Crude Oil Prices

Oil prices roundup for the week ending May 23, 2008

noreply@blogger.com (Ryan Crawford) — Sun, 25 May 2008 00:43:00 +0000

It was a quite week for news on oil this week. On Monday, President Bush signed a bill that forces his administration to temporarily stop buying oil to fill the Strategic Petroleum Reserve. Bush signed the measure without comment.

Holly Corp. said a key unit at its New Mexico refinery was shut down for repairs, cutting estimated May gasoline production by 756,000 gallons per day. This outage wasn't expected to significantly affect fuel prices.

Kazakhstan banned the export of all refined oil products, news agencies reported today. The energy-righ Central Asian nation is grappling with soaring fuel costs.

On Wednesday the Energy Information Agency reported crude stocks fell by 5.4 million barrels. Analysts were expecting an increase of 900,000 barrel. Crude imports averaged 9.2 million barrels a day last week, down 696,000 barrels from the prior week and 1.6 million barrels below the same week last year.

Gasoline supplies feel 800,000 barrels and distillate stocks rose by 700,000 barrels.

Refinery utilization rose to 87.9% of capacity. This was a 1.3% increase from the prior week.

American Airlines said it was scrap 75 plances from its fleet and reduce the number of seats available on domestic routes by 11-12% this year. It would also start charging $15 for the first checked bag on domestic flights.

On Thursday, the Paris-based International Energy Agency said it is worried about whether there is enough oil to meet global demand, and it is working on a review of the world's 400 largest oil field that could lead to a major revision in its closely-watched forecasts.

During a visit to Ecuador OPEC chief Abdala El-Badri said today that members are unhappy with surging oil prices that he blamed on speculators and a weak US dollar.

Qantas Airlines(Australia) said it will raise domestic and international air fares for the second time in less than a month in an attempt to offset soaring world oil and jet fuel prices.

International air fares will rise by about 4% and domestic fares by about 3% for tickets issued in Australia from June 4.

Federal Highway Administration data shows the number of miles American travelled fell 4.3 percent in March compared to last year. This is the first time since 1979 that March year-over-year mileage has dropped.

Bankrupt Frontier Airlines announced new fees today, thanks to the rising oil prices. If you want to carry home antlers you get during the hunting season the fee will now increase from $75 to $100.

It also plans to charge a $25 fee for a second checked bag, cancel half-price infant seats and take no more bookings for pets traveling in airplace cabins. The fee for children traveling alone on Frontier flights will increase to $50 from $40. It also plans to optimize it flght tracks using software based on air traffic and weather conditions, installing lighter leather seats, and the use of more fuel-efficient aircraft.

The number of rigs actively exploring for oil and natural gas in the United States increased by 27 this week to 1,889 according to the Baker Hughes Inc reported released today. 1,493 rigs were exploring for natural gas, 386 for oil and 10 were listed as miscellaneous. One year ago the rig count stood at 1,760.

China has released 169,365 barrels of oil from its strategic petroleum reserve to help with the recovery from the earthquake which his the country a couple of weeks ago.

Marathon Oil Company spent $1.8 million in 1Q lobbying the federal government on environmental and other issues.

A monthly survey by Reuters found analysts expected crude oil prices to average $107.13 a barrel in 2008 up from $72.30 in 2007. This was an increase of more than $10 from the last poll late in April. They also expect prices to stay above $106 for 2009 and $102 in 2010, compared to $92 in the last poll, due to concerns over long term supply constraints and strong demand from emerging markets.

The National Oceanic and Atmospheric Administration said Thursday that is predicts a near-average hurricane season this year. NOAA sees a 60-70% chance of 12 to 16 named storms, including six to nine hurricanes and two to five major hurricanes. It was Hurricane Katrina that first sent gasoline prices above $3 a gallon. Hurricanes often disrupt oil and natural gas production in the Gulf of Mexico.

Oil prices climbed to more record highs. After starting the week in the $126 range it climbed as high as $135.09 before closing the week at

Gasoline price at the pump climbed from $3.79 a gallon on Monday up to $3.87 on Friday. Many analysts are expecting $4.00 in the next week or so. Gasoline futures climbed from $3.22 to as high as $3.43 a gallon.

Diesel prices climbed from $4.52 a gallon on Monday all the way up to $4.649 a gallon on Friday. Heating oil futures climbed from $3.65 to $3.8656.

Natural gas prices finished the week at $11.857.

