drop in gasoline stocks as demand rose on cheaper prices.

The US Energy Information Administration said gasoline stocks fell 3.4 million barrels in the week to 20 February, against a forecast for just a 100,000-barrel draw.

The data also showed a 1.7% rise in US gasoline demand over the four weeks ending 20 February, as low gasoline prices lured US motorists back on the roads.

This helped oil shrug off a drop in US equities markets, which fell after US President Barack Obama's first address to Congress shed little new light on how he plans to stabilise the economy and shore up banks.

European shares hit a six-year low on Wednesday but recovered on this morning.

Abu Dhabi's move to cut allocations may pre-empt a decision by Opec to cut more when the group meets in Vienna in March.

Reports this week have shown high compliance by Opec members on production cuts agreed last year to stem the slide in oil.

Opec has promised to cut 4.2 million barrels per day from its production levels in September and surveys suggest its members have implemented almost all of their cuts.

Venezuelan Finance Minister Ali Rodriguez, a former president of Opec, said his country expected to propose new output cuts.

Global energy consumption has collapsed as the financial crisis has thrown most major economies into recession, bringing oil prices down more than $100 since their peak in July.

Financial markets are awaiting data on US weekly jobless claims and January durable goods orders at 1330 GMT, which are likely to show slumping business investment and rising unemployment in the world's top oil consumer.

U.K. Stocks Fall, Led by Energy Producers

March 11 2009 -- U.K. stocks fell for the first time in four days, led by energy producers and utilities as Tullow Oil Plc reported a drop in oil and gas production and International Power Plc said lower prices will hurt profitability in 2009.

Tullow Oil lost 3.1 percent, snapping three days of gains, as crude oil fell. Cairn Energy Plc slid 4.2 percent after the company announced a share sale. International Power lost 4.3 percent as the company said it faced a near term challenge in the U.K. and the U.S.

The FTSE 100 Index dropped 16.52, or 0.4 percent, to 3,698.71 in London at 9:25 a.m., having gained 4.9 percent yesterday. The FTSE All-Share Index lost 0.4 percent, while Irelands ISEQ Index fell 1.6 percent.

After yesterdays stellar gains the market will do well just to consolidate, said London-based trader Paul Chesterton at CMC Markets. We saw a pull back in the oil price overnight and some weakness in commodity and energy stocks.

Tullow oil lost 2.3 percent to 794 pence. The company, which today posted a fourfold increase in earnings to 223.2 million pounds ($306 million), said oil and gas production fell 9 percent to 66,600 barrels of oil.

The oil producer this week said it raised $2 billion in loans from 14 banks to fund developments and refinance debt.

BG Group Plc, the U.K.s third-biggest natural gas producer, fell 1.5 percent to 984 pence as crude oil fell in New York, extending yesterdays 2.9 percent decline, amid speculation a government report today will show U.S. inventories gained as demand weakened.

Shell Retreats

Royal Dutch Shell Plc, Europes largest oil company, declined 1 percent to 1,564 pence.

Cairn Energy dropped 4.2 percent to 1,792 pence as the U.K. oil and gas explorer in India said it plans to place up to 6.5 million shares to help strengthen the companys equity capital base.

International Power declined 4.3 percent to 196.1 pence. The British utility that produces electricity in 20 countries said the company faced challenges from weaker prices in the U.K. and the U.S.

There is some concern around the outlook in the U.S., Nathalie Casali, a London-based analyst at JPMorgan Chase & Co. said in a telephone interview today.

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/current/txt/wpsr.txt

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) increased 0.7 million barrels from the previous week. At
351.3 million barrels, U.S. crude oil inventories are above the upper limit of
the average range for this time of year. Total motor gasoline inventories
decreased by 3.0 million barrels last week, and are in the lower half of the
average range. Both finished gasoline inventories and gasoline blending
components inventories decreased last week. Distillate fuel inventories
increased by 2.1 million barrels, and are above the upper limit of the average
range for this time of year. Propane/propylene inventories decreased last week
by 0.6 million barrels and are above the upper limit of the average range. Total
commercial petroleum inventories increased by 2.6 million barrels last week and
are above the upper limit of average range for this time of year.

Betting on big oil's comeback



By Mina Kimes, reporter



With crude down below $45 a barrel, it's hard to see the beauty in oil stocks these days. But with analysts forecasting a rebound in prices, now might be a good time to buy.

"Right now, the upsides in the oil sector far exceed the downside risks," says Fadel Gheit, an analyst at Oppenheimer & Co. "I am absolutely convinced that oil prices will rise."

After last year's $100 free-fall rocked expectations, that kind of confidence is surprising. But Gheit is not alone; a strong consensus is growing for a price rebound. While crude isn't likely to rocket back to the sky-high levels of 2008, even bearish analysts admit that oil can't stay below $50 for long.


As demand and prices drop, producers are drastically cutting back on spending, and OPEC is moving quickly to cut supply. The market is currently over-saturated, but when the commodities market sniffs out the coming deficit, prices will rise again, say analysts.

"We see oil consumption in 2010 being close to what it is in 2009, but production will be down," says Ed Maran, the co-portfolio manager of Thornburg Value Fund. "There's a potential for a shortage in 2011, and it's entirely possible that we could be back up to $100 oil."


Maran thinks demand will return when the global economy recovers, led by oil-hungry countries like China and India. The industry faces political headwinds from the new administration, but few analysts believe that alternative options will satiate the demand for energy in the near future.

Exxon: a league of its own

Exxon Mobil, the world's largest oil and gas producer, stands to benefit if prices rise, but it is also unlikely to suffer much if they don't climb in the near term. "If the economy recovers but oil prices don't exceed $60 -that's the perfect environment for Exxon Mobil," says Gheit. While other companies need higher prices to boost profits, Exxon can reap the benefits of a smaller boost.

Some analysts don't like Exxon's limited upside. Because of the company's massive market cap, it will only react so much to rising prices. Goldman Sachs' Arjun Murti compared it to U.S. Treasuries because of both securities' perceived safety.

"You won't see a lot downs - or ups - because Exxon is so widely held and has such diverse operations," says Allan Good, a Morningstar analyst. "If oil shoots back up, Exxon isn't the best company to take advantage of the upside."

At an analyst presentation on Thursday, Exxon said it plans to boost its spending to $29 billion in 2009. CEO Rex Tillerson highlighted the company's exploratory potential, but Gheit read something else between the lines. "They're going to make a large acquisition," he says. "It's going to happen soon."

As the valuations of smaller companies drop, Gheit says Exxon could scoop up another producer at great discount. The company has enough money to buy any of its competitors - in combination - but would likely face regulatory opposition if went after another large producer.

Until then, Good says investors can take comfort in Exxon's $31 billion in cash. "Park your money there and get a nice return off of the dividend." The company is expected to raise its dividend soon to compete with companies like BP, which currently offers a whopping 9.5% yield.

Opportunities across the board

Other large stocks stand ready for a rebound. ConocoPhillips, whose shares have fallen 57% over the last year, has a price to earnings ratio of 9 versus Exxon's 13. The company has a large amount of refining exposure, which hurt its bottom line in 2008 because of rising oil prices and slowing consumption.

Maran says that ConocoPhillips was unfairly penalized because of its partnership with Lukoil and its expulsion from Venezuela. Investors are worried about political risk - an overreaction, he says, and one that's likely to change if more countries invite foreign companies in to revive their flailing economies.

Another big producer analysts say is undervalued is Petrobras, which discovered a series of mega-fields off of the Brazilian coast two years ago. Goldman's Murti recently wrote that Petrobras "may be the best positioned major oil company in the world for the next oil price upcycle."

It's still unclear how much the company's offshore find is worth, but Don Coxe, a longtime oil guru who now runs Coxe Advisors, likes what he sees. "Petrobras is a special story, and investors want to be a part of it," he says. "They could find $25 billion worth of oil down there."

For investors who are willing to dip their toes into less familiar territory, a variety of small, "beta" oil stocks could pop if prices go up. Gheit prefers Anadarko and Devon Energy for their strong exploration portfolios. While it's not wise to bet on acquisitions, he warns, they could be targets for companies like Exxon - when prices are this good, retail investors aren't the only ones eyeing oil stocks.



http://cnnmoney.mobi/money/archive/archive/detail/130649/full;jsessionid=C9D278E44BFC39B95F4F40EB76A45FC0#p1

US crude oil rallied above $47 on Monday, tracking earlier gains on Wall Street, and as traders cheered comments from Fed chairman Ben Bernanke that the US recession may finish by the end of the year.

Light, sweet crude for April delivery settled up $1.10 at $47.35 a barrel in New York. Earlier in the day, oil fell more than 3% to under $44 a barrel as traders mulled OPEC's decision on Sunday not to make further production cuts. Its next meeting is in May.

As the session progressed a weaker dollar and strengthening equities buoyed demand for the black stuff.

Reports of a militant attack on a Chevron oil pipeline in Nigeria also gave oil prices a lift. The sabotage could, it has been estimated, reduce output by 11,500 barrels per day.

US crude oil settled at a three month high on Tuesday after data showed housing starts surged 22% from Januarys figure despite expectations of a decline.

Its the first time housing starts have risen since last June. Meanwhile builder permits, which is a measure of builder confidence, also rose 3%, confounding expectations of a decline.

Separate inflation figures came in lower than expected. Oil traders cheered the days economic data and a day of gains on Wall Street.

US light crude oil for April delivery added $1.81 to settle at $49.16 a barrel. Oil prices were also pushed higher ahead of the expiry of Aprils contract.

Expectations that data out Wednesday will show an increase in weekly crude inventories also buoyed demand for oil.

Oil prices settled over $1 lower on Wednesday at the end of the Federal Reserves two day meeting in which the central bank said it would buy up to $300bn in treasury bonds over the next six months.

As expected interest rates were kept on hold at its record low.

US light crude oil for April delivery dropped $1.02 to settle at $48.14 a barrel.

Traders also mulled the weekly inventory report from the Energy Information Administration.

The data showed stockpiles of gasoline soared last week by 3.2m barrels, confounding expectations of a 2.1m barrel decline. The report also showed an increase of 2m barrels in crude inventories while distillates, used in diesel and heating oil, increased by 100,000 barrels.

when does the April contract close? or has it already?

Oil prices surged 7%, breaking clear the $51 barrier, after the government announced it would spend another $1 trillion to boost the economy.

The US Federal Reserve chief Ben Bernanke unveiled a $300bn treasury bond buy-back plan as part of a new $1.15trn package to rejuvenate the US economy on Wednesday.

The move continued to hit the dollar on Thursday, which has pushed higher the dollar-denominated crude.

Crude prices surged $3.47 to $51.61 a barrel.

The lower dollar has also buoyed other commodities, including gold. The move by the Fed to pump more money into the system will also push inflation and that too is seen as a driving factor for gold, which is traditionally seen as a hedge against inflation.

Hopes of a US economic recovery pushed crude oil prices higher on Monday after proposals from US Treasury Secretary Timothy Geithner for a $1trn debt plan.

US light crude oil for May delivery rose $1.73 to end the day at $53.80 a barrel on the New York Mercantile Exchange.

Oil also tracked a strong session on Wall Street, with the Dow leaping almost 7%, its strongest gain since last November. Hopes of an economic recovery of course sparked hopes of a recovery in oil demand. Earlier in the session it rose to a high of $54.05.

Details of the governments plans to mop up banks toxic assets were enthusiastically received and optimism about an economic recovery ran high on Monday.

While oil prices rose on Monday, analysts expressed concern about the large amount of crude stockpiles, as shown in last weeks Energy Information Administration report. These excess levels of crude oil are expected to keep oil's gains in check.

US crude oil edged lower on Tuesday on rising expectations that weekly inventory data will show an increase in crude stockpiles while the strengthening dollar also added pressure.

US light crude oil for May delivery fell 18 cents to settle at $53.98 a barrel. Earlier in the session it fell to a low of $52.45.

Wednesdays Energy Information Administration is expected to show an increase of 1.1m barrels in crude stockpiles signalling demand for the black stuff is still weak as consumers grapple with the economic downturn.

Among precious metals gold prices fell once again as the greenback rose against major currencies. COMEX gold for May delivery fell $29.10 to settle at $924.70 an ounce.

The yellow metal also suffered some profit taking following last weeks gains.

US driving season starts mid-late May. Wonder what effect that might have this year.

Would have thought less consumption BA but there again, also a bit to far away to contemplate for me at the moment.

----------------------------------------------------------------------------------------------------------

Oil prices came under pressure on Wednesday but settled off earlier lows after the governments weekly report showed a much bigger than expected build in energy stockpiles.

The Energy Information Administration said crude inventories rose 3.3m barrels last week compared with expectations of a 1.4m barrels increase.

Gasoline inventories fell by 1.1m barrels in the week while forecasts had been for a decrease of 900,000 barrels. Meanwhile distillate, which is used in diesel and heating oil, fell by 1.6m barrels, bigger than the 200,000 barrels decline expected.

Some surprisingly strong US economic data lifted crude prices off the days lows. New home sales figures climbed 4.7% in February to a seasonally adjusted annual rate of 337,000. The Commerce Department said orders for US made durable goods rose 3.4% in February, its first rise in seven months.

US light crude oil for May delivery fell $1.21 to settle at $52.77 a barrel. Before the stockpile and economic data crude traded around 4% lower.

The worst US GDP data for 26 years sent investors scurrying for the safety of gold, pushing the April futures contract up to $940, up $4.20 on the day.

US GDP fell by an annual rate of 6.3% in the final quarter of last year, worse than the initial read of 6.2% but better than consensus forecasts from economists of a 6.6% fall.

Meanwhile, the appeal of gold as a safe asset was further enhanced by news that the total number of US unemployed rose to a record 5.56m, although the dollars strength limited the extent of golds gains.

The oil price was also on the rise, with the April contract rising above $54 a barrel, reversing Wednesdays losses when the Energy Information Administration revealed that crude inventories rose by 3.3m barrels last week.

US crude oil settled almost $2 lower on Friday, settling under $53 a barrel as traders took profit on the previous sessions gains.

US light crude oil for May delivery fell $1.96 to settle at $52.38 a barrel on the New York Mercantile Exchange.

A decline on Wall Street, weak economic data, higher than expected weekly crude stockpile data and a stronger dollar also pressured oil prices. Weak retail sales data from Japan and grim US employment data renewed concern about the global economic outlook.

Otherwise crude has enjoyed six straight weeks of gains on hopes that fiscal stimulus from the US and other nations will help stimulate demand for oil.

Among precious metals gold fell on Friday as the dollar strengthened against major currencies. Gold for June delivery fell $16.90 to end at $925.30 an ounce.

Nymex $48.25 heading down oil stocks rising, demand falling, time to get out of oilies?

Maybe, maybe not h.

Oil prices rose on Tuesday, tracking gains on Wall Street, as financials dusted off the previous sessions losses and commodity stocks enjoyed a broad recovery.

Gains came despite economic data showing a slump in US house prices while a Consumer Confidence Index report showed a slight rise in March from the previous month.

US light crude oil for May delivery rose $1.49 to settle at $49.90 a barrel on the New York Mercantile Exchange.

The weaker dollar also underpinned demand for crude which had fallen by almost $4 a barrel in the previous session.

Overall sentiment was high on Tuesday as Wall Street posted its best monthly performance in six years.

After the massive profits producers were making with oil @ $100 plus, and those same producers now suffering due to reduced oil usage/lower oil price, I think it's only a matter of time before output is cut further, thus sqeezing the oil price upwards to around $70 - $80 this year, imo of course.
2517

Nymex back up to $50 halifax. Looks like you were wrong.

Make that $51. Looks to be heading up rather than down?

Oil prices fell on Wednesday after a weekly government report showed an increase in crude supplies.

Gloomy economic data also dented appetite for oil. According to the latest ADP employment index US private-sector firms slashed 742,000 jobs in March.

Meanwhile the Energy Department said crude supplies rose by 2.8m barrels over the last week bringing crude inventories to their highest level in 16 years although analysts had pencilled in an even bigger increase of around 3.2m barrels.

Supplies of gasoline rose by 2.2m barrels while distillates, used in domestic heating oil and diesel, rose by 300,000 barrels.

Oil prices fell by over $2 to a session low of $47.26 following the report but a rally on Wall Street stemmed bigger losses. US light crude oil for May delivery settled down $1.27 at $48.39 a barrel on the New York Mercantile Exchange.

Oil Rises Above $50 on Signs Economic Slump May Be Stabilizing
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By Grant Smith

April 2 (Bloomberg) -- Crude oil rose the most in two weeks, climbing above $50 a barrel on signs the world economy is stabilizing as leaders of Group of 20 nations meet in London to address the financial crisis.

OPEC Secretary-General Abdalla El-Badri said at a conference in Paris oil prices are bottoming out, while Goldman Sachs Group Inc. raised its 2009 Brent forecast on evidence that demand destruction has peaked. U.S. Treasury Secretary Timothy Geithner yesterday noted encouraging signs of a recovery in financial markets.

Demand is not going to fall as much as some of the doom- sayers have been saying, said Gareth Lewis-Davies, an analyst at Dresdner Kleinwort Group Ltd. in London. What were seeing now is the rate of decline in demand in developed economies decelerating, which of course has to happen before a recovery.

Crude oil for May delivery advanced as much as $3.14, or 6.5 percent, to $51.53 a barrel in electronic trading on the New York Mercantile Exchange. It was at $50.95 a barrel at 12:32 p.m. in London. Oil is up 14 percent this year.

Stocks in Europe and Asia rallied, driving the MSCI World Index higher for a third day, while the Group of 20 summit convenes today in London. U.S. durable-goods orders and home sales rose in February, Chinese urban investment surged 26.5 percent in the first two months of the year, and German investor confidence in March reached its highest level since July 2007.

Inventories Rise

Youre seeing encouraging signs of improvement in our markets, Geithner said yesterday in a Bloomberg Television interview in London, where he is attending the meeting with President Barack Obama.

Still, other data is showing that global oil inventories are rising as fuel demand falters because of the recession.

U.S. crude inventories climbed 2.84 million barrels in the week ended March 27 to the highest since July 1993, the Energy Department said. Gasoline supplies unexpectedly rose by 2.23 million barrels to 216.8 million barrels.

Total daily fuel demand averaged over the past four weeks was 18.9 million barrels, down 4.4 percent from a year earlier, the report showed. It was the lowest consumption for a four-week period since October.

Goldman Sachs said Brent crude oil prices may reach $50 a barrel this year, up from an earlier estimate of $45, because of OPECs production cuts.

The Organization of Petroleum Exporting Countries cut oil output by 1.2 percent to an average 27.395 million barrels a day last month, according to a Bloomberg News survey of oil companies, producers and analysts. The 11 OPEC members with quotas, all except Iraq, pumped 25.06 million barrels a day, 215,000 more than their target of 24.845 million.

Ailing Economy

OPEC, in a meeting March 15 in Vienna, decided against cutting production targets further because of concern higher prices might harm an ailing global economy. Ministers pledged to tighten compliance with their quotas after crude oil fell more than $100 a barrel from the July record.

Brent crude for May settlement rose as much as $3.20, or 6.6 percent, to $51.64 a barrel on Londons ICE Futures Europe exchange. It was at $51.36 a barrel at 12:23 p.m. London time.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net.

Last Updated: April 2, 2009 07:37 EDT

Oil prices jumped above the $50 barrier, tracking the gains seen in equities as hopes of an economic recovery gained momentum.

Much of the gains were achieved after leaders at the G20 summit in London agreed to a plan that puts the International Monetary Fund at the heart of efforts to kick-start the ailing global economy.

The G20 nations will make $750bn available for the IMF to rescue struggling economies, compared with $250bn previously.

Stocks jumped on the news and on changes in bank accounting rules.

Crude prices benefited because a recovery in the economy will increase demand for oil. US crude for May delivery ended the day up $4.25 at $52.64 a barrel.

$53/barrel now.

Crude settled lower on Friday after government data showed a further 663,000 Americans lost their jobs in March, bringing the total number of job losses during the recession to over 5m. The figure was more than analysts had expected.

The unemployment rate rose in line with market expectations to 8.5% from 8.1% in February, a 25-year high.

US light crude oil for May delivery fell 13 cents to settle at $52.51 a barrel on the New York Mercantile Exchange on Friday.

Thursdays sharp rally, sparked by enthusiasm over the G20s promise of $1trn to boost lending and trade, however brought the contract slightly higher for the week.

