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An interesting view of future Iraq..

Friday, February 05, 2010
Michael Schwartz, Will Iraq's Oil Ever Flow?

Sociologist Michael Schwartz, a sharp Iraq-watcher and author of a provocative book on the Iraq War, surveys the travails of Iraq's oil industry since the 2003 Bush-Cheney invasion and points to the continued difficulties of the Iraq petroleum industry.

My own guess is that eventually the security situation will settle down enough to allow the foreign petroleum companies now signing bids to develop specific fields to press forward. It will be a long slow haul, but Iraqi petroleum will likely come online over time. When that expansion of production happens,it will have a big impact on Iraq. There will be massive internal migration of labor to the Basra and other oil-rich areas, mixing up Sunni Arabs and Kurds with regional labor migrants from e.g. Egypt, India and Pakistan.

The Neoconservative dreams that Iraq would rival or replace Saudi Arabia as swing producer, and that it would recognize and perhaps supply petroleum to Israel, however, are both unlikely developments. Moreover, as China, India and other Asian giants begin growing more rapidly and depending on automobiles, demand for petroleum could well grow so fast over the next twenty years that any new big fields' production is just slurped up, with the world demanding more. That is, Rupert Murdoch's notion that Iraq production could plunge prices down to $14 a barrel for the long term, helping industrialized economies, was always stupid, since it did not take account of rapidly growing demand from Asia.

The emergence of Iraq as a petroleum state (or rather a bigger, wealthier petroleum state) will also further upset the geopolitical balance in the Middle East. With a Shiite majority, it will offset Saudi Arabia in the Sunni-Shiite culture wars. It seems likely to have a big, well-trained and effective army, which cannot always be depended on to be allied with the interests of Washington. A military coup down the road cannot be ruled out (there are few democratic oil states, where petroleum supplies more than a third of the national income). And, it likely will be a friendly and supportive big brother to movements like Hizbullah in Lebanon. While it won't always be on the same page as Iran, it will likely be an ally of and support for Tehran. One possibility is that a rich Iraq 20 or 25 years from now will be in a position to promote Twelver Shiism in the region, picking up some of the Alevis in Turkey, the Nusairis in Syria and the Zaidis in Yemen. With its possession of the Shiite holy cities of Najaf and Karbala, with the enormously influential chief cleric of Najaf as among its more prominent residents, Iraq's soft power among Afghan, Pakistani and Indian Shiites has the potential for being greater than that of Iran.

In the end, an oil-rich, Shiite-dominated Iraq is far more likely to be a victory for the Shiite revival kicked off in 1979 by Imam Ruhollah Khomeini than a triumph for Richard Perle, Paul Wolfowitz, Daniel Pipes and the other hard line warmongers who advocated for a revolution-by-invasion in Iraq.

But Schwartz is correct that all these developments are likely a decade or more off.

GE Oil & Gas Says Iraqi Market Wont Boom This Year

Feb. 4 (Bloomberg) -- GE Oil & Gas, the General Electric Co. unit that provides equipment to oil companies, said Iraq is a challenging market and theres no prospect of a boom for suppliers for at least a year.

Iraq is a potentially interesting market for us, Claudi Santiago, head of GE Oil & Gas, said in an interview in Florence, Italy. Its very fragile and over time we know that there are opportunities. It wont be a booming market in the next 12 months because of political and security concerns.

Iraq, holder of the worlds third-largest crude reserves, faces technical and labor challenges to raise oil output to a target of at least 11 million barrels a day in the next decade. While the worlds largest energy companies have agreed to develop fields in the country, they must first rebuild infrastructure thats been destroyed by years of war.

Explorers need time to decide what equipment they need before placing orders, Santiago said. A huge amount of equipment that GE installed in Iraq before conflict and sanctions halted investment now needs upgrading, he said.

Exxon Mobil Corp., PetroChina Co., BP Plc and Royal Dutch Shell Plc have agreed to work at fields in Iraq, which has said it needs $200 billion in investment to increase oil output from the current 2.32 million barrels a day.

Shell Seeks Contractors

We are procuring contractors who can come with us into Iraq in order to start to deliver, Shell Chief Executive Officer Peter Voser said today. It will take a few years before production growth really kicks in.

Oil majors production contracts with Iraq include targets for higher output. BP and China National Petroleum Corp. agreed in December to invest about $15 billion over 20 years to boost output at Rumaila, Iraqs largest field, to 2.85 million barrels a day from 1.07 million barrels a day.