(See current oil futures chart at the bottom of the page)

Oil prices rise before the holiday weekend

noreply@blogger.com (Ryan Crawford) — Sat, 24 May 2008 02:53:00 +0000

Oil prices rose today after almost dropping below $130 a barrel. They managed to turn around after falling as far as $130.16 to rally by the close to settle up $1.38 at $132.19 a barrel on the New York Mercantile Exchange.

Gasoline prices at the pump soared 4.4 cents overnight to a nationwide average of $3.875 a gallon according to AAA and the Oil Price Information Service. Five states are currently averaging over $4 a gallon, Connecticut, California, New York, Illinois and the most expensive is Alaska, where gas is averaging $4.181 a gallon. Gasoline futures rose 6.63 cents to $3.396 a gallon.

Diesel prices rose 5.9 cents to a record of $4.649. Diesel prices are averaging more than $5 a gallon in some parts of the U.S. and may rise above an average of $5 in California and New York state over the weekend. Meanwhile heating oil futures fell 8.87 cents to settle at $3.8656 a gallon.

Natural gas futures rose 16 cents to settle at $11.857 per 1,000 cubic feet.

Bankrupt Frontier Airlines announced new fees today, thanks to the rising oil prices. If you want to carry home antlers you get during the hunting season the fee will now increase from $75 to $100.

China has released 169,365 barrels of oil from its strategic petroleum reserve to help with the recovery from the earthquake which his the country a couple of weeks ago.

Marathon Oil Company spent $1.8 million in 1Q lobbying the federal government on environmental and other issues.

Relative strength climbed once again finishing the week at 73%. The 20-day moving average climbed to $123.10 and the 50-day moving average climbed to $113.93. Volume, as expected dropped over 100,000 contracts to 301,898. Open interest climbed slightly to 378,974 open July contracts. Overall volume tanked dropping over 200,000 contracts to 578,661 contracts being traded today. Overall open interest climbed over 5000 contracts to 5,623,168 open contracts now on the New York Mercantile Exchange.

As the summer travel season appoaches some traders will be away from their desk so seein volume drop between now and Labor Day Weekend wouldn't be a big surprise, especially right before a holiday weekend. Something is trying to tell me the correction may be very close at hand right now. I'm going to have to do a little more work with the numbers present and see what I am actually coming up with for the numbers.

Oil prices drop after setting an overnight record high

noreply@blogger.com (Ryan Crawford) — Thu, 22 May 2008 23:37:00 +0000

Oil prices dropped for the first time in several trading sessions only after making yet another new high overnight of $135.09. Crude prices dropped $2.36 to settle at $130.81 a barrel on the New York Mercantile Exchange.

Gasoline prices rose 2.4 cents overnight to another new record at the pump, $3.831 a gallon. Gasoline futures declined today, down 6.68 cents to settle at $3.3297 after rising to a new record $3.438.

Diesel fuel rose. Heating oil futures rose 4.59 cents to settle at a record close of $3.9543 after rising earlier to a trading record of $4.0153.

Natural gas rose 5.7 cents to settle at $11.697 per 1,000 cubic feet. The Energy Department said natural gas inventories rose last week by 85 billion cubic feet, in line with estimates.

Some analysts predict gasoline prices will break past $4 as early as next week. Prices may rise as high as $3.90 a gallon on a nationwide basis by this weekend. Gasoline prices in California and Illinois are now at an average of $4.005 a gallon. New York is $4.019 and Alaska is $4.133 a gallon. Diesel fuel prices in California are now averaging $4.894 a gallon.

It appears a stronger dollar gave some investors reason to sell oil futures to lock in profits from crude's record run. It is believed falling supply and rising demand are expected to continue and this will keep upward pressure on prices in the days and weeks to come.

The Paris-based International Energy Agency said it is worried about whether there is enough oil to meet global demand, and it is working on a review of the world's 400 largest oil field that could lead to a major revision in its closely-watched forecasts.

During a visit to Ecuador OPEC chief Abdala El-Badri said today that members are unhappy with surging oil prices that he blamed on speculators and a weak US dollar.

"Volatility has nothing to do with the fundamentals. It has nothing to do with world demand," he said, stressing that a dropping dollar was driving prices higher.

The OPEC chief said that in the past, when there has been a problem with supply, the group has, "never hesitated to held a meeting and try to correct that.'

"But today we are convinced that this price has nothing to do with the market, there is a lot of oil in the market, there in no shortage whatsoever, the stocks are very high, at comfortable levels and the main problems are speculators."

Qantas Airlines(Australia) said it will raise domestic and international air fares for the second time in less than a month in an attempt to offset soaring world oil and jet fuel prices.