Crudes decline on Friday was also stemmed by gains on Wall St, despite the jobs data, with many analysts explaining the downbeat data had already been factored into the market.

A decline on Wall Street, led by financials, hurt oil prices with US light crude oil for May delivery settling down $1.46 at $51.05 a barrel on the New York Mercantile Exchange.

Renewed concern about the outlook for financial companies pressured demand for oil as investors prepare themselves for the start of the first quarter earnings season.

Results are expected to be disappointing and it was this trepidation and renewed concern about the economic outlook that took oil prices lower. Earlier Monday crude for May fell to a low of $49.81 a barrel.

In recent weeks oil prices have enjoyed solid gains on hopes that the worst of the economic downturn is now over and government stimulus should bring a recovery. However as optimism faltered Monday, so did oil prices.

Gold also fell as the dollar rose and investors sought out riskier investments. Comex gold for June delivery fell $24.50 to settle at $872.80 an ounce, marking its third day of consecutive declines.

Crude oil moved below $50 a barrel on Tuesday as Wall St experienced its second day of declines as jitters over the first quarter earnings season set in.

Disappointing results from Alcoa and comments from billionaire financier George Soros that Marchs rally will not last had investors heading for the door.

US light crude for May delivery settled down $1.90 at $49.15 after dropping to a low of $48.89 earlier in the session.

Expectations that there will be another build in crude oil inventories also pressured demand for the black stuff amid weak demand. Analysts are expecting data from the US Energy Information Administration to show a further 1.9m barrel rise in crude stocks. Supplies are already running at a 16-year high.

The strengthening dollar also hurt demand for oil.

US crude oil prices rose on Wednesday after a weekly government report showed a smaller than expected rise in crude supplies.

Crude inventories rose by 1.7m barrels in the week ended 3 April, according to the Energy Information Administration. Analysts had pencilled in an increase of 2.3m in crude stockpiles.

Gains on Wall St also lifted demand for oil as investors shrugged off gloomy comments from the Federal Reserves minutes and a weak session for banking stocks.

US light crude oil for May delivery settled up 23 cents at $49.38 a barrel on the New York Mercantile Exchange. The contract had started the day on weak footing at a low of $47.37 but after the release of the weekly energy report, prices marched higher.

The report also showed gasoline stockpiles rose by 600,000 barrels, less than the 1.5m barrels predicted by analysts. Meanwhile distillates fell by more than expected. Supplies fell by 3.4m barrels despite predictions of a 600,000 barrel decrease.

when is the monthly completion date? has it passed?[ i think it is around the 20th of the month[ is this the reason for the drop in oil price today?
Alex

Last Wed was May expiry if I remember rightly, it followed markets lower today despite a couple of Iran/Korea rumours over weekend

Bunch of stuff on oil here: Good site and new. http://www.tradinghelpdesk.com

Sorry was talking rubbish re. May expiry,it's tomorrow
http://www.forbes.com/feeds/reuters/2009/04/20/2009-04-20T180812Z_01_SYD428032_RTRIDST_0_MARKETS-OIL-UPDATE-9.html

US crude futures soared past the $50 a barrel level again on Friday, taking its cue from higher equities.

Better-than-expected results gave stocks a boost and raised hopes that the worst of the economic problems may be over, which will increase the demand for oil.

Also giving a helping hand was the weaker dollar, as crude is traded in the US currency. The euro moved ahead against the dollar, which also fell against the Japanese yen.

Crude for June delivery settled up $1.93 to $51.55 a barrel.

Gold prices rose for the third day in a row on Friday due to the weaker dollar and after China revealed its gold holdings

Concern about the deadly swine flu weighed on oil prices and triggered a wave of last minute selling on Wall Street Monday.

The World Health Organization called the flu, which is a respiratory disease affecting pigs, a "public health emergency of international concern." The flu has killed 103 people in Mexico.

US light crude oil for June delivery fell $1.41 to settle at $50.14 a barrel on the New York Mercantile Exchange. Earlier in the session the contract tumbled to a low of $48.01 a barrel on fears the economic recovery could be held back by the flu.

The stronger dollar also weighed on crude as investors sought safe haven investments.COMEX gold for June delivery fell $5.90 to settle at $908.20 an ounce as investors turned to the greenback instead.

Industrial metals such as copper fell over 3% on Monday on concern that the spread of swine flu will dampen economic recovery.

Travel fears, amid growing concern about the spread of swine flu, weighed on oil demand on Tuesday. Traders are worried that the outbreak will impede economic recovery and further chip away at demand for the black stuff.

US light crude oil for June delivery fell 22 cents to settle at $49.92 a barrel on the New York Mercantile Exchange. The June contract, which has lost 4% in two days, traded as low as $48.55 but recovered a bit as US stocks mustered late gains following a better-than-expected consumer confidence report and encouraging house price data.

Oil prices, down sharply from their peak of $147 last summer, have been driven down as the global recession eats into demand. Later today the weekly government report on US supplies is expected to show another increase in stockpiles amid weak demand for oil. Analysts expect US crude stocks to have risen by 1.8m barrels last week.

Among precious metals gold futures fell again on Tuesday, amid a broad commodities sell-off, and following its rally to over $900 an ounce. COMEX gold for June delivery fell $14.60 to settle at $893.60 an ounce.

Gold has also been weakened by a drop in physical demand with gold sales in India, the worlds largest consumer of the yellow metal, down up to 40% as buyers tighten their purse strings amid the global economic downturn.

US crude oil ended higher, tracking gains on Wall Street and after a government report showed a surprise decline in gasoline supplies.

US light crude oil for June delivery rose $1.05 to settle at $50.97 a barrel.

Traders were also reassured that the Federal Open Market Committee kept interest rates at near zero and said that while the outlook had improved in the last month, the US economy was expected to remain weak for a while.

In its weekly inventory report the Energy Information Administration said gasoline supplies declined by 4.1m barrels in the week ended 24 April. Analysts had pencilled in a rise of 900,000 barrels.

Crude stockpiles meanwhile showed a bigger than expected rise. Supplies rose by 4.1m barrels instead of the 1.8m barrels forecast. The report also showed distillates rose by 1.8m barrels, bigger than the predicted 1.3m barrel increase.

US crude oil futures settled higher Thursday, after a volatile session, as traders weighed up another increase weekly stockpiles against signs that the economic downturn is slowing.

US light crude oil for June delivery rose 15 cents to settle at $51.12 a barrel on the New York Mercantile Exchange.

The Labor Department showed initial claims in the week ended 25 April fell 14,000 to 631,000 despite analyst expectations of a 645,000 increase in claims.

Tentative signs of improvement in the jobs market were however weighed down by the Energy Information Agencys monthly petroleum report, which showed a decline in demand for crude in February from the month before.

Among precious metals Comex gold for June delivery fell $9.30 to settle at $891.20 an ounce. The strengthening dollar weighed on the yellow metal as did optimism about an economic recovery.

Gold stable and oil up almost 2$.....anybody like me thinking that the dollar is about to start dropping...I mean : how can you print a trillion's worth without diluting the currency ?.

Shorts will close before a long weekend,just in case of Geopolitical, Required which will make oil rise. Apparently holiday periods usually involve countertrend moves, though if markets tank usd/yen will strengthen

Crude, gold and dow up !; this !, if it continues, bodes well for tomorrow's "morning footsie" !.

1200 point rise on the Hang Seng they must be euphoric!

US crude oil futures settled above $54 a barrel on Monday, to a five month high, on renewed optimism about an economic recovery.

Upbeat US housing and construction data fuelled hopes that the US economy is stabilising.

Meanwhile encouraging data from China also gave investors fresh hopes of a recovery. The US and China are the worlds two biggest oil consumers.

US light crude oil for June delivery settled up $1.27 at $54.77 a barrel on the New York Mercantile Exchange.

Among precious metals gold broke the psychologically important $900 an ounce level, helped by the weaker dollar.

US crude oil futures settled lower on Tuesday, snapping its five session winning streak, as Wall St turned lower and traders await the EIAs weekly data on US stockpiles.

Supplies are expected to have risen again after touching almost a 20-year high last week.

Concern about weak demand also crept back in as Federal Reserve chairman Ben Bernanke gave a mixed outlook on the economy. While he expects economic activity to bottom out, then to turn up later this year he also cautioned that the recovery would be slow, adding that unemployment is likely to rise further.

US light crude oil for June delivery fell 63 cents to settle at $53.84 a barrel on the New York Mercantile Exchange. Crude touched $54.47 a barrel on Monday, its highest level this year so far as investors cheered better than expected economic data.

Among precious metals gold settled modestly higher amid a volatile session on Wall St as jitters set in ahead of the results of the US stress tests on Thursday.

Crude surged to over $56 a barrel, nearly a 6-month high, after a government report said crude stockpiles rose by 600,000 barrels in the week to 1 May, less than analyst forecasts.

Crude supplies were expected to rise by over 2m barrels. The Energy Information Administration said gasoline stockpiles rose by 600,000 barrels less than forecasts of a 750,000 increase.

Oil prices were also given a boost by a strong performance among US equities and after two encouraging job reports sparked hopes that the US economy is starting to stabilise.

US light crude oil for June delivery rose $2.50 to close the session at $56.34 a barrel on the New York Mercantile Exchange, the highest settlement since 14 November 2008.

Oil prices have been hovering around the $50 a barrel mark for sometime now, down sharply from last summers high of almost $150, but amid optimism about an economic recovery and hopes of an increase in future oil demand, futures have gained around 10% in the last month.

Have just been told that Rotterdam is at maximum capacity for storage & now tankers at anchor are being used as temporary storage facitities, due to very high crude stockpiles. I am amazed that the crude price continues to hold so high given the glut at the moment.

American driving season about to start plus hurricane season coming ?

Possible new quota's to be set by OPEC later this month.
2517

It seems the price of oil is being rigged once again like it was when it shot up to $147 last year must be the saudis and the russians making the chinese pay!

Oil finished higher in New York Thursday, but way off its best levels as traders grew nervous about economic recovery prospects ahead of todays US jobs data.

A better than expected weekly jobless claims figure had helped the black gold surge as much as 4% at one stage, up to $58.57 a barrel. New jobless claims fell to 601,000, their lowest level since January and down from 631,000 the previous week.

US light crude for June delivery ended the session 37 cents better at $56.71 a barrel on the New York Mercantile Exchange, still up 6% on the week so far.

On the metal markets, gold rose for the fourth day in a row, topping $920 an ounce at one stage as the European Central Banks decision to cut rates to an all-time low of 1% raised inflation fears.

Its accepted that gold offers protection against inflation. Gold for June delivery added $4.50 to $915.50 an ounce in New York

THANKS STAN.

..Not at all XST -):

US crude oil rose above $58 a barrel on Friday as traders welcomed signs that the US job market is starting to stabilise and Thursdays stress tests showed banks to be in better shape than previously thought.

US light crude oil for June delivery climbed $1.92 to settle at $58.63 a barrel on the New York Mercantile Exchange, its highest settlement since 11 November.

Non-farm payrolls data showed 539,000 jobs went last month versus forecasts for 600,000 and a revised 699,000 for March, government figures showed.

A rally on Wall Street also underpinned demand for oil, as did other upbeat reports during the week on the housing market, consumer sentiment and manufacturing activity. There are renewed hopes that oil demand will make a recovery amid signs of economic improvement.

Among precious metals gold turned lower Friday as demand for safe haven flows faded. COMEX gold for June delivery fell 60 cents to settle at $914.90 an ounce.

US crude oil futures retreated Monday as profit takers moved in after prices hit a six-month high on Friday.

US light crude oil for June delivery dropped 13 cents to settle at $58.50 a barrel at the start of the week on the New York Mercantile Exchange.

Oil prices also mirrored a decline on Wall Street as profit takers also took a chunk out of the financial sector following the recent rally.

On Friday oil prices settled at $58.63 a barrel, its highest settlement since November 2008 on optimism about economic recovery in the US following upbeat data.

However with economic news thin on the ground Monday, traders had little to feed this new optimism.

Oil rapidly approaching $60 today.

Confidence that the global economy is stabilising took the price of a barrel of crude oil above $60 on Tuesday.

US light crude oil for June delivery rose 35 cents to settle at $58.85 a barrel on the New York Mercantile Exchange after rising to $60.08 a barrel before the market opened in electronic trading.

A report showing China's crude imports for April surged 13% from the same time a year ago gave oil prices a boost while the weaker dollar also increased its appeal.

Oil prices retreated from the $60 mark as nagging concern about the short-term energy outlook returned and as traders looked ahead to the Energy Information Administration weekly supplies report.

Gold futures advanced Tuesday, amid a broad commodities rally, helped by a weaker greenback.

US crude oil retreated Wednesday, despite a surprise decline in weekly crude inventories, after a gloomy retail sales report and as US equities settled sharply lower.

US light crude oil for June delivery fell 83 cents to settle at $58.02 a barrel on the New York Mercantile Exchange. Earlier in the session oil rose over 1% but by mid afternoon prices headed lower.

The Energy Information Administrations report showed US supplies of crude fell by 4.7m barrels in the week ended 8 May after imports fell. Analysts had pencilled in a rise of 1.4m barrels.

Gasoline stocks fell 4.1m barrels despite an expected increase of 400,000 barrels. Distillates, used to make diesel and heating oil, rose 1m barrels during the week.

In its monthly report earlier this week, EIA said it expects world oil demand to fall by 1.8m barrels per day in 2009. That's a 400,000 barrel cut from its predictions last month.

Brighter stock markets and a slightly weaker dollar were enough to drag oil higher Thursday.

The June contract jumped 60 cents to $58.62 a barrel on the New York Mercantile Exchange, having been as low as $56.55 earlier in the session.

Traders overcame weak US jobs data and a downgrade to oil demand forecasts from the International Energy Agency, but not before theyd knocked crude down 2.5%.

The IEA thinks demand will slip by 2.6 million barrels a day from last years levels, about 200,000 barrels more than it predicted a month ago.

"Continued oil demand weakness is premised on strong economic recovery later this year remaining elusive," said the IEA in its monthly report.

Crude oil futures ended sharply lower on Friday on concern that the economic recovery will not be as quick as recently hoped and demand for oil will remain weak.

Crude for June delivery fell $2.28 to $56.34 a barrel on the New York Mercantile Exchange.

Jitters about weak demand resumed late in the week after the International Energy Agency predicted that global oil demand will endure its largest drop this year since 1981.

Weaker than expected economic data also chipped away at investor confidence while oil cartel OPECs downward revision of its forecast for global energy demand this year also dealt oil prices a blow.

The International Energy Agency was the third energy forecaster to cut its forecast for oil demand.

US crude futures rallied 4.8% on Monday as US equities moved higher and after explosions at a major Nigerian and US refinery.

US light crude oil for June delivery rose $2.69 to settle at $59.03 a barrel on the New York Mercantile Exchange. The June contract expires at the end of Tuesdays session.

Stock markets across Asia, Europe and the US were mostly higher with Wall Street receiving a particular boost from a report by the National Association of Home Builders showing improved sentiment among US house builders in May.

House builder Lowe's also cheered after it reported a smaller than expected decline in first quarter profit and issued upbeat comments about future capital markets and a better mortgage refinancing environment.

Reports of explosions at two oil and gas pipelines in Nigeria fuelled concern about disruptions to supplies from Africas biggest crude exporter.

US crude futures touched $60 a barrel on Tuesday ahead of weekly inventory data which is expected to show a fall in crude supplies.

US light crude oil for June delivery settled at $59.65 a barrel on the New York Mercantile Exchange, up 62 cents. The June contract had risen to a high of $60.48 in pre-market trading. The July contract, up 47 cents at $60.06, becomes active on Wednesday.

While prices pushed higher, gains were limited after a disappointing report on the US housing sector and as Wall Street settled in the red. New construction of US homes fell to a new record low in April, according to figures by the Commerce Department.

Otherwise traders were looking ahead to the Energy Information Administrations weekly report which last week showed a decline in US crude inventories as imports fell.

Previously crude oil supplies were running at the highest level in nearly 20 years.

US crude oil futures continued to march forward, rising above $62 on Wednesday to a six-month high, after a government report said US crude supplies fell more than expected last week.

Crude for July delivery rose $1.94, on its first day of active trading, to settle at $62.04 a barrel on the New York Mercantile Exchange, the highest settlement 10 November.

The Energy Information Administration said crude inventories fell 2.1m barrels in the week ended 15 May 15, greater than expectations of a 1.5m decline.

Crude prices are now almost double levels seen in February when prices slumped to $34 a barrel. Optimism about economic recovery and strengthening equity markets has boosted demand for oil.

Gasoline stockpiles decreased by 4.3m barrels last week, despite expectations of a 1.7m barrel decline.

Aye, 105 (in places) a litre !!

"Aye, 105 (in places) a litre !!" not round here it ain't ... yet! -):

US crude oil struck a six-month high on Wednesday, rising towards $64 a barrel, ahead of OPECs meeting and after an EIA report predicted oil prices will rise to $110 in 2015 and $130 in 2030.

The Energy Information Administrations annual report said global oil demand is expected to increase to 91m barrels a day in 2015 and 107m barrels a day in 2030.

Saudi Arabia oil Minister Ali Naimi echoed those views at the start of the week. He said oil prices could rise at a much faster rate than previously thought and the global economy could cope with prices as high as $75 to $80 a barrel.

Crude for July delivery rose $1 to settle at $63.45 a barrel on the New York Mercantile Exchange after hitting a high of $63.82 earlier in the session.

Gold was unchanged as the dollar recovered against major currencies and as traders digested fairly upbeat US home sales data.

Stan, I will send you up some Cans ! ; )

Just filled up @ 97/98 a litre at the moment.

99.9 today. at 1730.

29/5/2009 Crude prices gain 30 percent in MayStory link: Crude prices gain 30 percent in May by Elaine Frei
Crude oil prices rose to their highest level this year in New York as West Texas Intermediate crude for July delivery added $1.23 to $66.31 per barrel on the New York Mercantile Exchange while Brent crude was up $1.08 to $65.47 per barrel on the ICE Futures Europe exchange in London.

The recent gains in prices, amounting to 30 percent just this month, came even though demand is down as investors bet that the economy, and therefore demand, will go up in the near future.

Prices are also up on declines in US inventories even though stockpiles of crude oil in the US are still plentiful.

In related news, the number of rigs looking for crude oil and natural gas in the United States fell to 899 this week, down by over 50 percent from this time last year, when 1,877 rigs were being used in the US.

Of the new total, 187 rigs are specifically looking for crude oil.

Nymex June gasoline futures were up less than a cent to $1.91 per gallon.

Oil rose again to over $68 per barrel as US equities started the month with an impressive rally and as investors bet the worst of the economic downturn is behind us.

The weaker dollar also boosted demand for oil sending US crude for July delivery up $2.27 a barrel to settle at $68.58.

More upbeat economic data from Asia also encouraged prospects of a pick up in demand.

Chinas Purchasing Managers Index slipped to 53.1 from 53.5 in April, but was stronger than expectations and above the key 50 mark, which indicates expansion.

Precious metals were mostly higher on Monday but gold prices moved lower. COMEX gold for August delivery finished down 30 cents at $980 an ounce on the New York Mercantile Exchange.

US crude oil futures settled a touch lower on Tuesday, recovering from bigger losses earlier in the session, as upbeat US housing data reinforced hopes of an economic recovery.

US light crude oil for July delivery fell 3 cents to settle at $68.55 a barrel on the New York Mercantile Exchange after hitting a intra-day low of $67.50.

A positive session among US equities and a weaker dollar also underpinned demand for oil, which hit a seven-month closing high of $68.58 a barrel at the start of the week.

Market confidence was buoyed by better than expected housing data. The National Association of Realtors' index on pending home sales for April rose 6.7% to 90.3%, the biggest monthly jump in pending US home sales in 8 years.

Analysts had pencilled in a smaller rise up to 85% from 84.6% in March. The data is the latest in a string of economic global reports indicating that the worst of the economic downturn may be behind us.

Light crude fell by almost $2 per barrel to just over $66 after government data showed an unexpected rise in crude supplies last week.

The Energy Information Administration reported a surprise 2.9m barrel increase in US crude inventories for the week ended 29 May. Analysts had pencilled in a 2m barrel decline.