Equipment on the ground in Iraq needs to be expanded and improved, Andy Inglis, head of exploration and production at BP, said yesterday in an interview in London. This is going to be a period of build-up; its about mobilization of our equipment, creating effective use of it. But its not an immediate ramp-up.

Oil Prices Sink

Oil-service providers suffered a drop in demand last year as the financial crisis restricted funds for production ventures and the economic slowdown sapped energy demand. Crude prices tumbled from a record $147.27 a barrel in July 2008 to a low of $32.40 a barrel in December that year, forcing producers to postpone projects.

For GE Oil & Gas, this year could be another year of single-digit growth for our business, Santiago said. It will take another nine months to confirm that the world is moving to truly healthful economic recovery, though this is going to be bumpy for a while.

GE Oil & Gas reported sales of $2.3 billion in the fourth quarter. Thats 5.6 percent of General Electrics total and 9.7 percent higher than in 2008, according to financial statements on Bloomberg.

Oil prices rebounded 78 percent last year, prompting producers such as Shell and BP to consider bringing on new capacity. Drilling and workover investment in the Middle East and North Africa may rise by almost a third to $27.9 billion by 2014, according to Douglas-Westwood Ltd., an energy consultant.

Sustained Growth

The outlook for sustained growth is largely dependent on crude prices, but several markets will be key, namely Mexico, Iraq, Russia, and the deepwater, Scott Gruber, an analyst at Sanford C. Bernstein & Co., said Jan. 29. Oil-service markets are mixed, but are broadly in the process of bottoming.

Oil-service providers and manufacturers doubled fees between 2004 and 2008. After oil prices plunged, crude producers were able to renegotiate contracts. BP chief Tony Hayward this week pledged to push the industry hard to cut costs further.

Theres still quite a lot of overcapacity in the supply chain in most sectors, he said. I would expect to see continued deflation in the supply chain.

Among projects that were delayed last year, the Sunrise oil-sands project in Canada is now set to proceed after BP and Husky Energy Inc. completed an engineering study.

Meanwhile, Shell is developing projects in Qatar and Malaysia to revive production growth. The company plans to increase output from existing reserves through 2020 by starting new projects that can pump more than 1 million barrels a day.

We see a certain flattening out on the cost side in the market, Shells Voser said. Contractors prices have come down, allowing Shell to make investment decisions on projects, he said.

12:49 GMT, Wednesday, 10 February 2010


Bank of England warns inflation will exceed 3%

Mervyn King: "The UK economy has continued to bump along the bottom"
The UK's inflation rate will rise above 3% in the coming weeks, the governor of the Bank of England, Mervyn King, has predicted.

Presenting the Bank's quarterly inflation report, Mr King said the increase in VAT and higher petrol costs would push up prices.

Crude Oil Trades Above $77, Pares Gains Before Inventory Report


Crude oil was little changed in New York, trading above $77 a barrel and paring earlier gains before a report likely to show U.S. crude inventories rose last week.

Futures retreated from their highest in two weeks, after posting their biggest gain in more than four months yesterday, when Greek Finance Minister George Papaconstantinou said his country is ahead of its deficit-reduction targets and wont require a bailout from the European Union.

Oil for March delivery traded at $77.28 a barrel, up 27 cents, in electronic trading on the New York Mercantile Exchange at 10:26 a.m. London time. The contract earlier rose as much as 81 cents, or 1.1 percent, to $77.82 a barrel, the highest since Feb. 3. Yesterday, futures rose 3.9 percent, their biggest gain since Sept. 30.

U.S. stockpiles of crude oil probably rose last week as delayed cargoes arrived at ports on the Gulf of Mexico, a Bloomberg News survey of analysts showed.

Stockpiles climbed 1.6 million barrels in the week ended Feb. 12 from 331.4 million the prior week, according to the median estimate. The U.S. Energy Department is scheduled to release its weekly inventory report at 11 a.m. tomorrow in Washington, a day later than usual because of the Presidents Day holiday.

Inventories of distillate fuel, a category that includes heating oil and diesel, probably fell 1.5 million barrels from 156.2 million the prior week, according to the survey. Gasoline supplies probably climbed 1.5 million barrels from 230.4 million, the survey showed.

The industry-funded American Petroleum Institute publishes its inventory report today.