International air fares will rise by about 4% and domestic fares by about 3% for tickets issued in Australia from June 4.

Relative strength, as could be expected, dropped back today, all the way down to 71%. This still puts it on the high side and still suggests that prices should drop more.

The 20-day moving average climbed to $122.37 and the 50-day moving average climbed to $113.42. Volume climbed by almost 60,000 contracts to 408,179 contracts. Open interest dropped by almost 13,000 contracts, now sitting with 376,547 open contracts for the July expiration. Total volume covering all months for over 100,000 contracts to 801,050 contracts being traded. Open interest for all months climbed slightly to 5,569,983 open contracts.

Trading should be light with the holiday weekend looming many investors may have already taken off for the weekend. With the lighter than normal trading the speculators ought to be out in storm. It wouldn't be surprising to see oil prices try to reach back up to $135 level once again.

(See bottom of webpage for current graph of oil prices)

Oil prices surge to new high after supply report

noreply@blogger.com (Ryan Crawford) — Thu, 22 May 2008 03:55:00 +0000

Oil prices settled at another new high closing up $4.19 at $133.17 a barrel on the New York Mercantile Exchange. It was the largest one-day preice advance since March 26th. It reached an all time high of $134.15 during the trading session.

Gasoline prices at the pump reached another record up 0.7 cents overnight to $3.807 according to AAA and the Oil Price Information Service. Meanwhile gasoline futures rose 9.21 cents to settle at $3.3965 a gallon after trading as high as $3.4081.

Diesel fuel rose 1.9 cents to $4.558 a gallon and heating oil futures rose 13.34 cents to settle at $3.9084 after trading as high as $3.9187

Natural gas futures rose 27.5 cents to settle at $11.64 per 1,000 cubic feet.

In its weekly look at crude oil inventories the Energy Department said today that crude oil inventories dropped 5.4 million barrels this past week to 320.4 million barrels. Analysts were expecting a rise of 900,000 barrels for the week. The sharp decline was dueto a substantial decline in imports.

Crude oil imports averaged 9.2 million barrels a day last week, down 696,000 barrel per day a week earlier.. Crude imports were down and are 1.6 million barrels below the same week last year.

Gasoline supplies feel 800,000 barrels last week to 209.4 million barrels. Distillate stocks were up 700,000 barrels at 107.8 million barrels.

Refinery utilization rose to 87.9% of capacity from 86.6% a week ago.

American Airlines said today that it would scrap 75 planes from its fleet and will reduce the number of seats available on domestic routes by between 11% and 12% this year. It said it would also impose a $15 charge for checking in bags, although this will not be levie on international passengers.

Each $10 increase in the price of a barrel of oil increases airline expenses by $800 million. Since the beginning of the year the commodity surge has raised the airline's annual costs by $3 billion.

Relative strength climbed once again closing at 82%. The 20 day moving average for the front month contract climbed to $121.59 and the 50 day moving average climbed to $112.93. Volume picked up to 348,997 up over 50,000 shares from yesterday. Open interest climbed to 389,257 open July contracts. For all months volume was up 85,000 contracts to 692,458 and open interest was up over 30,000 contracts to 5,551,003 open contracts.

Many are starting to talk about the speculative bubble. I have been saying this as well for quite some time. Some are starting to suggest that when this bubbles pops prices will fall quick and steep. I continue to see prices climb as long as money keeps on pooring into the market. Once funds stop buying commodities the prices will drop like a rock. Everything is WAY overbought right now and a correction is coming. It won't be pretty.

Oil prices soar to another new high

noreply@blogger.com (Ryan Crawford) — Wed, 21 May 2008 00:57:00 +0000

Oil prices...well, you get the picture. After soaring as high as $129.60 then managed to pull back slightly to settle the day up $2.02 at another new record close of $129.07. This came as the expiration for the June contract was reaching its climax. Tomorrow, the July contract takes over as the front month contract in the futures pit.

Gasoline prices rose once again at the pumps now up to a nationwide average of $3.80. Gasoline futures also rose on the higher oil prices, up 5.78 cents to settle at $3.3044 a gallon.

Diesel fuel also rose to another record at the pumps with truckers now paying $4.54 on average nationwide. Heating oil futures climbed almost 10 cents to settle at $3.775 a gallon after earlier rising to a record high of $3.792.

Natural gas followed the oil pits trading up 41.1 cents to settle at $11.365 per 1,000 cubic feet.

Today marked the 10th time in the last 12 trading session crude oil prices have hit a trading or closing record, in not both.