Gasoline inventories fell by a bigger than expected 200,000 barrels while distillate stockpiles rose by 1.6m barrels, more than the 950,000 barrels forecast by analysts.

A slump on Wall Street, following a four day rally, and a recovering dollar also wiped the shine off oils appeal and sent US light crude oil for July delivery down $2.43 to $66.12 a barrel on the New York Mercantile Exchange.

Oil prices have doubled since mid January on hopes that the worst of the economic downturn is behind us.

Gold edged closer to breaching $1,000 an ounce again as the weak dollar and worries about inflation helped demand.

The precious metal is suffering from worries that more effort must be made by the US government to help its economy. It could result in more money being printed and that will increase inflation.

Gold for August delivery rose $16.70 to settle at $982.30 an ounce.

Oil prices surged ahead, having at one stage targeted $70 a barrel, as a drop in jobless claims boosted expectations that the economy may be recovering, which will increase demand for oil.

Investment bank Goldman Sachs said an economic rebound and production cuts by OPEC could push oil towards $85 a barrel by the end of the year and to $95 by the end of 2010.

Crude for July delivery rose $2.69 to settle at $68.81 a barrel Thursday. It had hit $69.60 at one stage.

Crude oil touched $70 a barrel on Friday before retreating after a government report showed job losses slowed in May.

Oil prices jumped to $70.32 following the report, which showed US nonfarm payrolls fell 345,000 in May, instead of the 500,000 expected by analysts.

The widely watched Labour Department report boosted hopes that the US economy is starting to improve.

Also lifting demand for oil was a research report out Thursday from Goldman Sachs raising its 3-month price target for crude oil to $75 a barrel from $52 a barrel.

However towards the end of the session oil prices pulled back as the dollar strengthened. US light crude oil for July delivery settled 37 cents lower at $68.44 a barrel on the New York Mercantile Exchange.

Bankers 'drive up fuel cost' by gambling on crude oil prices 7/06/2009

Petrol prices hit their highest point for a year yesterday with motorists paying an average 100.08p a litre for petrol and 104.2p for diesel.

But one service station in West London was charging 139.9p for unleaded and 145.09 for diesel, according to petrolprices.com website.

Greedy City speculators gambling on the future cost of crude oil were blamed for driving up prices. Last January, petrol was 86.07p per litre and diesel 98.06p.

Yesterday motorists were warned average petrol prices could soar to 115p a litre.

The AA's Luke Bosdet said: "Speculators - many at banks bailed out by taxpayers - are pushing up oil prices, tipping the same taxpayers into deeper financial trouble."

http://www.mirror.co.uk/news/top-stories/2009/06/07/bankers-drive-up-fuel-cost-by-gambling-on-crude-oil-prices-115875-21420950/

US crude oil edged lower on Monday as US equities spent most of the day in the red and as the dollar rose against major currencies.

US light crude oil for July delivery fell 35 cents to settle at $68.09 a barrel on the New York Mercantile Exchange.

Oil prices briefly touched $70 a barrel on Friday after better than expected jobs figure boosted expectations of economic recovery and gave a stronger outlook for oil. Friday's rally on Wall Street also underpinned gains, however as US stocks struggled to get off the ground on Monday, demand for oil also remained low and even a last minute rally on Wall Street failed to bring prices higher in normal trading.

Oil did trade higher in after hours although analysts are warning that the 50% rise in oil prices in the last three months has been overdone.

Among precious metals gold lost its sparkle on Monday with Comex gold for August delivery settling $10.10 lower at $952.50 an ounce. The stronger dollar reduced golds appeal as an alternative investment.

Crude oil settled above $70 per barrel for the first time in seven months as the dollar retreated against major rivals.

Crude for July delivery rose $1.92 to settle at $70.01 a barrel on the New York Mercantile Exchange. Earlier it touched a high of $70.18.

The weaker dollar has helped oil prices more than double since the end of 2008 as a weaker buck normally makes commodities less expensive for buyers holding other currencies.

A report by the Energy Information Administration also gave oil prices a boost. In its monthly report out Tuesday the EIA raised its outlook for this year's crude oil and gasoline prices.

Crude prices are now forecast to average around $58.70 a barrel this year compared with a previous prediction of $52 a barrel.

Crude oil futures rose after weekly government data showed a sharp drop in inventories.

Following the report US light crude for July rose $1.32 to settle at $71.33 a barrel on the New York Mercantile Exchange, the highest settlement for seven months.

The Energy Information Administration said crude stocks fell by 4.4m barrels in the week ended 5 June. Analysts had expected an increase of around 800,000 barrels.

The data follows a report earlier in the week from the American Petroleum Institute which said US crude supplies slumped by 6m barrels last week.

Meanwhile the EIA also showed gasoline inventories fell 1.6m barrels, bigger than analyst predictions of 1.6m drop.

ED: Not sure about the last sentence.

Oil futures briefly rose above $73 a barrel for the first time this year after the International Energy Agency (IEA) raised its global demand forecast for the black stuff. It was the first time in ten months that the IEA had upped its projection of demand for oil.

The IEA estimate for daily oil demand worldwide was increased by 120,000 barrels to 83.3m barrels, on expectations of increased demand from the US and China. The effect on the oil price was tempered by expectations of increased output from non-OPEC producers, which the IEA expects to rise by 170,000 barrels a day.

The revision does not "necessarily imply the beginnings of a global economic recovery, the IEA report said, adding that the firmer trend may only be evidence of the recession hitting its low point.

The July contract for West Texas Intermediate closed at $72.68, its highest closing level since October 20 and up $1.35 on the day.

The price of gold was back on the rise again after going through a dull spell earlier this week. Golds allure was restored as investors turned their back on the US dollar, pushing the price of gold for August delivery up $7.30 to $962 an ounce.

Crude oil futures settled lower on Friday, snapping a three-session run-up, as the dollar strengthened against major currencies and OPEC announced that it was increasing monthly output for the second month running.

Crude for July delivery fell 64 cents to settle at $72.68 a barrel on the New York Mercantile Exchange.

The oil cartel said output in May, from its 12 member countries, rose on average to 28.27m barrels a day compared with 135,000 barrels a month earlier.

In its monthly report OPEC also said it expects global demand in 2009 to decline 1.6m barrels a day compared with the same time a year ago but added that it thinks the worst is over for the oil market.

On Thursday crude rose above $73 on hopes of economic recovery and after International Energy Agency upped its forecast for global oil demand.

NOW 103.9 P. 105.9 D. CRUDE WILL KILL OFF THE RECOVERY.

Crude oil fell on Monday settling around $70 a barrel as the dollar continued to gain against major currencies and US equities registered triple digit losses as economic data rekindled fears about the global downturn.

US light crude oil for July delivery dropped $1.42 to settle at $70.62 a barrel on the New York Mercantile Exchange.

The Empire State index's measure of manufacturing in the New York area fell 5 points to -9.4 in June. In the previous month, the index was -4.55. New orders remained negative at -8.15 but better than May's -9.01.

Meanwhile reports of violence in Iran following the elections failed to stir up demand for oil as commodity prices fell across the board. The major oil producing country is holding an investigation into the election after accusations of ballot fraud.

The resurgent dollar took gold futures to their lowest level in over three weeks on Monday. COMEX gold for August delivery fell $13.20 to settle at $927.50 an ounce.

US crude oil futures fell again Tuesday but remained above the $70 a barrel mark ahead of weekly US inventory data.

Crude had gained in earlier trading, rising to a high of $72.77, but as mostly downbeat economic data poured through, jitters about the economic outlook returned and pushed prices lower.

US light crude oil for July delivery fell 15 cents to end at $70.47 a barrel on the New York Mercantile Exchange.

Traders digested data showing a bigger than expected drop of 1.1% in May industrial production from the month before.

Inventory data from The American Petroleum Institute was also expected to show a 1.7m decline in crude oil stockpiles. US Energy Information Administration data is due out Wednesday.

US crude oil settled higher Wednesday in a choppy session as prices mirrored a recovery on Wall St and after a weekly government report showed a bigger than expected drop in crude supplies.

US light crude oil for July delivery closed 56 cents higher at $71.03 a barrel on the New York Mercantile Exchange.

Futures had fallen to a low of $69 earlier in the session after the Energy Information Administration showed crude supplies fell by 3.9m barrels last week. Analysts had expected a decline of 1.7m barrels.

The EIA also said gasoline stocks rose by 3.4m barrels in the week ended 12 June, much more than the 650,000 barrels pencilled in by analysts.

Distillate inventories meanwhile rose by 300,000 barrels last week. Analysts expected an increase of 950,000 barrels. The weaker dollar also boosted demand for oil.

Oil prices inched higher on Thursday as disruptions in Nigeria raised supply concerns.

Positive data also helped on expectations of a turnaround in the economy, which will increase demand for oil.

Crude for July delivery rose 42 cents to $71.45 a barrel Thursday.

Royal Dutch Shell said that some oil production had been stopped after an attack on one of its pipelines on Wednesday in Nigeria. Analysts believe such attacks could increase in the coming weeks.

On the economic data front, there an improvement in the Philadelphia Fed index on regional manufacturing, up to -2.2 in June from -22.6 last month. Experts predicted a read of -17.

Great now analysts are orchestrating acts of terrorism, always thought they were financial terrorists.

Crude oil finished the week lower as traders weighed up data showing surplus fuel supplies against reports of more attacks on oil pipelines in Nigeria, the worlds seventh biggest oil exporter.

Oil for July delivery fell $1.82 to $69.55 a barrel on New York Mercantile Exchange after a choppy session with the contract rising to a high of $72.30 earlier in the day.

The contract, which is due to expire on Monday, was down 3.3% over the week. The spike in oil prices was prompted by news of an attack by Nigeria's main militant group MEND.

But it was concern about ample supplies and weak demand that later chipped away at demand for the black stuff.

On Wednesday the weekly EIA government report showed US gasoline supplies rose unexpectedly as refiners increased output to meet demand for the summer driving season. At the same time traders are worried that rising oil prices may put off many drivers this summer as the economic downturn continues. The EIA said demand for petroleum products over the last four weeks was down by 6% from the same time last year.

Commodities: Crude slips below $67

Crude oil fell below $67 a barrel as focus turned to the weak outlook for the global economy.

Recent data has signalled that the global economy is poised for a recovery and has helped take oil prices around double the level seen at the start of the year.

However as traders weighed up data showing surplus fuel supplies and winced at global forecasts at the World Bank, sentiment turned lower and worries about demand for the black stuff resumed.

US light crude oil for July delivery fell $2.62 to settle at $66.93 a barrel on the New York Mercantile Exchange. The July contract expired Monday and the August contract becomes active on Tuesday.

The World Bank said the global economy is expected to shrink 2.9% this year, more than the 1.7% contraction forecast back in March. It also said global trade will drop by almost 10% this year while output is predicted to fall by 2.9%.

Commodities: Crude inches back towards $70

The weaker dollar, nerves ahead of weekly US energy supply data and disruptions from oil rich Nigeria stoked oil demand on Tuesday.

US light crude oil for August delivery rose $1.74 to settle at $69.24 a barrel on the New York Mercantile Exchange. But oil traders endured a choppy session with the contract falling a session low of $66.37 after disappointing US housing data.

Existing home sales rose 2.4% in May to a seasonally adjusted annual rate of 4.77m, from a downwardly revised 4.66m in April, but it was still lower than expectations. Economists had predicted an increase to about 4.82m.

There were also jitters ahead of the latest statement from the Federal Reserve.

Oil prices have jumped from below $40 a barrel at the start of this year to around $70 on the back of optimism that an economic recovery is in place.

Commodities: Gold moves ahead

Gold moved higher though gains were tempered late on after the dollar rallied on the back of comments from the Fed.

Before the Fed's comment, worries about higher inflation made gold, seen as a hedge to rising prices, more attractive to investors. But gold slipped back slightly after the Fed said inflation will remain subdued for sometime.

Gold price for August delivery rose $10.10 to finish at $934.40 an ounce.

Oil prices fell below $69 after the Fed kept interest rates near zero.

Crude had received support earlier after a report showed US gasoline stocks rose by 3.9m barrels in the week to June 19, which was above forecasts. Distillates stocks hit ten-year highs, while crude stocks fell.

Commodities: Nigerian attack boosts oil price

The price of crude was back above $70 a barrel for the first time in a week after a Royal Dutch Shell pipeline in Nigeria was attacked by militants. The Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility for the attack on the pipeline which supplies Shell's Bonny terminal. A spokesman for Shell was unable to confirm whether the attack had caused an interruption to production.

Demand for oil has also been boosted this week by news of refinery problems in Texas, USA. Exxon Mobil has shut a fluid catalytic cracker at its Baytown, Texas, refinery while earlier this week Valero Energy and Marathon Oil suffered power interruptions at their Texas refineries. The Baytown refinery is the largest in the USA and can process more than half a million barrels of oil a day.

Crude oil for August delivery rose $1.56 to $70.23 on the New York Mercantile Exchange, its highest level since 18 June, with the decline in the value of the dollar also contributing to the rise in the price of the black stuff.

The slide in the value of the dollar also made gold a more attractive investment. The August futures contract for gold rose $5.10 to $939.50 an ounce in New York while the spot price rose $6.91 to $938.50 an ounce in London. Dealers said indications that the Federal Reserve intends to keep its key lending rate at its historically low level for an extended period added to the appeal of gold, with some suggesting that China would switch to buying gold bullion in preference to US government debt.

Silver was also in demand, rising more than 13 cents in London trading to just over $14 an ounce, while copper reached its highest level in a week, with the September contract rising 3.5 cents to $2.316 a pound.

as i posted on FTSE thread ......

OIL and connected issues
it is plain for all to see that crude is now heading back to levels where most regions will deem it worthwhile to re-commence development and similar work ..... and you can count Saudi into that equation too, for Aramco, who control these things in The Kingdom, shut up shop 4/6 months ago.

our business has a peripheral though relevant interest in these aspects, and market intelligence is that, though recovery is still pretty fragile, it is assuredly happening across quite a broad spectrum.

to my mind, that makes the likes of Lamprell an even more likely t/o target, and i dare say Kentz and others fall into a similar category.

Petrofac will be an undoubted beneficiary, as well as a probable predator.

SINGAPORE (Reuters) - Oil fell toward $62 on Wednesday, on course for its sixth consecutive fall and longest losing streak since mid-December, after data showed larger-than-expected builds in U.S. products stocks, reflecting little sign of a recovery in oil demand.

Discuss
COMMENTS (0)
Figures from the American Petroleum Institute (API) showed distillate stocks jumping by a much higher-than-expected 3.4 million barrels, while gasoline inventories rose 767,000 barrels against a forecast 600,000-barrel build.

Combined with a 1.4 million barrels fall in crude stocks -- less than the expected 2.4 million barrels decrease -- the oil data shows little recovery in demand from the world's largest oil consumer at a time when talk of "green shoots" has come under renewed scrutiny.

U.S. light crude for August delivery fell 93 cents to $62.00 a barrel by 0621 GMT (2:21 a.m. EDT), having settled $1.12 lower at 62.93 a barrel on Tuesday, its fifth straight day of losses.

London Brent crude fell 80 cents to $62.43 a barrel.

"The middle distillates numbers are terrible. It is normal that stocks are going up at this time of the year but we are already at record levels," said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo.

"It looks like gasoline demand had started to get better and now suddenly looks bad. It could be for a couple of reasons: it could be a price response or it could just be that the economy is just not out of the woods yet," he added.

Prices could fall further if the Energy Information Administration , which will release its weekly inventory data at 1420 GMT (10:30 a.m. EDT), shows similarly bleak data.

Oil prices have fallen almost 15 percent from their brief surge above $73 a barrel in late June on worries a rebound in global fuel demand may be far off, after economic optimism helped lift prices from lows under $33 struck in December.

But questions over the pace of economic recovery continue to be raised, with the second-quarter's rally in energy and equity markets now petering out.

U.S. stocks fell to a 10-week low on Tuesday after a member of the Obama administration's economic advisory panel said the United States should plan to possibly provide a second round of stimulus funds to prop up the economy.

More bearish data came from Japan, where the value of the country's core private-sector machinery orders, a leading indicator of capital spending, hitting a record low in May, sending the Nikkei average < .N225> closing down 2.4 percent to a six-week low.

MSCI's index of Asia-Pacific shares outside Japan < .MIAPJ0000PUS> dropped 1.6 percent.

Potentially curtailing trading, Commodity Futures Trading Commission Chairman Gary Gensler said on Tuesday that the agency will hold hearings in the next few weeks to seek comments from consumers and market players on whether to set position limits on all commodity futures contracts.

The top regulator of U.S. futures markets is considering a clampdown on excessive speculation in energy and commodity trading by restricting holdings of big players, part of a broader move by the Obama administration to stabilize financial markets.

Oil Set for Biggest Weekly Drop Since January on Demand Concern
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By Yee Kai Pin and Ben Sharples

July 10 (Bloomberg) -- Crude oil fell, headed for its biggest weekly decline since January on concern a prolonged global recession will sap demand for energy.

Oil has dropped 10 percent this week on speculation fuel consumption in the U.S., the biggest energy-using nation, will remain subdued. Gasoline stockpiles increased over the Independence Day weekend, the peak of the summer driving season, a July 8 report showed. Yesterday, futures touched $59.25 a barrel, the lowest intraday price since the start of the year.

The No. 1 factor is still demand -- it all goes back to the economy, said Ken Hasegawa, a commodity derivatives sales manager at brokers Newedge in Tokyo. Its possible well test yesterdays low. If the market goes down further from here, we could see more selling orders.

Crude oil for August delivery fell as much as 44 cents, or 0.7 percent, to $59.97 a barrel on the New York Mercantile Exchange, and was at $60.04 at 2:41 p.m. in Singapore, poised for a fourth week of decline. Futures rose 0.5 percent to $60.41 yesterday, snapping six days of losses, the longest losing streak this year.

Crude oil bulls are hanging in there, albeit by the thinnest of margins, said Stephen Schork, president of Villanova, Pennsylvania-based consultant Schork Group Inc. If the bulls are going to put up a defense, this is where it will occur. If they fail, the path toward a $40-handle will be wide open.

Reduced Appeal

The dollar rose against the euro, reducing the appeal of commodities as a hedge against inflation. Gold slid July 8 to a two-month low of $905.10 an ounce and is headed for a second weekly decline.

The dollar traded at $1.3965 per euro at 2:43 p.m. in Singapore, up from $1.4020 in New York yesterday.

Oil may fall next week on speculation the global recession and payroll cuts will constrain demand and keep U.S. supplies ample, a Bloomberg News survey of analysts showed.

Nineteen of 41 analysts surveyed, or 46 percent, said futures will decline. Nine expect the market will be little changed and 13 forecast that oil prices will rise.

With a poor economic outlook for the future, oil is going to be pressured to come down in price, said Mike Sander, an investment adviser with Sander Capital in Seattle. Just as exuberance pushed oil higher in the second quarter, pessimism could easily push oil lower in the third quarter.

U.S. gasoline inventories climbed 1.9 million barrels to 213.1 million last week, an Energy Department report on July 8 showed. Stocks of distillate fuel, a category that includes diesel and heating oil, climbed 3.74 million barrels to 158.7 million, the biggest increase since January. The gain left distillate stockpiles 30 percent higher than the five-year average.

IEA Report

The International Energy Agency will release its monthly Oil Market Report today. The Paris-based agency June 11 raised its global oil demand forecast for the first time in 10 months, citing signs the economic slowdown is abating.

Gasoline for August delivery in New York dropped 0.8 percent to $165.08 a gallon at 2:30 p.m. Singapore time.

Brent crude for August settlement on Londons ICE Futures Europe exchange fell as much as 53 cents, or 0.9 percent, to $60.57 a barrel. Prices are down 7.7 percent this week.

To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net.

Last Updated: July 10, 2009 02:49 EDT

Crude Oil Falls a Second Day as Equities Drop, Stockpiles Gain
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By Christian Schmollinger

July 13 (Bloomberg) -- Crude oil fell for a second day as Asian stocks declined, raising speculation that the global recession will sap demand for fuel and increase stockpiles.

Oil and fuel inventories in the members of Organization for Economic Cooperation and Development rose in May to about 7 percent more than last year, the International Energy Agency said July 10. The MSCI Asia Pacific Index dropped to an eight- week low today on concern the U.S. economic recovery will be delayed. Taiwans exchange had its biggest drop in a month.