Brent crude for April delivery was up 17 cents at $75.85 a barrel as of 10:29 a.m. on the ICE Futures Europe exchange in London. Yesterday, the contract increased $3.17, or 4.4 percent, to $75.68.



Last Updated: February 17, 2010 05:38 EST

Falkland Islands: Oil boom or no oil boom?

By Robert Plummer
Business reporter, BBC News


Anticipation of a big oil find off the coast of the Falkland Islands is once again reaching fever pitch.


The Ocean Guardian rig will explore reserves in the Falklands
A drilling rig from the Scottish Highlands, the Ocean Guardian, is being towed by tug to the North Falkland Basin, widely considered the most promising of the four areas licensed for exploration.

In the UK, investment tipsters are lining up to recommend buying shares in the companies that own those licences.

Strangely enough, though, those shares are not enjoying any notable bounce at present - probably because of the reaction from Buenos Aires.

The Argentine government has imposed new restrictions on all ships heading to the Falklands, in a move that revives memories of the war it fought with Britain over the islands in 1982.

Argentina is clearly furious at the prospect of being excluded from an oil boom in a territory over which it still claims sovereignty.

After trying to raid the central bank's reserves to service its debts, President Cristina Fernandez de Kirchner's cash-strapped government is desperate for funding.

For their part, some of the key oil explorers are keeping tight-lipped as they wait to see what the diplomatic fallout will be.

Desire Petroleum, one of the firms that has contracted the Ocean Guardian rig, told the BBC it would be making no comment until the start of drilling next week and referred all inquiries to the British Foreign Office.

Natural gas tumbles on large supplies
By CHRIS KAHN, AP Energy Writer Chris Kahn, Ap Energy Writer 16 mins ago
NEW YORK Natural gas prices tumbled nearly 3 percent after the government said supplies are still higher than average despite a rash of snowstorms that blanketed the East Coast during the past few weeks.

Natural gas is used to both heat homes and power electric generators, and supplies generally drop in the winter as homeowners crank up the heat.

The Energy Information Administration said natural gas stores did fall last week. However the remaining supply of 2.03 trillion cubic feet is still nearly 3 percent higher than the five-year average.

With the winter more than half over, analyst Stephen Schork said natural gas prices were headed lower.

"We're at the end of the season," he said. "And there's an assumption out there that we have a lot of storage capacity, a lot of untapped wells that could easily be brought online."

The EIA is scheduled to announce its petroleum supply report later Thursday.

Benchmark crude for March delivery added 60 cents to $77.93 a barrel on the New York Mercantile Exchange. In London, Brent crude added 43 cents at $76.70 a barrel on the ICE futures exchange.

At the pump, retail gas prices increased overnight for the first time in nearly two weeks to a national average of $2.614 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is still 12.6 cents cheaper than a month ago. It's 65.7 cents more expensive than the same time last year.

In other Nymex trading in March contracts, heating oil added less than a penny to $2.0154 a gallon, and gasoline rose 2.16 cents to $2.0287 a gallon. Natural gas lost 14.5 cents to $5.241 per 1,000 cubic feet.

Rig arrives amid growing Falklands oil dispute
By Channel 4 News
Updated on 19 February 2010

Channel 4 News understands that a rig due to explore oil reserves beneath the sea near the Falkland Islands is expected to arrive today, amid an international dispute over "illegal" drilling.

http://www.channel4.com/news/articles/politics/international_politics/rig+arrives+amid+growing+falklands+oil+dispute/3550737

Argentina 'cannot rule out' Falklands oil claim
By Channel 4 News
Updated on 20 February 2010

The row over drilling for oil off the Falklands steps up as Argentina says it cannot rule out further measures to reclaim what is rightfully theirs.

The row over oil exploration near the Falkland Islands is heating up as Argentina vowed further action to stop foreign countries accessing what it claims are its natural resources.

The country's deputy foreign minister has told Channel 4 News he cannot rule out further measures to reclaim what he says rightfully belongs to Argentina, including the islands themselves.

Yesterday, the UK oil rig Ocean Guardian, which is at the centre of the feud, arrived in the South Atlantic to begin drilling within the next 24 hours.

The Argentinean foreign minister says any drilling activity in the sea surrounding the Falkland Islands is illegal; the British government rejects that.

The Governor of the Falkland Islands, Alan Huckle, told Channel 4 News that the Argentinean government will not stop the oil exploration work now in progress.

