POST YOUR OIL NEWS, Clips here


"

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.