There is still a weak demand outlook and a bearish sentiment to the market, said Victor Shum, a senior principal at Purvin & Gertz Inc. in Singapore. There is more of a focus on fundamentals but the price direction is closely correlated to movements in the stock market and the dollar.

Oil for August delivery dropped as much as 97 cents, or 1.6 percent, to $58.92 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $59 a barrel at 2:20 p.m. in Singapore.

Oil on July 10 capped its biggest weekly decline since January as U.S. consumer confidence fell and fuel stockpiles in the largest oil consumer rose for a fourth week.

New York oil reached an eight-month high of $73.38 a barrel on June 30. Prices gained 37 percent the preceding two months as rising equity markets emboldened investors and the falling U.S. dollar steered funds into commodities.

Gasoline Demand

Its been a dose of reality, said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. Theres been a lot of concern stemming from the rising gasoline stockpiles over there in the States, which doesnt bode well for the demand side of things.

The dollar rose to $1.3916 against the euro from $1.3936 on July 10, limiting the appeal of commodities as an inflation hedge. The MSCI Asia Pacific Index dropped 2.1 percent to 98.94 as of 12:39 p.m. Tokyo time, with three equities declining for every two that advanced.

U.S. gasoline demand usually peaks in June through August as motorists take to the roads for the summer holidays. Motor fuel consumption over the past four weeks was down 1.4 percent from the same period last year, the Energy Department said on July 8.

Gasoline for August delivery was at $1.6404 a gallon, down 1.01 cents, on the Nymex at 2:23 p.m. Singapore time. It fell 0.8 percent to $1.6505 a gallon on July 10.

The U.S. summer driving season has been a non-event for two years in a row now, Purvin & Gertzs Shum said. The path of least resistance is still down for oil prices.

Brent crude for August settlement fell as much as 82 cents, or 1.4 percent, to $59.70 a barrel on Londons ICE Futures Europe exchange and was at $59.76 at 2:31 p.m. Singapore time.

Nigeria Attack

The Atlas Cove oil jetty and depot in Nigerias Lagos state was on fire after an attack late yesterday, the Movement for the Emancipation of the Niger Delta said in an e-mailed statement. Rebels claimed to have blown up a pipeline to Chevron Corp.s export terminal in Nigerias Delta state on July 10.

Attacks on the countrys pipelines and export terminals have cut output by 1.4 million barrels a day, the IEA said on July 10.

Hedge-fund managers and other large speculators decreased their net-long position in New York crude-oil futures in the week ended July 7, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 15,357 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 25,420 contracts, or 62 percent, from a week earlier.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net

Last Updated: July 13, 2009 02:42 EDT

Oil Rises From Eight-Week Low on Economic Recovery Optimism
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By Mark Shenk

July 14 (Bloomberg) -- Crude oil rose from an eight-week low on optimism that the economy and fuel demand will rebound after earnings from Goldman Sachs Group Inc. topped analysts estimates and retail sales increased.

Oil climbed as much as 2.8 percent as Goldman Sachs posted record earnings and sales at U.S. retailers climbed 0.6 percent. Chinas economy may have expanded 7.8 percent in the second quarter, according to a Bloomberg News survey. The U.S. and China are the worlds two biggest oil consumers, responsible for more than 30 percent of global demand.

Oil is being helped by renewed confidence in the financial markets, said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. China probably grew by 7.8 percent in the last quarter, Goldman did better than expected and retail sales were up 0.6 percent. These all are positive signals for the economy and oil demand.

Crude oil for August delivery rose $1.35, or 2.3 percent, to $61.04 a barrel at 9:15 a.m. on the New York Mercantile Exchange. Futures climbed as much as $1.67 to $61.36 today. Yesterday, prices fell 20 cents to $59.69 a barrel, the lowest settlement since May 19.

Brent crude oil for August settlement rose 62 cents, or 1 percent, to $61.31 on Londons ICE Futures Europe Exchange.

Daily crude-oil consumption worldwide will increase by 500,000 barrels, or 0.6 percent, to 84.3 million in 2010 as industrial production gradually picks up after this years recession, The Organization of Petroleum Exporting Countries said today in a report. That compares with an increase of 1.4 million barrels a day, or 1.7 percent, to 85.2 million, forecast by the International Energy Agency on July 10.

Crude-oil supplies in the U.S. probably fell 2 million barrels in the week ended July 10 from 347.3 million the previous week, according to the median of 13 analyst responses in a Bloomberg News survey. The Energy Department is scheduled to release its weekly petroleum supply report tomorrow at 10:30 a.m. in Washington.

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

Last Updated: July 14, 2009 09:17 EDT

VIENNA Oil prices slipped below $62 a barrel Friday, as investors weighed mostly positive second quarter corporate results against signs of sluggish crude demand.

Benchmark crude for August delivery was down 52 cents to $61.50 a barrel by afternoon European electronic trading on the New York Mercantile Exchange. On Thursday, the contract added 48 cents to settle at $62.02.

Oil has rallied from $58.78 a barrel last week as companies such as Goldman Sachs Group Inc., Intel Corp. and JPMorgan Chase & Co. beat analyst expectations for second quarter earnings.

In other Nymex trading, gasoline for August delivery was down by more than a penny at $1.70 a gallon and heating oil dipped by nearly 2 cents to fetch $1.58. Natural gas for August delivery slid by close to 7 cents to $3.60 per 1,000 cubic feet. In London, Brent prices slipped 51 cents to $63.24 a barrel on the ICE Futures exchange.

NEW YORK Oil prices are extending their rally into a third straight day, rising above $63 a barrel Friday for the first time in 10 days.

Benchmark crude for August delivery jumped $1.17 to $63.19 a barrel on the New York Mercantile Exchange. In London, Brent prices climbed $1.95 to $64.70 a barrel on the ICE Futures exchange.

Meanwhile, retail gas prices continued to fall for the 26th straight day. Pump prices dropped overnight to a new national average of $2.481 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of gas is 19.8 cents cheaper than last month and $1.633 cheaper than a year ago.

In other Nymex trading, gasoline for August delivery added 3.65 cents to $1.75 a gallon and heating oil climbed 3.29 cents to fetch $1.6323 a gallon. Natural gas for August delivery added less than a penny to $3.674 per 1,000 cubic feet.

By ALEX KENNEDY, Associated Press Writer Alex Kennedy, Associated Press Writer 1 hr 30 mins ago
SINGAPORE Oil prices rose above $68 a barrel Monday in Asia as a rally fueled by an improving economic and corporate outlook extended into a third week.

Benchmark crude for September delivery was up 52 cents to $68.57 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose 89 cents to settle at $68.05.

Oil has rebounded from $58.78 a barrel earlier this month as stronger economic results from the U.S. and China boosted investor optimism.

The Dow Jones industrial average has risen about 11 percent during the last 10 days.

"Oil is completely mirroring equity markets," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore. "There's less risk aversion so more investment in commodities."

Many companies have reported better than expected second quarter company results, bolstering investor sentiment that the worst of a severe global recession is over.

But U.S. gasoline demand so far this summer has remained weak, raising doubts about whether the economy can emerge this year with a strong recovery.

"I think a lot of the green shoots we've seen over the last few month have a lot to do with the government stimulus which are eventually going to run out," Kornafel said. "The fundamentals should definitely have us lower."

In other Nymex trading, gasoline for August delivery rose 2.01 cents to $1.94 a gallon and heating oil gained 1.86 cents to $1.80. Natural gas for August delivery fell 6.8 cents to $3.63 per 1,000 cubic feet.

In London, Brent prices rose 52 cents to $70.84 a barrel on the ICE Futures exchange

From Bloomberg:
Crudes gains may be limited as inventories of gasoline and diesel fuel in the U.S., the worlds biggest oil user, have climbed, said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne.

Gasoline inventories climbed 813,000 barrels to 215.4 million in the week to July 17, the sixth straight gain, according to an Energy Department report on July 22. Stockpiles of distillate fuel rose 1.22 million barrels to 160.5 million, the highest since January 1985.

Although crude inventories are falling, its just going into gasoline supplies, and we havent seen much evidence of the summer driving season, said Westmore. Eventually these fundamentals will correct and you see that in these gasoline and distillate inventories getting drawn down.

Brent crude oil for September settlement rose as much as 96 cents, or 1.4 percent, to $71.28 a barrel, and traded at $70.98 on Londons ICE Futures Europe exchange at 9:50 a.m. London time. The contract rose 1.6 percent to $70.32 on July 24, the highest settlement since June 29.

Speculators net-long positions in New York oil, the difference between contracts to buy and sell the commodity, plunged 86 percent in the week ended July 21, the U.S. Commodity Futures Trading Commission reported.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net; Christian Schmollinger in Singapore at Christian.s@bloomberg.net.

ALEX KENNEDY, Associated Press Writer Alex Kennedy, Associated Press Writer Fri Jul 31, 1:07 am ET
SINGAPORE Oil prices jumped above $67 a barrel Friday in Asia, extending a big rally from the previous day as surging stock markets fueled investor optimism.

Benchmark crude for September delivery was up 62 cents to $67.56 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. On Thursday, the contract rose $3.59, or 5.6 percent, to settle at $66.94.

Traders have gotten whiplash this week as prices jerked up and down on investor uncertainty about the strength of the global economic recovery.

"Sentiment is very fragile," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. "Going forward, we're going to be looking at a seesawing market."

Crude investors were cheered by a jump in U.S. stocks on Wednesday. The Dow Jones industrial average rose 0.9 percent.

While the worst of a severe recession may be over, investors are cautious about a rebound this year. Signs of weak gasoline consumption and high crude inventories have dampened enthusiasm.

"When there's an indicator from the U.S. that suggests the recovery will be slow to emerge, prices get knocked back a bit," Moore said. "I think oil over the next few months will probably have a downward basis."

In other Nymex trading, gasoline for August delivery rose 0.89 cent to $2.00 a gallon and heating oil gained 0.79 cent to $1.78. Natural gas for August delivery held at $3.74 per 1,000 cubic feet.

In London, Brent prices rose 57 cents to $70.68 a barrel on the ICE Futures exchange.

By ALEX KENNEDY, Associated Press Writer Alex Kennedy, Associated Press Writer 6 mins ago
SINGAPORE Oil prices leapt above $70 a barrel Monday in Asia on investor expectations a recovering global economy will boost crude demand.

Benchmark crude for September delivery was up $1.12 to $70.57 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose $2.51 to settle at $69.45.

Oil prices seesawed last week before surging Thursday and Friday as investors bet that crude demand, which has been tepid this summer, will eventually pick up as the economy improves.

"Optimism for economic recovery is fighting the weak fundamentals, and right now the optimism is holding the upper hand," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Crude also has followed gains in global stocks. Most Asian indexes rose Monday.

Prices may test an eight-month high of $73.23 a barrel in the coming days, but dismal consumer sentiment in the U.S. will likely weigh on demand and send prices back into the $60s, Shum said.

"It will be difficult for oil prices to sustain in the $70s given the weak fundamentals," he said.

Mohammad Ali Khatibi, Iran's governor to the Organization of Petroleum Exporting Countries, said Sunday he expects crude prices to reach $80 a barrel by January, the oil ministry said.

In other Nymex trading, gasoline for August delivery rose 1.84 cents to $2.03 a gallon and heating oil gained 2.72 cents to $1.86. Natural gas for August delivery fell 1.7 cents to $3.64 per 1,000 cubic feet.

In London, Brent prices rose 93 cents to $72.64 a barrel on the ICE Futures exchange

By ALEX KENNEDY, Associated Press Writer Alex Kennedy, Associated Press Writer 27 mins ago
SINGAPORE Oil prices fell below $71 a barrel Tuesday in Asia after a big rally fueled by signs of economic recovery in the U.S.

Benchmark crude for September delivery was down $1.11 to $70.47 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Monday, the contract rose $2.13 to settle at $71.58.

Traders have brushed off evidence of weak crude demand and rising inventory levels, instead focusing on improving macroeconomic indicators.

A report Monday from the Institute for Supply Management, a trade group of purchasing executives, said U.S. manufacturing activity should increase next month for the first time since January 2008. Also, the Commerce Department said construction spending rose in June.

The positive economic news has emboldened investors to bid up stocks and oil. The Dow Jones industrial average rose 1.3 percent Monday and most Asian indexes gained Tuesday.

"With the economy seemingly improving each week, oil has felt pressure to go higher," said Michael Sander, an adviser at Sander Capital in Seattle. "As far as fundamentals go, oil still has very high inventory levels and weak consumer demand, but those just don't seem to matter."

A report last week showing U.S. crude inventories jumped the previous week suggested demand remains sluggish, and sent prices below $63 a barrel. Since then, oil has been on a tear as investors anticipate an improving economy will boost demand and whittle away supplies.

"Improving demand amid continued supply tightness should accelerate the pace of erosion of the inventory overhang, lending support to prices," Barclays Capital said in a report.

In other Nymex trading, gasoline for August delivery was steady at $2.07 a gallon and heating oil held at $1.87. Natural gas for August delivery fell 2.7 cents to $4.00 per 1,000 cubic feet.

In London, Brent prices fell 77 cents to $72.77 a barrel on the ICE Futures exchange.

Kuwait: Current oil price fine for now
Kuwait's oil minister says prices up to $80 good till end of year, but over $100 harmfuls
On Tuesday August 4, 2009, 4:08 am EDT
KUWAIT CITY (AP) -- Kuwait's energy minister says he hopes oil prices will stay between $70 and $80 a barrel till the end of the year.

Sheik Ahmed Al Abdullah Al Sabah however says prices should not rise above $100 because this could backfire on producers by lowering demand.

He spoke in Rome on Tuesday to the state-owned Kuwait News Agency.

Sheik Ahmed said the latest rise in oil prices to just over $70 reflects optimism that the world economy appears to be rebounding from recession.

Prices have modestly improved following OPEC's decision to cut production by 4.2 million barrels from September levels. The cartel, of which Kuwait is a key member, will meet in September to review production policy.

.Published: Aug. 3, 2009 at 12:54 PM
BAGHDAD, Aug. 3 (UPI) -- The Cabinet of Iraqi Prime Minister Nouri al-Maliki approved a draft law to reinstate the Iraq National Oil Co., sending the matter for parliamentary approval.

Iraqi government spokesman Ali al-Dabbagh confirmed Cabinet approval of the measure during the weekend, the Voices of Iraq news agency reports.

"The Cabinet has decided to approve a draft law on the Iraq National Oil Co. and referred it to the Parliament," he said.

Baghdad sees the reinstatement of a national oil company as a key to boosting oil production while securing government control over energy resources.

Dabbagh said the Maliki government approved the measure to ensure exploration, development and production of national hydrocarbon reserves moved forward.

Previous efforts for a national oil company had stalled over ethnic disputes over the share of Iraqi oil wealth.

The new measure, however, does not name the operations for the company in an effort to avoid regional disputes between Kurdish and central governments in Iraq.

Iraq established its national oil company in 1964. Iraqi dictator Saddam Hussein dismantled the company in 1987, however.

Iraq sits on some of the largest proven crude oil reserves in the world after Saudi Arabia and Iran.

NEW YORK, Aug. 14 (UPI) -- Crude oil prices rose overnight on the New York Mercantile Exchange Friday, but have not broken out of a holding pattern near $71 per barrel.

Oil prices climb above $74 on recovery hopes

Posted: Aug 24, 2009 08:25 AM

Updated: Aug 24, 2009 08:45 AM

BANGKOK (AP) - Oil prices climbed above $74 a barrel Monday in Asia amid spreading optimism about a global economic recovery.

Expectations that demand for energy will grow were spurred by Federal Reserve Chairman Ben Bernanke who said Friday that the U.S. economy is reviving.

Benchmark crude for October delivery rose 22 cents to $74.11 a barrel by midafternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Friday, it jumped 98 cents to settle at $73.89.

In more good news for the U.S. economy, the National Association of Realtors said Friday that home resales posted the largest monthly increase in at least 10 years.

Asian stock markets rallied on recovery hopes, with Japan's Nikkei 225 index jumping 3.4 percent.

In otherNymex trading, gasoline for September delivery added 2.43 cents to $2.0199 a gallon and heating oil for September delivery added 1.28 cents to $1.9177 a gallon. Natural gas for September delivery fell 2.9 cents to $2.775 per 1,000 cubic feat after tumbling another 14.1 Friday.

In London, Brent prices rose 29 cents to $74.50 a barrel on the ICE Futures exchange.

Oil Trades Near 10-Month High on Speculation Demand Recovering
By Yee Kai Pin

Aug. 24 (Bloomberg) -- Crude oil traded near a 10-month high after a rebound in sales of existing homes in the U.S., the worlds biggest oil-consuming nation, spurred optimism the global economy is emerging from recession.

Oil climbed alongside Asian equities after established home sales jumped more than forecast in July to the highest in almost two years, signaling the housing crisis that crippled the worlds largest economy may be easing. The dollar was little changed after falling for a fourth day against the euro Aug. 21, bolstering the appeal of commodities.

A lot of the gains in commodities have been based on what Id call loose fundamentals -- driven heavily by whats happening in equity markets rather than supply-demand issues, Mark Pervan, senior commodity strategist at ANZ Banking Group Ltd. in Melbourne, said in a Bloomberg Television interview.

Crude oil for October delivery rose as much as 46 cents, or 0.6 percent, to $74.35 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $74.24 at 2:56 p.m. in Singapore.

The contract climbed 1.3 percent Aug. 21 to $73.89 a barrel, the highest settlement since Oct. 21, as shares rallied and the dollar fell. Futures have gained 67 percent in 2009.

The market is on the cusp of $75, Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania, said in his daily note to clients. If it gets there, there is not a hell of lot to prevent it from going to $80 or $85.

The dollar traded at $1.4309 to the euro at 2:46 p.m. in Singapore, from $1.4326 in New York. The MSCI Asia Pacific Index added 2.4 percent to 113.30 at 3:40 p.m. in Tokyo, with almost 10 times as many stocks advancing as retreating. Futures on the Euro Stoxx 50 Index added 0.7 percent at 7:18 a.m. in London.

Economic Situation

We have seen a lot of improvement in the economic situation, Eliane Tanner, commodity strategist at Credit Suisse Group AG in Zurich, said in a Bloomberg Television interview. Demand has now already peaked a little bit globally. The situation is improving.

Oil prices surged Aug. 19 after the U.S. Energy Department reported an 8.4 million-barrel drop in the countrys commercially held stockpiles. The decline left inventories, still 12 percent higher than a year earlier, at a four-week low.

The big inventory draw last week in U.S. crude oil is one of the supportive factors but it is uncertain and we probably have to see more updated data this week, said Tetsu Emori, a commodity fund manager at Astmax Co. Ltd. in Tokyo. If last weeks data is correct, the market could be even stronger.

Brent crude oil for October settlement rose as much as 56 cents, or 0.8 percent, to $74.75 a barrel on the London-based ICE Futures Europe exchange. The contract traded at $74.64 at 2:46 p.m. in Singapore.

Nigeria Rebels

A rebel group in Nigeria threatened to resume attacks on oil infrastructure that have cut exports by more than 20 percent since 2006.

The Movement for the Emancipation of the Niger Delta, an armed group in Nigerias main oil-producing region, said Aug. 22 it has suspended peace talks because the government expects disarmament without the real issues being addressed.

MEND will be compelled to resume with ferocious attacks on the oil industry at the end of our cease-fire on Sept. 15, spokesman Jomo Gbomo said in an e-mailed statement.

Nigeria is part of the Organization of Petroleum Exporting Countries, which pumps 40 percent of the worlds crude oil. The 12-member group is scheduled to discuss policy Sept. 9 in Vienna.

To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net

ISTANBUL : Wednesday, 26 August 2009 01:28

ISTANBUL - Iraq aims to increase its oil production by up to four times with the development of 10 new fields to be auctioned later this year, Iraqi Oil Minister Hussein al-Shahristani said Tuesday.

The minister spoke after a meeting with oil companies in Istanbul to present the new fields and the terms for the tender, which will follow a first-round bidding in June that saw investors snub all but one of eight contracts on offer.

Iraq expects production from the new fields slated for auction "to be several million barrels per day", Shahristani said.

"So combining the fields of the first and second round, Iraq should increase its production to at least three to four times of its current production," he said.

Iraq, which has the world's third largest oil reserves, is yet to catch up with output levels prior to the US-led invasion in 2003, hit by deadly unrest and tensions between Baghdad and the oil-rich autonomous Kurdish region in the north.