"I don't think there is any threat of any sort of hostility or anything like that," he said. "Nor, quite frankly, is there going to be any difficulty, at least with this first round of drilling."

But Argentina's deputy foreign minister, Victorio Taccetti, said his country is prepared to go further still.


"Faced with a unilateral act which we deem illegitimate, we will take measures to defend our sovereignty; these are always peaceful measures," he said.

Argentina exercises its sovereign rights over an "exclusive economic zone", reaching 200 miles from its shores.

But it also claims sovereignty over a much larger area - the South Atlantic Continental shelf, which includes the Falkland Islands.

Last week, the Thor Leader, a ship reportedly carrying drilling equipment, was seized in the Argentine port of Campana. The Argentinean government has also banned ships from going to and from the Falkland islands via its waters - a move that seems popular on the streets of Buenos Aires.

But Emma Edwards, the oil portfolio representative who is responsible for oil on the Islands, said: "The oil belongs to the Falkland Islanders, and the oil does belong to us first.

"We will look after our own infrastructure - ensure that we've got the roads, the hospitals, the education that we need, plus reserves so we can keep ourselves going after any oil has gone."

Oil markets explained 19/2/2010

Big movements in the oil price have significant ramifications around the world. But just what makes the price move and how do the oil markets work? BBC News takes a closer look.
Crude oil, also known as petroleum, is the world's most actively traded commodity.

The largest markets are in London, New York and Singapore but crude oil and refined products - such as gasoline (petrol) and heating oil - are bought and sold all over the world.

Crude oil comes in many varieties and qualities, depending on its specific gravity and sulphur content which depend on where it has been pumped from.

If no other information is given, an oil price appearing in UK and other European media reports will probably refer to the price of a barrel of Brent blend crude oil from the North Sea sold at London's International Petroleum Exchange (IPE).

The Big Question: Could oil exploration of the Falklands lead to a renewal of hostilities?




Tuesday, 23 February 2010


Why are we asking this now?

Argentina has claimed sovereignty over the Falkland Islands for nearly two centuries, ever since it achieved independence from Spain in 1816, even though the Islas Malvinas, as they are known in Argentina, have been in British hands since 1833, and a British claim to them dates back to 1690.

In 1982 Argentina invaded the Falklands only to be driven out by a British task force, after a two-month war in which 649 Argentinian and 255 British lives were lost. In recent years relations have eased, and transport and economic ties between the islands and Argentina have, in part, normalised. But the basic dispute over sovereignty is as far from resolution as ever, and underlying tensions have never disappeared. This month they have flared up again, over British plans to begin drilling for oil in waters off the islands.


What exactly are the British doing?

The UK oil company Desire Petroleum has towed a rig, the Ocean Guardian, to a point in the North Falklands Basin, roughly 100 miles north of the islands, and drilling operations started yesterday morning. The first results should be available in a month. The site is within the Falklands territorial waters as established by Britain, but of course also in waters claimed by Argentina itself, on the basis of its assertion of sovereignty of the islands.


Exactly how much oil is at stake?

No one knows for sure. For more than a decade, the word has been that the Falklands are sitting on fabulous energy reserves. For oil, the headline estimate is colossal: some 60 billion barrels, equivalent to almost a quarter of the proven reserves of Saudi Arabia. In reality, only a fraction of that figure might be commercially recoverable, perhaps 3.5 billion barrels, according to Desire Petroleum, which says its six licence areas contain "excellent oil source rock".

Geological surveys also point to the presence of natural gas. Oil was actually discovered off the Falklands in 1998 by Royal Dutch Shell. Back then though, an oil price of $10 a barrel made commercial development unviable. Today a barrel costs almost $80 and seems bound to rise as the world economy pulls out of recession and global demand increases. Even if conservatively calculated, a significant find would thus have huge economic implications for the Falklands and also, of course, for economically battered Argentina, if it could ever get its hands on the stuff.

Full http://www.independent.co.uk/extras/big-question/the-big-question-could-oil-exploration-of-the-falklands-lead-to-a-renewal-of-hostilities-1907412.html

Oil hovers above $80 after 3-week rally
By ALEX KENNEDY , 02.23.10, 03:23 AM EST


SINGAPORE -- Oil prices hovered above $80 a barrel Tuesday in Asia as investors mulled whether sluggish U.S. crude demand justified a 15 percent rally over the last three weeks.

