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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.