Iraq currently produces around 2.4 million barrels per day, with oil accounting for some 85 percent of government revenues. It exports some two million barrels per day, most of it from the fields of the southern province of Basra.

British energy giant BP and China's CNPC International Ltd were the only companies to win a bid in the first auction, while a slew of other foreign firms snubbed the other contracts offered by Baghdad, unhappy with financial terms.

It was the first time Iraq's oil industry had been opened up to foreign companies since being nationalised four decades ago.

Iraq also has considerable natural gas reserves, and Shahrastani said on Tuesday Baghdad might consider supplying the planned Nabucco pipeline, designed to carry gas to western Europe, by-passing Russia.

Developing the fields "will take five to six years", he said. "When these are developed, Iraq will have much more gas than it needs, which will be definitely available for export."

Iraqi Prime Minister Nuri al-Maliki has earlier said his country may contribute 15 billion cubic meters of gas to Nabucco, whose suppliers are yet to be determined.

The 3,300-kilometre (2,000-mile) conduit, planned to become operational in 2014 with a capacity of 31 billion cubic metres of gas, is planned to run through Turkey, Bulgaria, Romania and Hungary to Austria. -- AFP


Last Updated on Wednesday, 26 August 2009 13:30

BANGKOK Oil prices rose moderately Friday in Asia, hovering near $73 as investors nurtured doubts about a sustainable recovery in the world's biggest economy.

Benchmark crude for October delivery was up 32 cents to $72.81 a barrel by late morning Bangkok time in electronic trading on the New York Mercantile Exchange. The contract Thursday added $1.06 to settle at $72.49 after tumbling from near $75 earlier in the week.

Reflecting the dire state of energy demand, natural gas prices slumped to their lowest level in seven years Thursday after the U.S. government reported that salt caverns, aquifers and other underground areas where it is stored are filling up. Levels of natural gas have been building because power-intense industries like manufacturing have cut back severely on production.

Crude posted gains because of a fall in the dollar which means investors can get more crude for less money.

Yet some analysts say the oil price is bound to fall in coming weeks as earlier euphoria about the global economy emerging from recession gives way to doubts about how sustainable the recovery is.

Existing weakness in demand will also be exacerbated by the seasonal drop in gasoline consumption when the U.S. summer driving season ends in a few weeks time.

"We have seen this strength (in the oil price) which reflected renewed confidence in the economy," said John Vautrain, energy analyst at consultancy Purvin & Gertz in Singapore. "But in the last week or so people are starting to say that the stock market is overbought and the data is not that good."

In other Nymex trading, gasoline for September delivery was up 0.46 cent at $2.036 a gallon and heating oil rose 0.2 cent to $1.8612 a gallon.

In London, Brent crude was up 17 cents at $72.50.

The release of the Lockerbie bomber triggered speculation that British energy companies trying to access Libya's oil wealth could soon hit a bonanza. But in reality, Big Oil is already there, and its interest in Libya is cooling.

A natural-gas processing plant that Snamproggeti, a subsidiary of Eni SpA, is constructing at Mellitah on the Libyan coast.
.The initial enthusiasm that accompanied Libya's first rounds of oil licensing -- held soon after international sanctions were lifted in 2004 -- has worn off, a casualty of arbitrary laws, Draconian contractual terms and Byzantine bureaucracy.

Since last week, when the Scottish government released Abdel Baset al-Megrahi, the Libyan convicted eight years ago in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, there has been speculation that it was part of a political deal between London and Tripoli: In exchange for Mr. al-Megrahi's release, Libya might make life easier for British companies, such as BP PLC and Royal Dutch Shell PLC, that want to do business in Libya. That theory is vehemently denied by both British and Scottish officials.

And industry officials say they doubt the Scottish move could ease the massive bureaucratic obstacles British companies have faced in Libya.

"That might prove illusory," said Mehdi Haroun, a partner at legal firm Herbert Smith LLP in Paris who advises oil firms working in North Africa. Even if Col. Moammar Gadhafi's government becomes more favorably disposed toward foreign companies, "you still have to face the inertia of the administration," he said.

Libya has a long tradition of demanding political concessions in exchange for commercial deals. There is a "pattern of using its oil and gas reserves for political ends," says Samuel Ciszuk, a Middle East analyst at IHS Global Insight, and a tendency to apply "political pressure to influence negotiations" with oil companies or their home governments.

He cites the jailing of the Libyan representative of Russian oil company OAO Lukoil during commercial negotiations with Libya's national oil company in 2007. The executive, who was detained on suspicion of espionage, was released in July 2008.

Libya has the largest proven oil reserves of any African country, with 43.7 billion barrels, according to BP. Oil companies have piled in since sanctions were lifted, attracted by some of the world's most promising unexplored oil and gas acreage and its proximity to the huge European energy market.

Libya has held four licensing rounds over the past four years, dishing out contracts to supermajors such as Exxon Mobil Corp. and smaller companies including Petro-Canada, a unit of Suncor Energy Inc. It has also brokered two big bilateral deals -- one with Royal Dutch Shell in 2005 and one with BP in 2007. BP's $900 million agreement was one of the biggest exploration deals in the company's history.

.But Libya has proved a difficult country to operate in. Oil companies often have to pay heavy customs duties on imported equipment, despite the exemptions written into their contracts. Onerous labor laws require them to hire Libyan nationals even when they lack the appropriate skills. Signing a simple rental agreement for an office can be hard, because of the chaos of competing ownership claims.

As oil prices began to soar over the past two years, Libya squeezed more out of foreign investors. Companies like Austria's OMV AG and ENI SpA of Italy were obliged to renegotiate their contracts to comply with new, tougher fiscal terms. In exchange for extending the length of their licenses, they had to pay huge signing bonuses and agree to a much smaller share of production from the oil fields they operate.

Mr. Ciszuk of Global Insight says Libya put pressure on the companies to agree to the new terms by getting the Libyan parliament to call for full nationalization of the oil and gas sector. The initiative was dropped as soon as the oil companies fell in line, he says.

In the latest licensing round, in December 2007, companies had to bid even lower shares of production to win exploration permits. Most of the victors of that round were big state-owned companies like Russia's Gazprom and Sonatrach of Algeria, better able to swallow tougher terms than publicly listed majors that require a higher investor rate of return.

Another factor has taken a shine off Libya: the lack of big oil discoveries to underpin companies' enthusiasm about the country. Since 2008, Occidental Petroleum Corp., StatoilHydro ASA of Norway, British natural-gas producer BG Group PLC and ENI have all drilled dry holes. BG says it has found nothing commercially viable in Libya and is refocusing on other areas.

"Foreign investors no longer see Libya as the new El Dorado it appeared to be after international sanctions were lifted -- especially in the current economic climate," says Herbert Smith's Mr. Haroun.

Write to Guy Chazan at guy.chazan@wsj.com

Oil hovers near $70 as investors eye stocks
By ALEX KENNEDY,
SINGAPORE Oil prices hovered near $70 a barrel Tuesday in Asia after a pullback in global stocks triggered a sharp drop the previous day.

Benchmark crude for October delivery was up 28 cents at $70.24 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange.

The contract Monday lost $2.78 to settle at $69.96 after a drop in stocks heightened investor concerns that the global economic recovery may be weaker than expected. China's benchmark stock index fell 6.7 percent Monday while the Dow Jones industrial average fell 0.5 percent.

Most Asian stock indexes rebounded modestly Tuesday, including China's.

"Stocks are a leading indicator of the economy, so if we have a slump in stocks, that's one fewer driver to support high oil prices," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.

Oil will likely trade between $65 and $70 during the next few weeks, Shum said.

"I don't expect a big pullback because we are starting to see more signs of economic life," he said. "There's clear evidence that the global economy has reached a bottom."

In other Nymex trading, gasoline for September delivery was steady at $1.99 a gallon and heating oil was steady at $1.78 a gallon.

In London, Brent crude was up 35 cents at $70.00.

Chinas Insatiable Energy Deals Only Growing (PTR, XOM, CVX, RDS-B, SNP, CEO, MRO)
Posted: September 1, 2009 at 6:01 am The Shanghai Composite went under 2,700 and between Monday and Tuesday is back to lows not seen since Mays end. Technically, it is back in bear market territory now that it has come off 20% from the highs. But there is one single aspect here which may be the silver lining for China. As asset prices sink, it is easier for China and its central government to buy more and more of whatever it wants on the cheap. While the notion that Chinas deal making for key assets is not new, the pace at which China is locking in energy supply deals seems to only be increasing. And it is effectively doing it without a single handshake taking place on US soil and without US oil.

After reviewing some of the public deals that China has been making, it is rather obvious that its appetite to buy and secure more sources of oil and gas is not ending whether China is technically in the 2007 to 2009 recession or not. If you have what many Westerners believe is a 50-year plan, then overextended Americans, lower commodity prices, and cheaper stocks of key infrastructure and energy players just makes it easier to buy up oil and gas for all of the energy needed to power the infrastructure for over 1.3 billion people. China has already spent billions in several bigger public deals and it seems as though the size and the pace is only rising.

PetroChina Co. (NYSE: PTR) is taking a 60% stake in two oil sands projects in western Canada in a $1.7 billion (U.S. equivalent) in a deal with Athabasca Oil Sands Corp. These two projects, the MacKay River and Dover oil sands projects, are both owned by Athabasca and are located in northeast Alberta. As far as what the surveys have shown, these are believed to hold about 5 billion barrels of bitumen heavy crude. As oil sands are far more capital intensive and require a much higher oil price equivalent break-even point, this is just another long-term secured energy pact that China is capitalizing on.

Exxon Mobil Corp. (NYSE: XOM) and PetroChina already signed a sales and purchase agreement in Beijing for the long-term supply of LNG from the proposed Gorgon LNG project in Australia. Exxon Mobil owns a 25% interest in the offshore Gorgon LNG facility, and Chevron Corp. (NYSE: CVX) and Royal Dutch Shell (NYSE: RDS-B) have the remaining stake. Under the joint-venture agreement, each company will compete to market their gas separately. China is on the hook for more than $40 billion over a 20-year period if the terms have not changed.

Sinopec acquired oil company Addax Petroleum in a bid of more than $7 billion for its large operations in Western Africa and the Middle East. This company had listed 738.4 million barrels of oil in total proved, probable, and possible reserves as of the end of 2008.

Integrated oil major Marathon Oil Corporation (NYSE: MRO) announced in July a pact to sell its 20% interest in a block offshore Angola for $1.3 billion. Chinese oil companies CNOOC Ltd. and Sinopec were the buyers of the deal expected to close late in 2009. The partners in the deal might block this with a right of first refusal, but by now you get the gist.

Earlier this year, Petroleo Brasileiro SA in Brazil agreed to a $10 billion loan from the China Development Bank and to supply oil to China through China Petroleum & Chemical Corp. (NYSE: SNP). While this is at market prices, the deal does continue to secure more and more oil for China. Around the same time, China National Petroleum signed separate deals with Russia and with Venezuela where China would provide $25 billion to Russia and $4 billion to Venezuela in loans for long-term commitments to supply oil.

Kuwait Petroleum Corporation and Sinopec (NYSE: SNP) were well along on plans to build a new 300,000 barrel per day refinery in Guangdong province back at the end of Spring 2009. The deal also had Royal Dutch Shell Plc (NYSE: RDS-B) and Dow Chemical Company (NYSE: DOW) each as owning 10%.

China Petroleum (NYSE: PTR) also announced a deal back in May to buy 45.5% of Singapore Petroleum for just over $1 billion.

Chinese oil giant CNOOC Ltd. (NYSE: CEO) tried earlier this decade to make an unsolicited acquisition offer to buy Unocal here in the United States. This was essentially blocked by the Congress wrangling over China owning a large US oil reserves (or by CFIUS) because of national security concerns. And then Unocal was ultimately acquired by Chevron in a deal which did receive approval from CFIUS and other regulators.

After failing for Unocal and deciding to go elsewhere for its oil besides the U.S., a Canadian oil and gas interests company called PetroKazakhstan with reserves of roughly 550 million barrels of oil and 25 billion cubic feet of natural gas (old estimates from around the time of the deal that are likely different today). This was acquired by China National Petroleum Corporation in 2005 in a deal which valued PetroKazakhstan over $4 billion.

There is another notion here which may only move to infuriate some readers. China is more than able to do deals in Iran. And guess who has been interested in securing Iraqs vast oil supplies? That chapter of Iraqs history is still being written as of today. It seems T. Boone Pickens thought that the U.S. should have an at-market call option on all that oil may come true, at least for China.

These are just some of the big public deals that have been made. The real tally is of course hard to know when you only have the press release data to go through for real details and the exclusions or conditions that exist. But this tally here is well over $50 billion in oil heading to the Chinese. And not a single drop of it has been via a Chinese company acquiring a prized public U.S. oil company. Now go ahead and lop in all the uncounted or smaller deals that are in the millions or unknown size of transaction dollars that have taken place in emerging market countries.

China has done all of this without launching a single air strike and without the use of military force. And the U.S.s biggest public concern in whether China will keep buying up U.S. Treasury notes and bonds.

JON C. OGG
September 1, 2009

.Oil hovers above $68 as US crude inventories drop
By ALEX KENNEDY, Associated Press Writer Alex Kennedy, Associated Press Writer 24 mins ago
SINGAPORE Oil prices hovered above $68 a barrel Wednesday in Asia after a two-day plunge as a drop in U.S. crude inventories suggested demand may be recovering.

Benchmark crude for October delivery was up 24 cents to $68.29 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract Tuesday lost $1.91 to settle at $68.05.

Oil sank almost $5 a barrel in the first two days of the week on investor concerns a slow global economic recovery this year from severe recession may not justify the big rallies in stocks and commodities since March.

The Dow Jones industrial average fell 2 percent Tuesday.

Investors were cheered somewhat when the American Petroleum Institute said late Tuesday that U.S. inventories plunged 3.2 million barrels last week. Analysts had expected the API numbers to drop 1.9 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The Energy Department reports mandatory supply figures later on Wednesday, while refiners voluntarily report the API numbers.

There were also signs Tuesday that the U.S. economy the biggest consumer of oil is improving.

The Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index rose in August, indicating an expansion for the first time since January 2008. And the National Association of Realtors said pending U.S. home sales rose to the highest level in more than two years.

In other Nymex trading, gasoline for October delivery rose 0.65 cents to $1.79 a gallon and heating oil gained 0.84 cent to $1.77 a gallon. Natural gas jumped 1.7 cents to $2.84 per 1,000 cubic feet.

In London, Brent crude was up 29 cents at $68.02.

By ALEX KENNEDY, Associated Press Writer Alex Kennedy, Associated Press Writer 2 hrs 19 mins ago
SINGAPORE Oil prices clung near $68 a barrel for a fourth day Monday in Asia as investors looked to this week's OPEC meeting for a possible change in the cartel's production.

Benchmark crude for October delivery was up 12 cents at $68.14 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract Friday rose 6 cents to settle at $68.02.

Trading volume was light in Asia on Monday ahead of the Labor Day holiday in the U.S.

Traders are eyeing Wednesday's meeting of the Organization of Petroleum Exporting Countries in Vienna. OPEC President Jose Botelho de Vasconcelos, who is also Angola's oil minister, said last week that the 12-member group will likely keep output quotas unchanged.

Crude prices have swung wildly in the past year, reaching $147 a barrel in July 2008 before plunging to $32 a barrel in February. Saudi Arabia, OPEC's biggest producer, has said $75 is a fair price for consumers and producers.

In other Nymex trading, gasoline for October delivery was steady at $1.77 a gallon, and heating oil held at $1.72 a gallon. Natural gas fell 6.4 cents to $2.66 per 1,000 cubic feet.

In London, Brent crude was up 33 cents at $67.15.

By DIRK LAMMERS, AP Energy Writer Dirk Lammers, Ap Energy Writer 1 hr 38 mins ago
Crude prices shot above $71 a barrel Tuesday as a falling dollar pushed investors to seek out commodities such as oil and gold.

Benchmark crude for October delivery gained $3.28 to $71.30 a barrel on the New York Mercantile Exchange. The contract settled at $68.02 on Friday after rising 6 cents.

The dollar fell to a low for the year Tuesday against the euro and several other currencies as gold prices surpassed $1,000 an ounce for the first time since February.

Investors often turn to commodities as a hedge against inflation and dollar weakness, and gold seems to be pulling oil along for the ride, said PFGBest analyst Phil Flynn.

"The move in metals has oil reluctantly rallying higher," Flynn said in his morning report. "Normally crude oil would be worrying about the upcoming OPEC meeting as opposed to worrying about the gold market."

Leaders of the Organization of Petroleum Exporting Countries have signaled they plan to keep output levels unchanged at the group's meeting Wednesday in Vienna. That could send oil prices lower as traders expect OPEC members to increasingly exceed the group's official production quotas.

Saudi Arabian oil minister Ali Naimi said Tuesday that crude markets were "in good shape," boosting expectations OPEC will use its meeting this week to stress compliance with output quotas instead of cutting production.

Naimi, whose country is OPEC's top producer, told reporters in Vienna that crude's current price "is good for everybody: consumers and producers."

Energy markets also got a boost from rising equity markets, as the Dow Jones industrials, the S&P 500, the Nasdaq composite index and most major Asian and European stock indexes all were trading higher.

The average price for a gallon of regular gasoline fell a half penny to $2.578, according to auto club AAA, Wright Express and Oil Price Information Service. That's 6.5 cents more than a month ago, but $1.08 less than at this time last year.

In other Nymex trading, gasoline for October delivery rose 7.06 cents to $1.8469 a gallon, and heating oil gained 7.25 cents to $1.7930 a gallon. Natural gas rose 8.4 cents to $2.812 per 1,000 cubic feet.

In London, Brent crude was up $3.20 to $70.02 on the ICE Futures exchange.

OPEC likely to hold oil supply steady, call for more compliance



9 September 2009 | 06:14 | FOCUS


Vienna. OPEC ministers are likely to keep the oil output quota unchanged while calling for more compliance at their upcoming meeting, Xinhua News Agency informed.
Saudi Oil Minister Ali Naimi, whose country is top producer of the Organization of Petroleum Exporting Countries (OPEC), said the current oil price "is good for everybody: consumers and producers.
"The market is in good shape, very well supplied," he told reporters upon his arrival in Vienna for the OPEC meeting on Wednesday.
Crude prices have remained relatively steady at around 70 U.S. dollars per barrel after recovering from a low of 32.4 dollars in December. Late last year, OPEC announced a record 4.2 million barrel per day production cut from September 2008 levels amid the sharp decline of fuel demand due to the economic crisis.
"I don't think now is the right time to cut production ... we think in the world economy there is still some uncertainty," Qatari Oil Minister Abdullah al-Attiyah said.
"We have to be very careful about the world economy and push towards normal growth ... we need time to see what is coming in the next few months," he explained.
Meanwhile, OPEC ministers will focus on compliance with the output limit by the cartel members, according to the delegates.
OPEC is producing some 1 million barrels per day. This was more than the organization claims, making its promised output cut less effective on the market prices, analysts said.
OPEC is a cartel of 12 countries comprising Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
OPEC nations account for two thirds of the world's oil reserves, and, as of April 2009, 33.3 percent of the world's oil production.

Hi Smiler o, been keeping your thread going whilst you been away..... keeping company with the void I reckon and only just released... :))

Crude Oil Is Set for Weekly Gain on Dollar, Chinese Demand

By Ann Koh

Sept. 11 (Bloomberg) -- Crude oil rose for a fifth day as the dollar fell to a nine-month low and industrial production in China, the worlds second-biggest energy user, grew at a faster pace than forecast.

Oil is poised for its first weekly gain in three after the dollar reached its lowest level since Dec. 18 against the euro as Chinas factory output gained and new loans exceeded analyst expectations, reducing demand for the U.S. currency as a refuge. Chinas net crude oil imports in August also climbed to the second-highest on record.

The expectation is that China is on a strong growth path, said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. Also supportive of oil prices was the fact that the U.S. dollar has remained fairly soft.

Crude oil for October delivery rose as much as 44 cents, or 0.6 percent, to $72.38 a barrel on the New York Mercantile Exchange. It traded at $72.32 a barrel at 1:45 p.m. in Singapore. Futures have gained 6.3 percent this week and 62 percent in 2009.