Benchmark crude for April delivery was down 15 cents at $80.15 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract added 25 cents to settle at $80.31 on Monday Oil has jumped from $69.59 a barrel on Feb. 5 on investor optimism that the global economy will rebound strongly from recession last year. Yet growing inventories of crude, gasoline and diesel fuel suggest demand in the U.S. remains weak.

Some analysts expect crude demand in the U.S. and Japan will gradually follow overall economic growth and lift prices. Goldman Sachs ( GS - news - people ) expects crude to trade between $85 and $95 for most of this year.

"Continuing growth in the two largest developed market economies suggests that the economic recovery is still on track." Goldman Sachs said in a report. "We expect that Japanese oil demand will break the trend of the past decade and grow in 2010."

In other Nymex trading in March contracts, heating oil was steady at $2.0785 a gallon while gasoline rose 0.3 cent to $2.1185 a gallon. Natural gas fell 2.1 cents to $4.874 per 1,000 cubic feet.

Oil prices tumble on economy worries
By MARK WILLIAMS, AP Energy Writer Mark Williams, Ap Energy Writer 5 mins ago
Oil prices tumbled Thursday on new signs that the economy remains weak and that demand for crude is still tepid at best.

Benchmark crude for April delivery fell $2.80 to $77.20 a barrel on the New York Mercantile Exchange. The contract rose $1.14 to settle at $80 on Wednesday.

Oil has been bouncing back and forth for months between $70 and $80 as investors watch economic data for clues about where the economy is heading following the Great Recession.

The signs Thursday were mostly negative as the government said new claims for unemployment benefits last week jumped unexpectedly while a separate report on big-ticket manufactured goods was mixed.

Crude prices rose Wednesday after Federal Reserve Chairman Ben Bernanke told Congress that he expects interest rates to stay low for a while to help boost the economy.

The economy has grown for six months but is not yet spurring hiring and unemployment remains stubbornly high. Couple that with more than ample supplies and signs that the economy still needs to be propped up by federal stimulus "means that the demand were expecting to see may not develop," said Phil Flynn of PFGBest.

Oil prices were also pushed down Thursday by a stronger dollar and a drop in the stock market.

Because crude is traded in dollars, it gets cheaper when the dollar climbs and forces investors holding other currencies such as the euro to pay more for oil. The dollar was near a nine-month high against the euro over worries about economic growth and debt problems in Europe.

Major stock averages were down nearly two percent around midday.

Despite the drop in oil prices, retail gasoline prices headed higher for the eighth straight day, rising 1.5 cents a gallon to a national average of $2.693, according to AAA, Wright Express and Oil Price Information Service.

Pump prices have climbed 7.9 cents over the past week and are nearly back to the levels of a month ago when they were at $2.70 per gallon. Prices remain 80.2 cents above year-ago levels.

In other Nymex trading in March contracts, heating oil fell 7.55 cent to $1.9666 a gallon, and gasoline lost 7.05 cents at $2.0284 a gallon. April natural gas prices were down 10.2 cents to $4.757 per 1,000 cubic feet.

In London, Brent crude gave up $2.64 at $75.45 on the ICE futures exchange.

.Oil plunges below $82 on volcano, Goldman gitters

Associated Press Writer 1 hr 37 mins ago
SINGAPORE Oil prices plunged below $82 a barrel Monday in Asia, extending big losses on expectations that disruption to air travel from the Icelandic volcano will undermine the global economic recovery and crude demand.

Benchmark crude for May delivery was down $1.38 to $81.86 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.

A huge cloud of volcanic ash has shut down air traffic in most of Europe for four days, scuttling travel plans and freight services that could end up costing billions of dollars.

At the very least, traders say the volcano crisis will lower demand from airlines for jet fuel.

"The market had underestimated the impact of the volcano," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. "There's still a lot of uncertainty about how much this will affect the overall economy."

Oil fell $2.27 to settle at $83.24 a barrel on Friday after the Securities and Exchange Commission said Goldman Sachs & Co. defrauded investors by failing to disclose key information about mortgage investments it sold as the housing market was collapsing in 2008.

Investors speculated that Goldman may have to liquidate some positions in crude to pay for penalties if found guilty.

"I think the whole market sentiment has switched to less optimistic," Chu said. "Things are pointing more bearish now."

All major Asian stock markets fell Monday.

Crude had jumped to an 18-month high above $87 a barrel earlier this month from $69 in early February.

In other Nymex trading in May contracts, heating oil fell 3.24 cents to $2.185 a gallon, and gasoline dropped 2.70 cents to $2.250 a gallon. Natural gas was steady at $4.044 per 1,000 cubic feet.

By ALEX KENNEDY, Associated Press Writer Alex Kennedy, Associated Press Writer 34 mins ago
SINGAPORE Oil prices rose above $82 a barrel Tuesday in Asia, clawing back a little ground after the fraud case against Goldman Sachs and flight disruptions in Europe from volcanic ash triggered a two-day plunge.

Benchmark crude for May delivery was up 74 cents to $82.19 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Oil tumbled $1.79 to settle at $81.45 on Monday, after it fell $2.27 on Friday.

A rebound in stock markets helped boost crude prices. The Dow Jones industrial average rose 0.7 percent Monday as Citigroup Inc. reported better than expected earnings and revenue, and most Asian indexes gained Tuesday.

Stocks dropped Friday after the Securities and Exchange Commission said Goldman defrauded investors by failing to disclose key information about mortgage investments it sold as the housing market was collapsing in 2007.

Oil traders often look to equities as a barometer of overall investor sentiment.

"The stock market proved that lawsuits and courts are no match for profits," Cameron Hanover said in a report. "That took away one source of selling in oil."

Investors are also eyeing a huge cloud of ash from an Icelandic volcano that has shut down air traffic in most of Europe for five days. Some cities, such as Barcelona and Rome, were beginning to receive flights Tuesday, but most European airports remained shut.

In other Nymex trading in May contracts, heating oil rose 1.70 cents to $2.17 a gallon, and gasoline gained 0.79 cent to $2.26 a gallon. Natural gas jumped 1 cent to $3.96 per 1,000 cubic feet.

In London, Brent crude's June contract was up 56 cents at $84.79 on the ICE futures exchange.

Bank of America Merrill Lynch said in a research note Tuesday that Americans simply aren't consuming enough to justify higher prices and predicted that oil will struggle to rise later this year. The analysts noted that a lot of oil is simply moving to storage houses and supertankers not to refiners who make gasoline and other fuel. They said OPEC also has boosted production recently and could push even more oil onto the world market.

Bank of America Merrill Lynch said it expects benchmark oil to slip to an average of $83 a barrel in the second quarter. It said oil should rise to an average price of $92 a barrel in the second half of the year.

Edward Meir, a senior commodity analyst at MF Global in New York, added that oil will continue to suffer as the dollar strengthens. A stronger dollar usually helps push down oil prices by making crude more expensive for investors holding other currencies.

"Commodity markets have to work against the headwind of a stronger dollar, which, given the turmoil in Europe, will only intensify," Meir said.

At the pump, gasoline prices dipped overnight to a new national average of $2.859 a gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 3.9 cents more expensive than it was last month and 80.1 cents more expensive than a year ago.

By ALEX KENNEDY, Associated Press Writer Alex Kennedy, Associated Press Writer 10 mins ago
SINGAPORE Oil prices dropped below $70 a barrel Monday in Asia as the euro sank to a four-year low and stock markets tumbled on investor concern Europe's economy will wither amid a debt crisis and fiscal austerity measures.

Benchmark crude for June delivery was down $1.64 to $69.97 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The June contract lost $2.79, almost 4 percent, to settle at $71.61 on Friday.

Crude fell as low as $69.82, the lowest since $69.59 on Feb. 5, as the U.S. dollar gained against the beleaguered euro, which was at a four year-low. Oil, which is priced in dollars, becomes more expensive to investors holding other currencies when the dollar advances.

The euro fell to $1.2279 on Monday from $1.2352 on Friday while the dollar slid to 92.03 yen rom 92.30 yen.

Asian stock markets also plunged Monday, and oil investors often look to equities as a sign of overall investor confidence.

"It's a sea of red out there," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "The euro concerns have really impacted confidence among investors across markets."

"Oil will be under pressure as long as the dollar is surging," he said.

In other Nymex trading in June contracts, heating oil fell 3.11 cents to $2.0393 a gallon, and gasoline fell 3.77 cents to $2.0931 a gallon. Natural gas was steady at $4.313 per 1,000 cubic feet.

In London, Brent crude was down $1.08 to $76.85 on the ICE futures exchange.