Output at Chinas factories grew 12.3 percent from a year earlier, the statistics bureau said in Beijing. That exceeded the 11.8 percent growth expected by economists surveyed by Bloomberg News.

The dollar dropped to as low as $1.4621 per euro from $1.4582 yesterday in New York. The euro has gained 4.6 percent against the dollar so far this year.

Economic Recovery

Chinas net crude oil imports increased 18 percent last month to 17.92 million metric tons, the General Administration of Customs said. Thats second to the record 19.2 million tons in July, according to Bloomberg calculations.

Separately, the countrys power generation rose to a record after the domestic economic recovery spurred demand from businesses and factories. Output increased for a third month, climbing 9.3 percent, the statistics bureau said.

Crude oil futures may fall next week as fuel stockpiles rise and refineries prepare to idle units for seasonal maintenance, a Bloomberg survey showed.

Fourteen of 31 analysts surveyed, or 45 percent, predicted oil will fall through Sept. 18. Ten respondents, or 32 percent, forecast the market will rise and seven said prices will be little changed. Last week, 50 percent of analysts said oil would fall.

Stockpiles Fell

U.S. stockpiles of crude oil fell 5.91 million barrels to 337.5 million last week, the lowest level since mid-January, an Energy Department report showed yesterday. Supplies were estimated to decline 1.85 million barrels, according to the median of 16 responses from analysts in a Bloomberg survey.

Oil stocks are still very high, but improving demand amid continued supply tightness should accelerate the pace of erosion of the inventory overhang, lending support to prices, analysts at Barclays Capital, led by Gayle Berry, said in a report.

Gasoline inventories rose 2.07 million barrels to 207.2 million, the first gain in seven weeks, the department said. Stockpiles of distillate fuel, which includes heating oil and diesel, climbed 1.99 million barrels to 165.6 million, the highest since January 1983.

Brent crude oil for October settlement climbed as much as 59 cents, or 0.8 percent, to $70.45 a barrel on the London-based ICE Futures Europe exchange, and traded at $70.33 at 1:39 p.m. Singapore time. Yesterday, the contract settled 3 cents higher at $69.86.

To contact the reporters on this story: Ann Koh in Singapore at akoh15@bloomberg.net

Last Updated: September 11, 2009 02:06 EDT

your doing a Grand Job Keep it up ! : )

By ALEX KENNEDY, Associated Press Writer Alex Kennedy, Associated Press Writer 2 hrs 46 mins ago
SINGAPORE Oil prices dropped below $69 a barrel Monday in Asia amid a stronger U.S. dollar and a slide in regional stock markets.

Benchmark crude for October delivery was down 83 cents at $68.46 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. On Friday, the contract tumbled $2.65 to settle at $69.29.

Oil prices have fallen about $4 in the last two trading days as the dollar rebounded off its lows of the year last week. Oil is priced in dollars so it becomes more expensive when the U.S. currency gains.

The euro fell Monday in Asian trade to $1.4535 from $1.4597 on Friday and the dollar was steady at 90.45 yen.

Oil traders are also eyeing stock markets for an overall read on investor confidence. Most Asian indexes fell in early trading Monday.

"Oil's being driven down by the dollar and weakness in Asian stocks," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "There are also worries about oil demand."

Crude has traded between $65 and $75 for the last few months as investors mull weak consumer demand amid a global economic recovery.

Shum said oil will likely remain in that range until there is a strong new catalyst.

"There are no clear forces to cause oil to break out of that range," Shum said. "I don't expect this pullback to be very significant."

In other Nymex trading, gasoline for October delivery fell 2.53 cents to $1.73 a gallon, and heating oil dropped 1.09 cents to $1.72 a gallon. Natural gas was steady at $2.97 per 1,000 cubic feet.

In London, Brent crude was fell 51 cents to $67.18.

Tue 15 Sep 2009

LONDON (SHARECAST) - Oil continued to fall on Monday with prices hanging just under $69 a barrel. Trade was dominated by concern over a trade row brewing between China and the US.

Also weighing on sentiment was an announcement by commodities-exchange operator CME Group which runs the New York Mercantile Exchange where US oil trades, that traders will face tighter limits on exchanges such as NYMEX from 14 September to help limit speculation in some trades.

The announcement comes as part of the Obama administrations efforts to reduce speculation in energy markets.

Crude for October delivery fell 43 cents to settle at $68.86 a barrel on the New York Mercantile Exchange.

Among precious metals gold remained above the $1,000 line despite some comments that this price is too dependent on speculative money to be sustained.

Gold for December delivery fell $5.30 to settle at $1,001.10 an ounce.

Commodities: Oil above $72 as stockpiles fall, gold up
Thu 17 Sep 2009

LONDON (SHARECAST) - US crude oil stocks enjoyed another strong session with the weaker dollar, upbeat economic news and a larger than expected drop in weekly supplies data supporting demand.

Crude oil for October delivery climbed $1.58 to settle at $72.51 a barrel on the New York Mercantile Exchange. Earlier in the session the October contract rose to a high of $72.56.

Demand for the black stuff picked up after the US Energy Information Administration said crude oil inventories fell by 4.7m barrels last week compared with expectations of just under a 3m barrel drop.

The EIA report, which cited a slowdown in imports for the bigger than expected decline, also showed an increase in gasoline and distillate stocks.

Economic data was also well received and underlined fresh hopes about the economic outlook.

Encouraging house price data and a separate report showing industrial production rose more than expected also lifted sentiment. All this fuelled appetite for risk, bringing the dollar lower and making oil cheaper for holders of other currencies.

Among precious metals gold continued to rack up gains, with gold for December delivery closing up $13.90 at $1,020.20 an ounce. Earlier it hit an intra-day high of $1,023.30 a level not seen since March last year.

The weaker dollar and optimism about the global economic outlook increased demand for gold as an alternative investment, analysts said.

Silver for December delivery added 43 cents to close at $17.43 an ounce while copper for December delivery climbed 9.5 cents to $2.934 a pound.

BANGKOK Oil prices fell below $72 a barrel Monday in Asia as high crude stockpiles and weak demand tempered enthusiasm about recent signs of improvement in the world's largest economy.

Benchmark crude for October delivery was down 40 cents at $71.64 a barrel by midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract gave up 43 cents Friday to settle at $72.04 a barrel.

The recession has sapped American fuel consumption, and U.S. oil stockpiles are 14 percent larger than last year even as recent data suggests the economy is clawing out of recession.

The Energy Information Administration said Wednesday that the country also is sitting on a sea of distillate fuels including heating oil, with stockpiles approaching a 27-year high.

"Most of the macro data from the U.S. over the last month has been supportive of oil prices," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. "But inventories remain high and demand is weak, so that's capping prices."

Moore said crude will likely average $64 a barrel in the fourth quarter before rising to average $80 in the October to December period of 2010.

In other Nymex trading, gasoline for October delivery slipped 0.84 cent to $1.8240 a gallon, and heating oil fell 0.86 cent to $1.8193 a gallon. Natural gas fell 4.5 cents to $3.733 per 1,000 cubic feet.

In London, Brent crude fell 41 cents to $70.91 on the ICE Futures exchange.

Associated Press Writer Alex Kennedy contributed to this report from Jakarta.

2009 September 20 Sunday
Production In Mexico's Biggest Oil Field Tanking
The tanking production of Mexico's formerly largest oil field is happening so fast it is breathtaking.

Output at state-owned oil monopoly Petroleos Mexicanos's offshore field Cantarell, once the world's second-largest oil field, has plunged to 500,000 barrels a day from its peak of 2.1 million in 2005.

"I don't recall seeing anything in the industry as dramatic as Cantarell," says Mark Thurber, assistant director for research at the Program on Energy and Sustainable Development at Stanford University.

If this happens to Saudi Arabia's Ghawar oil field then we'll enter an economic depression. As more countries hit their production peaks we become more dependent on the dwindling list remaining producers that are not yet in decline. I expect a series of oil price shocks as a result.

Mexico was America's 2nd biggest supplier in 2007 and will likely cease to supply us any oil within 5 years.

In 2007, Mexico was our second-biggest oil supplier, after Canada. Last year, with a 15% drop in daily barrels supplied, the country dropped to third place behind Saudi Arabia.

Both Saudi Arabia and Mexico are too secretive about the state of their oil fields to allow outside experts to estimate future production trends. Mexico is easier to call though since experts see deep offshore drilling as needed to slow Mexico's oil production decline. Since Mexico's government is spending Pemex revenue on government funding Pemex does not have enough money (or expertise) to do the needed deep offshore exploration and development. So we can count on continued Mexican oil production decline.

Mexico's Chicontepec field has been a disappointment. This decline in Mexican production is going to bring an end to Mexico's role as an oil exporter and therefore reduce funding for their government and depress the Mexican economy. Mexico might even become a net exporter in 5 years time. The United States needs to build a formidable physical border barrier to insulate ourselves from the economic troubles building up south of the border.

By Randall Parker at 2009 September 20 01:14 PM Economics Energy

1 hr 13 mins ago
BANGKOK Oil prices wallowed near $70 a barrel Tuesday in Asia after falling steeply overnight amid news that China's crude consumption fell in August.

Benchmark crude for October delivery was up 26 cents at $69.97 a barrel by early afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell $2.33 to settle at $69.71 on Monday.

Energy consumption in North America and Europe has been crimped by recession, leaving China as one of the few countries that continue to consume oil, gasoline and diesel in growing quantities. That pace, at least during late summer, appeared to slow, according to a report released Monday.

Chinese oil demand slid 5.4 percent in August from July, the first month-to-month drop since March, according to Platts, the energy information arm of McGraw-Hill Cos., as the world's second-largest oil consumer reined in oil imports and crude throughput rates at its domestic refineries.

But some analysts expect a second-half recovery in demand from Europe and the U.S. combined with still decent energy appetite from Asia to boost oil prices.

"I think we're going to see a pretty significant recovery in the second half in the U.S. and Europe, and demand from China has been holding up," said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore. "I see more upside than downside for oil prices right now."

Moltke-Leth said crude could rise above $75 during the next month. "If we can break through that, prices will likely jump to $80."

In other Nymex trading, gasoline for October delivery rose 0.96 cent to $1.7610 a gallon, and heating oil rose 1.23 cents to $1.7640 a gallon. Natural gas, after tumbling more than 5 percent, was up 6.9 cents to $3.645 per 1,000 cubic feet.

In London, Brent crude rose 21 cents to $68.90 on the ICE Futures exchange.

Associated Press Writer Alex Kennedy contributed to this report from Jakarta.

interesting about Iran possible conflict..

BANGKOK Oil prices rose to near $67 a barrel Tuesday in Asia as regional stock markets rebounded and investors awaited a slew of data on the U.S. economy.

Benchmark crude for November deliver was up 2 cents at $66.86 by late morning Bangkok time in electronic trading on the New York Mercantile Exchange. The contract rose 82 cents Monday to settle at $66.84.

Regional stock markets, often a barometer of optimism about economic prospects, rebounded from a sharp fall Monday after corporate takeovers boosted Wall Street to a higher close.

Also pushing up oil prices was the West's recent stern warning to Iran over a previously unknown nuclear facility. About 20 percent of the world's crude moves through the Straits of Hormuz on Iran's southern coast and any showdown between the West and Iran could threaten that route.

One of Nigeria's militant leaders has given up his armed struggle against the government in the oil-rich Niger Delta.

Ateke Tom told a news conference the government had offered him a pardon, and said: "I hereby formally accept the amnesty offer and lay down my arms."

President Umaru Yar'Adua, who proposed the amnesty earlier this year, said he commended Mr Tom's decision.

But other rebels are still fighting, saying they want a fairer distribution of oil wealth.

Various people claiming to speak for the the main militant group, the Movement for the Emancipation of the Niger Delta (Mend), have said they reject the terms of the amnesty.

The rebels fund themselves by stealing oil, kidnapping people and extortion.

The attacks are believed to cut Nigeria's oil output by some 25%.

During a previous peace initiative in 2004 Mr Tom said he had handed all his weapons to the government, but later restarted his fight.

He announced he would accept the current amnesty offer after a meeting with the president on Thursday.

The government's amnesty offer is part of an effort to end years of rebel attacks on the Nigerian oil industry.

Officials said militants who give up their weapons by October would benefit from a rehabilitation programme, including educational and training opportunities.

A rumour that has been doing the rounds for a while now, but yet again raised it's head on FT site:
"the most profound financial change in recent Middle East history, Gulf Arabs are planning along with China, Russia, Japan and France to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years. "

By CHRIS KAHN, AP Energy Writer Chris Kahn, Ap Energy Writer 4 mins ago
NEW YORK Oil prices fell Wednesday as traders shrugged off an unexpected drop in crude supplies and focused instead on government data that showed Americans still have little appetite for more petroleum.

Benchmark crude for November delivery lost $1.31 to settle at $69.57 on the New York Mercantile Exchange. In London, Brent crude gave up 68 cents to $67.88 on the ICE Futures exchange.

Prices fell immediately after the Energy Information Administration reported that the nation's oil supply dropped by 1 million barrels last week. The drop was unexpected analysts thought stockpiles would grow by 1.9 million barrels but investors found little else to like in the report.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said crude demand continues to be unimpressive, noting that the U.S. still has more oil in storage than last year.

American petroleum consumption has cooled so much that Sunoco, Inc. announced Tuesday that it would idle its Eagle Point refinery in Westville, N.J. As part of the decision, Sunoco said it would furlough 400 workers and cut its dividend.

"Most people look at Sunoco and wonder, who else is going to shut down until things improve?" Kloza said.

The EIA report also said that total petroleum supplies grew last week. Gasoline inventories grew by 2.9 million barrels last week and distillate fuel supplies grew by 700,000 barrels. Analysts expected smaller increases for both.

Elsewhere, the dollar got stronger compared with other major currencies, and equities markets lost ground in afternoon trading. Oil, which is traded in dollars, tends to fall when the dollar gets stronger.

At the pump, retail gas prices ticked higher overnight by less than a penny to a new national average of $2.465, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular gas is 11.8 cents cheaper than last month and $1.015 cheaper than a year ago.

In other Nymex trading, gasoline for November delivery lost 5.24 cents to settle at $1.7203 per gallon, and heating oil gave up 3.31 cents to settle at $1.7811 a gallon. Natural gas for November delivery added 2.4 cents to settle at $4.904 per 1,000 cubic feet.

Bit long but of interest,


Nigeria: Oil Majors Move to Scuttle U.S. $50 Billion Chinese Offer
Ijeoma Nwogwugwu and Constance Ikokwu
7 October 2009

--------------------------------------------------------------------------------
Lagos Concerns over the possibility of losing 16 prolific oil mining leases (OMLs) held for over 40 years by the international oil companies (IOCs) has led to intense lobbying and intrigues to delay the passage of the Petroleum Industry Bill (PIB) currently at the National Assembly.

The PIB, which has gone through the third reading in both chambers of the National Assembly, will repeal several of the existing oil industry legislations and usher in a revolutionary era in the manner the oil and gas sector operates. But major multinational oil firms - Shell, ChevronTexaco, TotalfinaElf, Agip and Exxon-Mobil - have upped the ante through intensive lobbying in the National Assembly to delay the passage of the PIB until next year and force the hand of the Federal Government to renew their leases under existing terms before they finally expire at the end of this month.

Specifically, the IOCs are concerned that the 16 oil blocks they have held since 1968 under joint venture contracts (JVCs), for which their leases expired between November and December last year and renewed for a year by the Yar'Adua administratiron, may form part of the 23 blocks currently being eyed by the Chinese National Offshore Oil Corporation (CNOOC). CNOOC recently made a $50 billion offer to the Federal Government to acquire a 49 per cent stake, translating to 6 billion barrels in oil reserves in 23 of the oil leases held by the IOCs. In its quest to acquire 6 billion barrels of oil, the CNOOC, acting under the auspices of Sunrise Consortium, applied for 49 per cent equity participation in the following blocks: i. OMLs 67, 68, and 70; ii. OMLs 11 and 13; iii. OMLs 71, 72, 74, 77, 79, 83, 85, 86, 88, 89, 90, 91, 95, 118, 127, 133, 139 and 140. All the blocks are held by the IOCs. The request is being given consideration as instructions have gone out for the data on the blocks to be released to Sunrise by the Department of Petroleum Resources (DPR).

In addition, a negotiating committee has been set up in NNPC to handle discussions with the company. The committee is to consider the request and determine an optimum price for the reserves in the blocks against the backdrop of the offer made by CNOOC. The oil companies had expected the automatic renewal of licences which expired last year. But the Federal Government stalled that move, preferring to renew them for only one year in order to take into account the realities of the present times with the passage of the PIB. However, the IOCs are currently pushing hard to get the 16 expired leases renewed a second time under long-term leases that would carry similar terms and conditions as the subsisting JV leases. But the government has balked at the idea of renewing the expired leases for longer periods because it is conscious of the fact that the PIB would usher in an entirely new regime that would require the incorporation of the JVs and even change the terms for the existing Production Sharing Contracts (PSCs) governing newer leases yet to expire. Furthermore, a delay of the passage of the bill would stall efforts by the Federal Government to give a stake in the existing oil leases to the oil communities in the Niger Delta as contained in the draft legislation with the parliament as now being proposed.

President Umaru Musa Yar'Adua, it was gathered, is eager to see the oil communities get some interest in the oil leases operated under the JVCs, which will be hived out from either the Nigerian National Petroleum Corporation's (NNPC's) or the oil major, or both stakes. A clause in the proposed PIB provides for compensation to the oil communities in the Niger Delta by giving them a sense of ownership for natural resources drilled from their backyard. But the companies would prefer that the communities get their share of oil proceeds only through the Federal Government's stake in the JVs while they keep their 40 per cent of the deal. In a memo written by the NNPC which was obtained exclusively by THISDAY, a breakdown of the 23 blocks shows that 18 are currently held under joint venture arrangements while the remaining five are operated under the PSCs. Of the JV blocks, 16 expired late last year while two are due for renewal in 2019. Also, virtually all the expired blocks are located in the continental shelf (shallow offshore) except the two unexpired ones that are located onshore.

The PSCs were only recently converted to OMLs and are not due for renewal until 2020 at the earliest. Expectedly, all the PSC blocks are located in the deepwater and belong in the first set of deep offshore blocks awarded in the 1993 licensing round. A further analysis shows that seven of the oil blocks are held by Shell Petroleum Development Company (SPDC) of which five expired in November 2008; four are held by Exxon-Mobil of which three expired in December 2008; 10 are held by Chevron of which eight have expired; one is held by Shell Nigeria Exploration and Production Company (SNEPCO - Shell deep offshore subsidiary); and one is held by TotalfinaElf. If the PIB is passed, it will not be business as usual because the IOCs will have less influence in the operations of the incorporated joint ventures (IJVs), which will now be restructured to reflect the new ownership structure, board composition and management of the leases. For a long time, the general perception was that the Federal Government has not been getting the best possible deal under the JVs because even though NNPC currently holds a majority stake of 57 per cent across board and is supposed to provide its share of the funding in proportion to its equity stake in the contracts, it has long been suspected that the JVs are entirely funded by the Nigerian government when the cash calls are paid.

With the passage of the PIB, Nigeria through NNPC will have a say in the day-to-day operations of the JVs, will be able to monitor how they are funded by all the partners in the agreement and will cease to be reliant on the Federal Government for the funding of the leases, as the IJVs can raise money from markets under commercial terms. Similarly, the PIB proposes to review several of the contract terms for the PSCs, particularly those governing the older PSCs signed in 1993, which conceded zero per cent royalties to the IOCs, among other unfavourable terms. The bill will result in the repeal of the Petroleum Act of 1969 as amended, Petroleum Profit Tax Act as amended, the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1999 as amended, the NNPC Act and PPPRA Act. Also, the Oil Pipelines Act, Associated Gas Re-injection Act and Regulations, Petroleum Equalisation Fund Act and Petroleum Technology Development Fund Act and other laws might also be repealed in the process. THISDAY learnt that the companies are hoping that if they are able to successfully mount pressure on the National Assembly to delay the bill, they can win the fight.