Charts updated ; ))

Oil drops to near $68 as stock markets, euro fall

Tue May 25, 4:03 am ET
SINGAPORE Oil prices fell to near $68 a barrel Tuesday in Asia as plunging regional stock markets and a weaker euro rattled the confidence of commodity investors.

Benchmark crude for July delivery was down $1.85 to $68.36 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract advanced 17 cents to settle at $70.21 on Monday.

Oil has plummeted 22 percent from $87.15 a barrel earlier this month as a falling euro made dollar-based crude more expensive for investors holding the European currency.

Investor concern that Europe's debt crisis could undermine global economic growth has also hurt stock markets, which oil traders watch as a measure of overall confidence.

All major Asian stock markets fell Tuesday, following a 1.2 percent pullback in the Dow Jones industrial average Monday. The euro dropped to $1.2226 from $1.2342 on Monday.

"The market appeared to acquiesce to the weakness in the stock market," Ritterbusch and Associates said in a report. "The primary drivers of this month's price plunge remain heavily skewed toward the bearish side."

In other Nymex trading in June contracts, heating oil fell 3.8 cents to $1.861 a gallon, and gasoline dropped 3.95 cents to $1.931 a gallon. Natural gas was off 0.1 cent at $4.016 per 1,000 cubic feet.

In London, the Brent crude July contact was down $1.83 to $69.34 on the ICE futures exchange.

Analysts are projecting a modest rise in oil prices in 2010. But there's another side to the story that Wall Street doesn't want you to know about... And, it's going to push oil prices through the roof.

Oil prices staged a remarkable rally in the past year on the back of a weak dollar and a nascent economic recovery.

And most forecasts are calling for oil to edge up slowly over the year.

At least, that's what the big firms want you to think...

Goldman Sachs controls over 43,000 miles of pipeline and more than 150 oil storage terminals. Morgan Stanley has the capacity to store and hold 20 million barrels. And these firms have the power to direct billions of dollars of their clients' money in oil.

Which way do you think they will push oil prices?

If you guessed "through the roof" you're right. And, those who invest right along with Wall Street have the opportunity for windfall profits.

NEW YORK Oil prices climbed above $74 a barrel on Wednesday, as crude followed the stock market higher on encouraging earnings news.

Drivers got another break at the pump. The national average for a gallon of unleaded regular slipped to $2.721, down 0.3 cent from Tuesday, according to AAA, Wright Express and Oil Price Information Service. That's 3.4 cents lower than a week ago and 11.7 cents higher than a year ago.

Benchmark crude rose $2.09 to settle at $74.07 a barrel on the New York Mercantile Exchange.

In recent months oil prices have been influenced by the stock market as an indicator of economic recovery and potential demand for oil and gas. The Dow Jones Industrial Average rose almost 275 points, or 2.8 percent, to close at 10,018.28. The NASDAQ and S&P 500 were each up more than 3 percent. Financial stocks led the way just ahead of earnings season, as State Street Corp. issued a second-quarter profit forecast that was better than analysts expected.

Crude also got a boost from a forecast of lower inventories when the Energy Department's Energy Information Administration issues its weekly report on Thursday. Analysts expect crude supplies to shrink by 3.5 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Even with a decline, the U.S. and the world are awash in oil and the question of demand weighs heavily on pricing. Some analysts are concerned that growth in developed nations will slow in the second half and next year as massive government stimulus programs taper off.

"Following a robust increase in oil demand in the past year, the stimulus-driven rebound is giving way to slower growth," Bank of America Merrill Lynch said in a report. "Oil inventories look high as demand is set to soften."

The intense heat wave gripping the eastern U.S. has not had much effect on the price of natural gas, used by some power plants to generate electricity. That could change with forecasts of sustained heat and an active hurricane season this summer.

"We see reasons to expect prices to strengthen over the next two months," energy consultancy Cameron Hanover said in a note to investors. "Hurricanes and heat are what natural gas bull markets thrive upon, and this year has several elements suggesting that hurricanes and heat will be common."

Natural gas lost 11.7 cents to close at $4.565 per 1,000 cubic feet on the Nymex.

In other trading heating oil rose 6.15 cents to close at $1.9787 a gallon, and gasoline gained 5.40 cents to close at $2.0253 a gallon.

Brent crude added $2.06 to settle at $73.51 a barrel on the ICE futures exchange.