High stakes politics has since engulfed the industry with the Chinese lobbying to acquire substantial interests as well. They are said to be very adept at campaigning for a non-renewal of the licences of oil majors. It is further expected that the bill would enable the government to restructure the NNPC into a profit-driven company as obtained in other oil producing countries. It will also lead to the creation of the National Petroleum Directorate that will be responsible for policies in the oil and gas sector and the creation of several new companies, including the Nigerian Petroleum Inspectorate (NPI), the National Petroleum Products Regulatory Authority (NPPRA), the National Petroleum Assets Management Agency (NAPAMA) and the Nigerian National Oil Company Ltd (NNOC) as the successor to NNPC. Others are the Nigerian Petroleum Research Centre (NPRC), and the National Frontier Exploration Service. The Petroleum Technology Development Fund and Petroleum Equalisation Fund would also be restructured in line with the oil and gas policy. The Minister of State for Petro-leum, Mr. Odein Ajumogobia, a member of the Presidential Advisory Council on Petroleum, Dr. Muhammed M. Ibrahim and the Secretary/Legal Adviser of NNPC, Professor Yinka Omorogbe, have all described the bill "as a most comprehensive piece of legislation creating a legal and regulatory framework that was transparent, effective and 21st century compliant".

By ALEX KENNEDY, Associated Press Writer Alex Kennedy, Associated Press Writer 2 hrs 26 mins ago
SINGAPORE Oil prices reached a fresh one-year high near $76 a barrel Thursday in Asia on a weaker U.S. dollar and growing investor optimism about an economic recovery.

Benchmark crude for November delivery was up 72 cents to $75.90, the highest since October 2008, by midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract added $1.03 to settle at $75.18 on Wednesday.

Oil investors have fed off rising stock markets and a falling dollar this week to break out of a $65 to $75 trading range that has held since May.

The Dow Jones industrial average rose 1.5 percent Wednesday to above 10,000 for the first time in a year on encouraging earnings reports from Intel Corp. and JPMorgan Chase & Co. Most Asian stock indexes gained in early trading.

Meanwhile, the euro rose to $1.495 in early Asian trading from $1.4933 the previous day while the dollar gained to 89.46 yen from 89.34. Oil is traded in U.S. dollars and its price tends to rise when the dollar falls.

"There's a perception that the economy is getting stronger and the dollar is getting weaker," said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney. "But we haven't seen a real improvement in demand just yet."

U.S. oil inventories fell unexpectedly last week, the American Petroleum Institute said late Wednesday. Crude stocks dropped 172,000 barrels while analysts had expected a jump of 2.2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Gasoline supplies declined 2.7 million barrels, the API said, while analysts had anticipated an 1.6 million barrel gain.

In other Nymex trading, heating oil rose 2.43 cents to $1.97 a gallon. Gasoline for November delivery gained 2.77 cents to $1.89 a gallon. Natural gas for November delivery jumped 4.5 cents to $4.48 per 1,000 cubic feet.

In London, Brent crude rose 54 cents to $73.64 on the ICE Futures exchange.

From Wed, 14th.
BAGHDAD Exxon Mobil, Lukoil, Conoco Phillips, Eni, Occidental and Kogas have all resubmitted bids for either the West Qurna Phase 1 or Zubair oil field projects in what the Iraqi government is claiming as a success for its stickler terms.

The two fields along with four other oil fields and two gas fields were offered in a June 30 auction but only the Rumaila oil field was awarded. BP with junior partner Chinese National Petroleum Corp. was the only companies at the time to agree to the ministrys remuneration fee the per barrel profit the companies would earn when production was increased and slashed its initial offer in half to $2 per barrel.

After the auction, the ministry was criticized by Iraqi politicians, foreign governments and the oil industry for being inflexible. The ministry and government said it was protecting the sovereignty and resources of Iraq.

At the beginning it was not accepted by the companies except the Rumaila field, said Oil Minister Hussain al-Shahristani, in a press conference with government spokesperson Ali al-Dabbagh detailing progress in West Qurna and Zubair projects. So the oil ministry has succeeded when the companies have agreed for the maximum price and to be committed with the maximum level of production.


Oil Minister Shahristani (left) and government spokesperson Dabbagh announce progress on the Zubair and W. Qurna oil field projects (photo: Ben Lando/IOR)
Italys Eni with partners Occidental Petroleum from the United States and the Korea Gas Corp. said Tuesday they were set to sign up the Zubair field. The Oil Ministry said no contract has been signed yet but the companies agreed to the terms.

The Eni consortium agreed to a $2 per barrel remuneration fee and to increase production to 1.1 million barrels per day (bpd) within six years. Zubair holds 4 billion barrels of oil and is currently producing just more than 200,000 bpd.

Both Exxon Mobil and Russias Lukoil (with partner Conoco Phillips) have rebid for the super-giant West Qurna Phase 1. (Phase 2 will be included in an upcoming second auction.) The field holds 8.7 billion barrels and is producing just below 300,000 bpd. Both have agreed to a $1.90 per barrel remuneration fee. Exxon pledges to bring production to 2.1 million bpd in six years, where Lukoils production plateau is 1.5 million bpd.

Shahristani said the deals will be awarded within two weeks. He and Dabbagh said all that is required is Council of Ministers approval of the deals, not Parliament as some MPs have demanded.

The Oil Ministry has been given the authority to negotiate and to sign with the companies which accepted the Oil Ministrys conditions, said Dabbagh, which also is according to the policy reflecting the Oil Ministry and the government policy.

The Parliaments Oil & Gas Committee said it has received permission from the speaker of Parliament to formally question Shahristani Oct. 27, part of a larger and complex dispute between the government political parties which want more control over oil policy.

The Rumaila field now awaits Council of Ministers approval after the ministry and BP/CNPC agreed to the terms earlier this month. Within six years production will increase from just over 1 million bpd to 2.85 bpd. Shahristani said this and the West Qurna and Zubair projects alone will reach 6 million bpd. By enhancing existing production and opening up new fields with foreign investment, Shahristani said Iraq will reach up to 12 million bpd, the capacity of Saudi Arabia today. Iraq is the worlds third largest proven reserves but production has stagnated at no more than 2.5 million bpd.

Within the next 6 years, Iraq will be one of the biggest oil exports in the world and in this case it will not be needed to depend on other resources for the development of the country, Shahristani said.

The developing the oil fields will depend on these foreign investments, Shahristani said. We have proved that it is true that the policy was hard; but we were very keen about the Iraqi people riches and will not waste it.

This weekend the Oil Ministry will meet with pre-qualified companies in Istanbul to discuss the terms of the second bidding round, which Shahristani confirmed would take place during the first half of December.

Details announced by Shahristani:
Companies will be taxed 35 percent on profits, not cost recoup.
A quarter of profits will be passed to the respective Iraqi state owned firm, which has a 25 percent stake in the project.
Companies will partner with the Iraqi National Oil Company when it is reestablished; a law to do so is still in Parliament.
Estimates hundreds of thousands of Iraqi jobs created by these contracts; mandates 85 percent of workforce for foreign firm projects must be Iraqi.
Companies will have to train Iraqis in new techniques, inside and outside Iraq.
Iraqi subcontractors will be encouraged.
Contracts, when signed, will be published in full.

By ALEX KENNEDY, Associated Press Writer Alex Kennedy, Associated Press Writer Fri Oct 16, 12:40 am ET
SINGAPORE Oil prices continued a weeklong rally Friday in Asia, jumping above $78 a barrel, after U.S. gasoline inventories unexpectedly fell.

Benchmark crude for November delivery rose as much as 59 cents to $78.17 before slipping back to $78.03 by midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $2.40 to settle at $77.58 on Thursday.

The Energy Information Administration said Thursday that U.S. gasoline supplies fell 5.2 million barrels while analysts had expected a jump of 1.6 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Crude supplies rose 400,000 barrels, the EIA said, while analysts had anticipated an 2.2 million barrel gain.

Until this week, oil had bounced between $65 and $75 since May.

"The transition to a $70 to $80 range is now in full cry," Barclays Capital said in a report. "We expect further transitions upward to occur in line with improvements in the underlying market data."

A falling U.S. dollar has also helped boost oil this week.

In other Nymex trading, heating oil was steady at $2.02 a gallon. Gasoline for November delivery held at $1.95 a gallon. Natural gas for November delivery jumped 3.0 cents to $4.51 per 1,000 cubic feet.

In London, Brent crude for December delivery rose 22 cents to $76.45 on the ICE Futures. exchange.

By ALEX KENNEDY, Associated Press Writer Alex Kennedy, Associated Press Writer Fri Oct 23, 12:25 am ET
SINGAPORE Oil prices rose to near $82 a barrel Friday in Asia, just below a one-year high, as signs the global economic recovery is gathering pace fueled investor optimism.

Benchmark crude for December delivery rose 51 cents to $81.70 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 18 cents to settle at $81.19 on Thursday.

Investors have taken heart from evidence that recovery from the global recession is gathering pace. China said Thursday that its economy grew 8.9 percent in the third quarter, building on recent improvements in industrial production, retail sales and commodity imports.

"So far the path of recovery has surprised to the upside," Barclays Capital said in a report. "The groundwork for a sustainable move into higher price ranges has been laid."

Crude traders are also eyeing gains on global stock markets, which tend to reflect overall investor sentiment. The Dow Jones industrial average jumped 1.3 percent on Thursday and most Asian indexes rose in early trading Friday.

Prices soared to $82 a barrel earlier this week, the highest since October 2008, from $32 in December.

In other Nymex trading, heating oil rose 0.61 cent to $2.10 a gallon. Gasoline for November delivery gained 1.08 cents to $2.06 a gallon. Natural gas for November delivery jumped 5.6 cents to $5.00 per 1,000 cubic feet.

In London, Brent crude for December delivery rose 57 cents to $80.08 on the ICE Futures exchange.

By Steve LeVine

Oil has returned to the role it held before last year's price collapsea sanctuary of choice for investors fleeing the dollar. At least for now, that is.

Over the past week, crude surged through the $80-a-barrel barrier for the first time since September 2008. (The benchmark price of a barrel of crude oil ended Friday, Oct. 23, at $80.50.) This follows a breathtaking, yearlong bout of volatility. Since the summer of last year, oil has rocketed to $147, plunged to $32, and just a week ago traded below $70.

Yet many analysts say oil-market fundamentals are so weak that prices won't rise much higher, and may in fact retreat. "This is a dollar-led rally and unsustainable," says Phil Flynn, an oil analyst with PFGBest Research, a futures brokerage.

Another Safe Haven, Gold, Soars by 20%
The dollar is the main driver behind a 15% increase in oil prices over the past week, analysts say. Since March the dollar has fallen 15% in inflation-adjusted value compared with a basket of currencies of its major trading partners. Traders have sought to cushion the fall in the value of the dollars they are holding by buying futures in traditional safe havens. Mirroring crude's climb, gold has soared this year to more than $1,000 an ounce, or by about 20%. "The steady increase in oil prices means that traders want to hold hard assets," said Lawrence Goldstein, a director at the Energy Policy Research Foundation in Washington.

Few experts are predicting a sudden strengthening of the dollar, so oil prices could stay where they are. But the fundamentals are so weak, analysts say, that the price could rapidly fall back below $80 and even further.

When oil prices rocketed past $140 in 2008, the causes lay mostly with the supply-demand balance: There was virtually no spare production capacity anywhere in the world, so that any supply disruption, such as hurricanes in the Gulf of Mexico and the routine militant attacks in Nigeria, pushed prices up.

Plenty of Production Capacity, Oil in Storage
Observers predicting a price spike have pointed to a drop in global oil exploration and production, saying that when economies rebound there will be a shortage. In the U.S., for instance, exploration is down 27.8% from a year ago, with 309 rigs actively drilling, compared with 428 at this time in 2008, according to the Baker Hughes Rig Count. Abroad, there are 8% fewer rigs drilling than there were a year ago764, down from 831. Major oil companies such as ExxonMobil (XOM), Chevron (CVX), and BP (BP) continue to spend on exploration, while smaller companies have cut back substantially.

But that is just part of the picture, analysts say. For starters, spare production capacity currently runs about 6.7 million barrels a day, according to the International Energy Agency, with Saudi Arabia accounting for 3.8 million barrels, or 56%, of the total.

In addition, oil storage tanks around the world are overflowing and would have to be drawn down before any big price spike takes place. U.S. crude inventories stand at 339 million barrels, up 27.7% from a year ago, reports the U.S. Energy Information Administration. In addition, since mid-September the Strategic Petroleum Reserve has exceeded 725 million barrels, a 27-year record. In fact, there is such a global glut that there is almost no place on land to put all the oil. An estimated 125 million barrels' worth are floating around on tankers scattered over the globe, according to OPEC. Normally, a negligible amount of oil is being stored offshore in ships.

Refineries, too, can ramp up and produce oil products, analysts say. U.S. refineries are operating at around 80% of capacity, among their lowest rates in two decades. "High inventories and weak market fundamentals might eventually weigh on markets" and push prices lower, said Edward Morse, managing director at Louis Capital Markets, a London-based brokerage. So it's possible that crude isn't such a safe haven after all.

Inverse bullish head and shoulders on the ETF wheat chart.

the other side of the issue was put in a very long article, primarily about BP, in yesterday's Sunday Times.
the nub of it was that regardless of the short term issues as set out by BB above, known oil reserves are being depleted far quicker than new are being found.
of course this does not necessarily mean that crude will rise - it almost certainly will over time, but it is driven by other factors - but that second tier and smaller companies with proven reserves of both quality and quantity, will become ever more tempting morsels

Just to balance that bearish point up re- wheat/oil

well worth a read.......http://sharecrazy.com/beta/Tips/2733/where-will-oil-go-next

By BARRY HATTON, Associated Press Writer Barry Hatton, Associated Press Writer Tue Nov 24, 6:44 am ET
Oil slipped towards $77 a barrel Tuesday as markets awaited data expected to show that the pace of U.S. economic recovery is slower than previously estimated.

By early afternoon in Europe, benchmark crude for December delivery was down 12 cents to $77.44 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 9 cents to settle at $77.56 on Monday.

The U.S. government was due to report Tuesday on gross domestic product and consumer confidence. Investors expected the data to show the economy is still growing, but at a slower pace than initially calculated.

Also, many analysts predict the economy will weaken again next year as the effect of stimulus packages wears off and the jobless rate dampens consumer spending.

Crude has bounced between $76 a barrel and $82 for more than a month as a weakening dollar offsets concerns about tepid consumer demand. Oil often trades inversely to the strength of the dollar as investors buy commodities as a hedge against inflation.

"The ceiling has been set by weak refining margins, lackluster demand and a global economic recovery that is expected to be sluggish," Societe Generale said in a report.

Investor optimism was buoyed by a report Monday from the National Association of Realtors that October home sales rose more than 10 percent, suggesting strength in the U.S. economy. On the other hand, crude refiner Valero Energy said it shut down a plant last week because demand for oil products such as gasoline has been weak.

In other Nymex trading, heating oil was up 0.81 cent to $1.9880 a gallon. Gasoline for December delivery rose 0.84 cent to $1.9878 a gallon. Natural gas for December delivery was 0.4 cents higher at $4.477 per 1,000 cubic feet.

In London, Brent crude for January delivery rose 23 cents to $77.69 on the ICE Futures exchange.

____

Crude Oil Buyers Risk Bull Trap Near $80: Technical Analysis

Crude oil buyers may misinterpret the markets climb this week as a signal for further gains, exposing themselves to a potential price reversal, according to Cameron Hanover Inc.

Oil, rising for a third week in four, will face stronger resistance the closer it gets to $82 a barrel, a one-year high reached on Oct. 21, said Peter Beutel, president of the trading adviser in New Canaan, Connecticut. Buyers should watch for the market to settle higher each day before stepping in, rather than take their cues from intraday price swings, he said.

We need to be careful of bull traps, Beutel said in an e-mail. We should probably look for two closes with a second day higher than the first breakout day to confirm that a real breakout has occurred.

Crude oil touched a one-week high above $79 a barrel on Dec. 1 as the dollars decline against the euro bolstered the investment appeal of commodities including gold. The contract for January delivery on the New York Mercantile Exchange was at $76.93 a barrel in electronic trading, up 33 cents, at 11:23 a.m. Singapore time. Futures, which lost 54 percent in 2008, have gained 73 percent this year.

Oil remains in a downtrend channel that goes back about six weeks and should a breakout occur, a rally may have a long-term swing objective to $93.50 a barrel, Beutel said. Prices last traded at that level on Oct. 3, 2008.

Beutel identified five levels of resistance before $82 a barrel, starting with $78.90. On the downside, the first line of support is near $75.65, followed by about $72.40.

Decisive breakouts would be bullish and would suggest fresh legs higher, he said. Of course, these resistance levels have turned back many earlier attempts.

Kosmos Energy, Tullow Oil's operating partner on the West Cape Three Points Block, offshore Ghana, has reported another encouraging test drilling.

Round 2 of the Iraq oil bidding battle begins
By Ben Lando of Iraq Oil Report
Published December 10, 2009
BAGHDAD - Asian, European and Turkish oil executives exchanged handshakes and smiles Thursday, awaiting an early morning flight to Baghdad. They represented three of 44 competitors angling for 10 of Iraqs best untapped oil projects on offer this Friday and Saturday in an auction at the Iraqi Oil Ministry.

The companies are also comrades of sorts, of a fraternity of foreign oil companies desperately trying to return to the worlds most prospective oil patch. After years of isolation, companies are willing to settle on 20-year service contracts rather than the production sharing agreements that have become the industrys preference.

Companies pre-qualified to bid come from 24 countries. Seven are based in the United States.

This is Iraqs second auction the first on June 30 that eventually saw awarded three of the six oil fields offered as part of the ministrys efforts to boost production from 2.4 million barrels per day (bpd) to 6 million within seven years and as much as 10 million within 10-15 years, rivaling Saudi Arabia.

In the two auctions Iraq offered up 84 billion of its 115 billion barrels in proven reserves.

Iraq wants to eventually be a net exporter of oil, natural gas, fuel and electricity, all which require hundreds of billions of dollars of investment over a timeframe of two decades.

Even the mid-term goal is optimistic, with many challenges, both foreign and domestic, investors must face.

Last Tuesdays quintuple car bombs not only killed and injured around 600 people throughout Baghdad, but served as a reminder to Iraqis, politicians, security officials and foreign oil companies that Iraq remains a very dangerous place.

But companies say they will be in attendance. And security will be tight, says the head of Iraqs Oil Police, who has long been planning for the conference.

Combined with past wars, sanctions and mismanagement by Saddam Hussein, an increase in production and thus exports, which Iraq relies on for nearly all its state income, more than $34 billion this year so far first requires a major facelift of infrastructure from the field to the pipelines to storage tanks to export routes.

In exchange Iraq is offering super-giant fields Majnoon and West Qurna-Phase 2, along with eight other oil projects. Companies will place bids on two weighted criteria: to what level production of the fields will be raised, and how much per barrel produced will they get paid.

The latter will be weighted more heavily 80 percent to 20 percent when the ministry judges the bids, so as not to encourage companies to inflate their production targets.

Bids in the first round in June did just that, says Thamir Ghadhban, top oil adviser to Prime Minister Nouri al-Maliki and twice minister since 2003.

On June 30 only the massive Rumaila field was awarded, to BP and the Chinese National Petroleum Corp. Companies felt the ministry was being too stingy with the fee they were willing to pay for each barrel of increased oil flow.

But realizing there was much more to gain Iraq has at least the worlds third largest reserves, with much more to find companies resubmitted their offers. Last month Exxon Mobil with junior partner Shell and Eni with partners Kogas and Occidental Petroleum both were given initial awards to the West Qurna-Phase 1 and Zubair fields, respectively.

Even after this, however, companies have a ways to go. A new government will be formed after Marchs national elections, and there is a sentiment, though now minority, that contracts must have Parliaments approval. Some say they are illegal outright without a new oil law stuck in political fighting for years. And although there is recognition that foreign expertise, training and technology is needed in Iraqs struggling oil sector, theres no agreement as to how big a role and for how long foreigners should play in a sector popularly nationalized for the past three decades.

* The fields being offered are Najmah, Qaiyarah, North and Central East Baghdad, Eastern Fields (Gilabat, Kashem al-Ahmar, Nau Doman, Qumar), Badra, Middle Furat (Kifl, West Kifl, Merjan), Halfaya, Garraf, Majnoon and West Qurna-Phase 2.

* Qualifying Firms (alphabetical by country):
Algeria: Sonatrach
Angola: Sonangol
Australia: BHP Billiton; Woodside.
Canada: Nexen.
China: CNOOC; CNPC; Sinochem.
Denmark: Maersk.
France: Total.
Germany: Wintershall BASF Group.
India: Oil India; ONGC.
Indonesia: Pertamina.
Italy: Edison; Eni.
Japan: Inpex; Japex; JOGMEC; Mitsubishi Corp.; Nippon.
Kazakhstan: KazMunaiGas
Korea: Kogas.
Malaysia: Petronas.
Netherlands: Shell.
Norway: StatoilHydro.
Pakistan Petroleum
Russia: Gazprom; Lukoil; Tatneft.
Spain: Repsol.
Turkish Petroleum Corp.
United Kingdom: British: BG Group; BP; Cairn.
United States: Anadarko; Chevron; ConocoPhillips; ExxonMobil; Hess Corp.; Marathon; Occidental Petroleum.
Petrovietnam

Iraqs Second Oil Auction Qaiyarah
By Staff of Iraq Oil Report
Published December 11, 2009
BAGHDAD - UPDATE TIME: 12:42 PM

The Qaiyarah oil field is small with only 8 million barrels per day, compared to the super-giants that went on auction earlier in the day. Its located in Nineveh province, only 70 km south of Mosul, where al-Qaida and other insurgent groups dominate on any given day.

The field was found in 1928. Eighty six wells have been drilled since then. Production started in 1936 but geography and geology plague it.

12:42:PM: Sonangol offer $12.50 remuneration per barrel and a production plateau target of 120,000 barrels per day for Qaiyarah. The offer is rejected. Iraqs Oil Ministry states that the maximum remuneration fee is $5 per barrel.

Iraqs Second Oil Auction Halfaya
By Staff of Iraq Oil Report
Published December 11, 2009
BAGHDAD - UPDATE TIME:11:52 AM

With 4.1 billion barrels of reserves, Halfaya is located in Missan province, southeast of Amara, the capital. Oil was first found in 1976 and seven wells have been drilled, four of which have had limited production.

11:52: AM: Taking 50 percent of the oil field, China National Petroleum and Consortium was the big winner in Halfaya. Junior partners Total and Petronas each took 25 percent. The Chinese major beat off bids from Eni Oil and Gas, Sonangol, Kogas, Occidental and China National Offshore Oil Corporation, ONGC, TPAO and Oil India.

The winning bid offered a $1.40 per barrel remuneration fee and a production plateau target of 535, 000 barrels per day (bpd). Eni Oil and Gas with partners Sonangol, Kogas, Occidental and China National Offshore Oil Corporation lost out with an offer of $12.90 remuneration per barrel and a production plateau target of 400,000 bpd. Other bids included ONGC, TPAO and Oil Indias offer of $1.40 remuneration per barrel and a production plateau target of 535,000 bpd. Also offered was a 50:50 split between Statoil and Lukoil at $1.40 remuneration per barrel and a production plateau target of 535,000 bpd.

The winning bids remuneration fee was lower than the Ministry of Oils maximum, so the figure was not disclosed.

Iraqs Second Oil Auction The Eastern Fields
By Staff of Iraq Oil Report
Published December 11, 2009
BAGHDAD - UPDATE TIME: 12:40: PM

The four fields that make up the Eastern Fields project are located in Diyala province, between Kirkuk and Baghdad. Gilabat, Khashem al-Ahmar, Nau Doman and Qumar are all undeveloped. Well tests have confirmed oil and gas in all four. Khashem al-Ahmar was discovered first, in 1927, then Gilabat in 1958, Nau Doman in 1976 and Qumar in 1979.

Al-Qaida and other insurgent groups have been active in the area around the fields, and pose an added risk to investors and workers. They are also grouped in disputed territories fought over between Iraqs Arabs and Kurds.

12:40:PM: Sonangol offer $12.50 remuneration per barrel and a production plateau target of 120,000 barrels per day. The offer is rejected. Iraqs Oil Ministry states that the maximum remuneration fee is $5 per barrel.

Iraqs Second Oil Auction Majnoon
By Staff of Iraq Oil Report
Published December 11, 2009
BAGHDAD - UPDATE TIME: 11:09 AM

The 12.6 billion barrel super-giant Majnoon oil field is in Basra province, 60 km northwest of Basra city, and extends toward Missan province. According to Iraqs Petroleum Contracts & Licensing Directorate, Majnoon was discovered in 1976. Twenty four wells have been drilled and it has been partially developed. Work stopped in the 1980s during the Iran-Iraq war, and restarted in 2002.

French major Total had a preliminary agreement with Saddam Hussein to develop the field, but work stopped because of sanctions. Total with partner Chevron is expected to make a strong bid for the field, along with other majors including Exxon Mobil and Shell.

11:09: AM: Shell wins a 60 percent of share of Majnoon oil field with junior partner Petronas. The oil giants beat off bids from Total, China National Petroleum and Consortium. Petronas took 40 percent of the field as Shells junior partner. Shell offered a $1.39 remuneration fee per barrel and a production plateau target of 1.8 million barrels per day. Total offered $1.75 remuneration and 1.405 million bpd. Both remuneration fees were lower than the maximum Iraqs Ministry of Oil was willing to pay.

Iraqs Second Oil Auction East Baghdad
By Staff of Iraq Oil Report
Published December 11, 2009
BAGHDAD - UPDATE TIME: 12:01 PM

The East Baghdad oil field holds 8.1 billion barrels, stretching from Baghdad and into Salahadin province. It is, however, next to and possibly runs below Sadr City, the often volatile poor section of Baghdad that is under full control of those loyal to cleric Moqtada Sadr.

Only the central and north parts of the field are up for auction, northwest of Diyala river. The southern part is allegedly being negotiated with a Japanese oil company. East Baghdad was discovered in 1976 and 64 of the 80 wells are in the contract area. Limited production began in 1980.

12:01 PM: So far, no bids have been placed on offer for East Baghdad oil field.

Complete Round 2 results
By Ben Lando of Iraq Oil Report
Published December 13, 2009

A smiling Oil Minister Shahristani, in one of the many photos he took with celebratory ministry, security and political staff after the Dec. 12 auction. (STAFF/Iraq Oil Report)
BAGHDAD - The highly anticipated second licensing round is over, with Iraq awarding seven of 10 fields to foreign oil companies with the best bid.

Heres what went down:


Iraqi oil fields offered in the second licensing round. (Source: www.pcld-iraq.com)
MAJNOON
Winning bid: Shell (60 percent) with Petronas (40 percent)
Remuneration fee: $1.39/barrel
Production Plateau Target: 1.8 million barrels per day (bpd)

Competing bids:
Total (57 percent) with CNPC (43 percent)
Remuneration Fee: $1.75/barrel
Production Plateau Target: 1.405 million bpd

Project details:
First Commercial Production Rate: 175,000 bpd
Plateau Production Duration: 10 years
Non-recoverable Signing Bonus: $150 million
Minimum Expenditure Obligation: $300 million

WEST QURNA PHASE-2

Winning bid: Lukoil (85 percent) with Statoil (15 percent)
Remuneration fee: $1.15/barrel
Production Plateau Target: 1.8 million bpd

Competing bids:
Petronas (60 percent) with Pertamina (20 percent), PetroVietnam (20 percent)
Remuneration Fee: $1.25/barrel
Production Plateau Target: 1.2 million bpd

Total (100 percent)
Remuneration Fee: $1.72/barrel
Production Plateau Target: 1.43 million bpd

BP (51 percent) with CNPC (49 percent)
Remuneration Fee: $1.65/barrel
Production Plateau Target: 888,000 bpd

Project details:
First Commercial Production Rate: 120,000 bpd
Plateau Production Duration: 13 years
Non-recoverable Signing Bonus: $150 million
Minimum Expenditure Obligation: $250 million

HALFAYA

Winning bid: CNPC (50 percent) with Petronas (25 percent), Total (25 percent)
Remuneration Fee: $1.4/barrel
Production Plateau Target: 535,000 bpd

Competing bids:
Statoil (50 percent) with Lukoil (50 percent)
Remuneration Fee: $1.53/barrel
Production Plateau Target: 600,000

ONGC (50 percent) with TPAO (30 percent), Oil India (20 percent)
Remuneration Fee: $1.76/barrel
Production Plateau Target: 550,000 bpd

Eni (30 percent) with Sonangol (15 percent), CNOOC (15 percent), Kogas (20 percent), Occidental (20 percent)
Remuneration Fee: $12.90/barrel
Production Plateau Target: 400,000

Project details:
First Commercial Production Rate: 70,000 bpd
Plateau Production Duration: 13 years
Non-recoverable Signing Bonus: $150 million
Minimum Expenditure Obligation: $200 million

GARRAF

Winning bid: Petronas (60 percent) with Japex (40 percent)
Remuneration Fee: $1.49/barrel
Production Plateau Target: 230,000 bpd

Competing bids:
KazMunaiGas (45 percent) with Kogas (45 percent), Edison (10 percent)
Remuneration Fee: $2.55/barrel
Production Plateau Target: 185,000 bpd

TPAO (60 percent), ONGC (40 percent)
Remuneration Fee: $2.76/barrel
Production Plateau Target: 200,000 bpd

Pertamina (100 percent)
Remuneration Fee: $7.50
Production Plateau Target: 150,000

Project details:
First Commercial Production Rate: 35,000 bpd
Plateau Production Duration: 13 years
Non-recoverable Signing Bonus: $100 million
Minimum Expenditure Obligation: $150 million

BADRA

Winning bid: Gazprom (40 percent) with TPAO (10 percent), Kogas (30 percent), Petronas (20 percent)
Remuneration Fee: $5.50/barrel (The consortium initially bid for $6/barrel, which was more than the ministry was willing to pay. The consortium then agreed to the ministrys fee.)
Production Plateau Target: 170,000 bpd

Competing bids: NONE

Project details:
First Commercial Production Rate: 15,000 bpd
Plateau Production Duration: 7 years
Non-recoverable Signing Bonus: $100 million
Minimum Expenditure Obligation: $100 million

QAIYARAH

Winning bid: Sonangol (100 percent)
Remuneration Fee: $5/barrel (The company initially bid for $$12/barrel, which was more than the ministry was willing to pay. The consortium then agreed to the ministrys fee.)
Production Plateau Target: 120,000 bpd

Competing bids: NONE

Project details:
First Commercial Production Rate: 30,000 bpd
Plateau Production Duration: 9 years
Non-recoverable Signing Bonus: $100 million
Minimum Expenditure Obligation: $150 million

NAJMAH

Winning bid: Sonangol (100 percent)
Remuneration Fee: $6/barrel (The company initially bid for $8.50/barrel, which was more than the ministry was willing to pay. The consortium then agreed to the ministrys fee.)
Production Plateau Target: 110,000 bpd

Competing bids: NONE

Project details:
First Commercial Production Rate: 20,000 bpd
Plateau Production Duration: 9 years
Non-recoverable Signing Bonus: $100 million
Minimum Expenditure Obligation: $100 million

There were no bidders on the fields or projects: East Baghdad (north and central); Middle Furat (Kifl, West Kifl, Merjan); and Eastern Fields (Gilabat, Khashem Al-Ahmar, Nau Doman, Qumar).

From Irqa oi news, 14/12/009

Iraqs Kurds, who favor heavy decentralization, and nationalist Arabs, who want strong state control, have both questioned Shahristanis oil deals. Some have called them illegal.

In press conferences and speeches before the auction, both Prime Minister Nouri al-Maliki and Oil Minister Shahristani, reiterated the governments pledge that the deals would remain valid no matter what happens in the March 7 national election.

Legal cover has been as much of a concern to foreign oil companies as physical security. Three days before the first field was put on the block, five bombs killed more than 120 people. Iraqs northern export pipeline was offline for a week, during both October and November, due to sabotage.

The contract specifies very clearly the responsibilities of the companies and the security for the fields is the responsibility of the Iraqi government but if the oil companies require specific security for their personnel or their activities, that is their responsibility, said Shahristani.

We will make necessary precautions to deal with it, said Torgeir Kydland, the senior vice president for Iraq at Statoil, the Norwegian firm which partnered with Russias Lukoil to increase production at the West Qurna-Phase 2 project from nearly nothing now to 1.8 million bpd.

That additional crude, however, now needs somewhere to go. And throughout the value chain, there are missing links. Iraq needs to upgrade refineries, build more storage units, and create a larger capacity transport infrastructure. Following wars and sanctions, everything needs repair and modern technology.

Iraq cannot export much more than it does already; depending on which segment of the pipeline system, either repairs have not been made or an increase in oil flow risks all-out rupture.

The amount of work required for the infrastructure to handle such a massive production and to transport it and to export it is huge, said Shahristani. He said a pipeline and export master plan will be completed soon after assessing the needs of the fields awarded for development.

There will be another port there and also a network of pipelines extended from the north of Iraq to the south and from the east to the west of Iraq to export oil from different areas, he said. Such a move will diversify recipients, increase delivery to those already served, and allow it to separate the different qualities of crude instead of selling it as a concoction of one.

And when it makes significant gains in production, it will have to find its place within OPECs quota system, which Iraq a founding member has been excused from because capacity was cut by wars and sanctions. Shahristani said the 12 million bpd target will merely be Iraqs capacity, and that actual output will be based on market demands and aligned with OPEC. There is language in the contracts that compensates foreign companies if production is reduced, he said.

Iraq is considered by Transparency International as one of the most corrupt countries in the world. And the influx of potentially hundreds of billion dollars of foreign investment into an as yet unproven government of struggling institutions is a volatile concoction producing in other developing yet resource-rich nations what has come to be known as the resource curse.

That is, when oil revenues arent used to benefit the citizens of the producing country but, rather, the elite. Investor companies are often enablers if not complicit, and their home nations approving.

The result is a populace lacking basic services and a polluted environment that soon turns into violence, destabilizing both oil operations and government. The resource curse in Iraq, however, is not inevitable. And although history is a bad indicator, in Iraq and in most oil producers, such a trend can be slowed and reversed.

Thats why were glad its not coming on line all in one day, said a senior U.S. official. The ministrys Inspector Generals office is considered to be both progressive and aggressive.

The companies are expected to reach an initial agreement with the ministry by the end of the year.

They will give us a work plan about the numbers of the fields to be developed, the expected costs, the invested money, and the number of the workers, said Shahristani.

This is then followed by Cabinet approval and the final signing. Thirty days later the companies must pay the signature bonus, which is no less than $100 million, depending on the field. And its non-recoverable, as opposed to the first round where the much larger signing bonus was given as a loan.

Oil prices hovered below $70 a barrel on Tuesday, held down by high inventories and weak demand while investors awaited new data about the U.S. economy.

By early afternoon in Europe, benchmark crude for January delivery was up 10 cents at $69.61 in electronic trading on the New York Mercantile Exchange. On Monday, the contract fell 36 cents to settle at $69.51.

Prices have dropped over the previous nine days the longest slide since 2001 on investor doubts about a recovery in U.S. crude demand and as the dollar strengthened.

Crude is down about 13 percent since reaching its 2009 high of $82 a barrel in October.

Analysts at Petromatrix Research said Tuesday that "the negative momentum is not over."

And Galena Illinois-based Ritterbusch and Associates said in a report said a further slide to the $65 to $66 area is "looking increasingly likely."

Later Tuesday, the U.S. is due to publish its weekly oil inventory report. Other economic data, including November industrial output figures, are also expected to offer some clues about the health of the world's largest economy.

While some encouraging signs for the U.S. economy have appeared lately, the Federal Reserve forecasts unemployment will remain high because companies won't start rehiring until they are confident the recovery will last.

Investors are also watching closely the U.S. dollar, which has reversed a yearlong slide this month. Traders had been buying crude and other commodities as a hedge against inflation and a weaker currency.

The euro fell to $1.4556 on Tuesday from $1.4656 on Monday while the dollar rose to 89.24 yen from 88.55. The British pound fell to $1.6261 from $1.6304.

In other Nymex trading in January contracts, heating oil was down 0.11 cent at $1.9071 while gasoline was up 0.48 at $1.8315. Natural gas rose 7.3 cents to $5.405 per 1,000 cubic feet.

In London, Brent crude for January delivery lost 5 cents to $71.84 on the ICE Futures exchange.

By TAREK EL-TABLAWY
AP Business Writer


INO.com Headlines
OPEC revises up 2010 world oil demand
13 minutes ago

(AP:CAIRO) OPEC nudged its 2010 forecast for global oil demand slightly higher Tuesday, a week before it's due to meet, but cautioned that the pace of the global recovery may affect consumer appetite for its chief export.

The 12-nation Organization of the Petroleum Exporting Countries said in its December Monthly Oil Market Report that world oil demand was expected to increase by 800,000 barrels per day to 85.13 million barrels per day, largely from developing countries. That's a 70,000 barrel per day upward revision from its November forecast.

The group, which supplies about 35 percent of the world's crude, said the market still faced some risks linked in part to the pace of the world's ability to rebound from its worst recession in over six decades.

OPEC noted that oil inventories remain exceedingly high in developed nations and ample stocks of refined petroleum products could continue to affect demand and, as a result, oil prices.

"A more detailed look at the supply/demand balance indicates that fundamentals will continue to be weak in the first half of the year before improving in the second half, as reflected in the demand for OPEC crude," OPEC said.

"Despite the low base in world oil demand in 2009, which suggests a strong increase in 2010 oil demand growth, the possibility of a weak and slow economic recovery could adversely affect oil demand growth," it said.

The report is generally optimistic about the rebound in demand in 2010 after what OPEC described as "one of the worst years" for global oil demand. But it also offers group members a sobering reminder of the challenges they face in trying to support prices for their chief export.

Oil prices hovered below $70 a barrel Tuesday in Asia after dropping the last nine days on investor doubts about a recovery in U.S. crude demand and amid a strengthening dollar.

OPEC ministers meet in Luanda, Angola, on Dec. 22, but several of the bloc's biggest producers have indicated that a change in member quotas was not likely.

Saudi Arabia's oil minister, whose country sits atop the world's largest proven crude reserves and is considered OPEC's kingpin, earlier this month described oil prices as "perfect."

The group has said oil at between $75 to $80 per barrel was a fair price for producers and consumers. But crude has fallen by about $7 per barrel in the past few weeks, in part because of fluctuations in the U.S. dollar and instability in equity markets.

OPEC has left its members' production quotas unchanged since last December, when it announced the last of a series of cuts aimed at bringing their output down by 4.2 million barrels per day. The cuts helped engineer a rebound in crude prices, which had collapsed to the low $30s from a mid-2008 high of almost $150 per barrel.

OPEC said in its report that the demand for its crude was expected to increase 100,000 barrels per day, or 30,000 barrels a day more than its previous month's forecast. It attributed the slight increase to more crude from countries outside the producer bloc.

It also said production from 11 members _ not including Iraq which is currently exempt from the quotas _ averaged 26.61 million barrels per day in November. That increase of 44,000 barrels per day from the previous month showed more erosion in compliance with output levels from the members.

The group is currently producing about 600,000 barrels per day more than it said it should when it announced the December cuts.

By CHRIS KAHN, AP Energy Writer Chris Kahn, Ap Energy Writer 1 hr 29 mins ago
NEW YORK Oil prices rose sharply Wednesday, wiping out a week's worth of declines after the government said supplies of oil and petroleum products dropped much more than expected.

Benchmark crude for January delivery surged by $2.23, more than 3 percent, to $72.92 a barrel on the New York Mercantile Exchange. In London, Brent crude for January delivery added $1 to $73.05 a barrel on the ICE Futures exchange.

The Energy Information Administration said that crude supplies fell by 3.7 million barrels last week and distillate fuels including heating oil dropped by 2.9 million barrels. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., expected more moderate draws of 2 million barrels of crude and 750,000 barrels of distillates.

Refineries tend to try to get rid of as much crude as possible toward the end of the year to avoid paying higher taxes. But heating oil supplies also dropped as frigid temperatures blanketed the Midwest and Northeast.

"The cold weather has really been pushing prices right now," analyst Peter Beutel said.

At the pump, retail gas prices fell by less than a penny overnight to a new national average of $2.594 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 3.7 cents cheaper than it was last month, but it's 93.3 cents more expensive than the same time last year.

In other Nymex trading in January contracts, heating oil climbed 6.59 cents to $1.9692 a gallon while gasoline gained 4.75 cents to $1.8926 a gallon. Natural gas lost 3.7 cents to $5.486 per 1,000 cubic feet.