"I keep making projections, and they keep turning out to be too low," said Darin Newsom, senior analyst at market analysis provider DTN. "We're already pushing up against $130. If we clear that, there's no reason to believe crude oil can't get to $140."

"It's a runaway market at this point," said Fred Rozell, retain pricing director at the Oil Price Information Service. "I think it's just money chasing money."

"Diesel and gas are just taking a ride. This is really a crude market this year, and crude is really the driving force that's pushing prices higher," Rozell said.

On the technical side of the new record, the relative strength climbed once again today now standing at 76% for the last day of trading on the June contract. The 20-day moving average jumped to $121.26 and the 50-day moving average also climbed higher settling at $112.99. The volume was very thin with 44058 contracts being traded and 35,631 contracts being closed out, for profit or loss after the market closed this afternoon. Overall the volume shot up to 607,516 contracts covering all available months for trading. The open interest inched for by just shy of 2,000 contracts to settle at 5,517,557 contracts.

Looking at the July contracts stats show, the price settled at $128.98 with relative strength at 76% and open interest of 368,266. The open interest for the July contract has been growing each day for the past two weeks, not surprisingly.

Once again there should be pullback coming in prices. This is a major speculative bubble that won't be pretty when it bursts. Some in the petroleum industry are now starting to suggest limits should be put on futures trading to control how much oil can move in one day to help control prices.

Oil prices once again hit a new record high

noreply@blogger.com (Ryan Crawford) — Tue, 20 May 2008 01:20:00 +0000

Oil priced climbed 76 cents today to settle as another new closing record of $127.05. The first time oil has closed above $127 a barrel. At one point today prices rallied to within 5 cents of Friday's intraday record. Prices didn't manage to go above Friday's record though.

Gas prices continued to climb higher over the weekend at the pump, now up to a nationwide average of $3.79. Gasoline futures today managed to climb once again today, up 1.31 cents to settle at $3.2366 a gallon.

Diesel fuel also climbed to another new record $4.52 a gallon nationwide. Heating oil future fell 2.77 to $3.6751 a gallon on the New York Mercantile Exchange.

Today President Bush signed a bill that forces his administration to temporarily stop buying oil to fill the Strategic Petroleum Reserve. Bush signed the measure without comment. The Senate passed the bill last week by a 97-1 margin and the House passed the by a 385-25 margin. It was believed a veto could be easily overridden.

Holly Corp. said a key uint at it New Mexico refinery was shut down for repairs, cutting estimated May gasoline production by 756,000 gallons per day. This outage wasn't expected to significantly affect fuel prices.

Oil prices jumped on a report OPEC would not increse production before its next meeting September 9th.

Kazakhstan banned the export of all refined oil products, news agencies reported today. The energy-righ Central Asian nation is grappling with soaring fuel costs.

Relative strength continued to climb now at 72%. The 20-day moving average also climbed higher now up to $120.71. The 50-day moving average is now at $112.52.

Volume dropped almost 100,000 contracts from Friday, with 147,057 contracts being traded today on the June contract. Open interest also dropped down to 83,099 open contracts. The final day of trading for the June contract is just around the corner. The trading in all contracts was down just over 1,000 contracts. The open interest in all months climbed by 25,000 contracts, roughly, to 5,515,598 open contracts.

The inability of the contract to make a new high today makes me think we have put in a short term top. Closing near the top end of the trading range makes me think we also have put in a short term top. I would be looking for lower prices over the next several days with prices moving down toward the 20-day moving average.

Oil prices and news roundup for week ending May 16th, 2008

noreply@blogger.com (Ryan Crawford) — Sat, 17 May 2008 20:32:00 +0000

Oil prices started the week at a new record high and they finished the week at yet another new record high. Oil futures finished the week at $126.29 and saw prices go as high as $127.82

Gas prices at the pump followed suit and rose 6.9 cents during the week. Gas futures also rose to new highs jumping 4.26 cents

Diesel prices also moved higher for the week 19.7 cents. Heating oil futures rose 6.68 cents.

Natural gas bucked the trend close lower for the week down 22.7 cents for the week.

On Monday the Bush administration said they would resist the calls to sell crude from the Strategic Petroleum Reserve. They also rejected calls from Congress to stop adding oil to the reserve. This move was later changed at the end of the week on Friday when they said they would stop adding new oil to the reserve on July 1st.

It was reported on Monday that oil imports to China dropped 3.9 percent from last year to 14.24 metric tons, or about 3.5 million barrels a day. This was the first decline in 18 months.

Starting Tuesday, May 13th, Canadian based Westjet Airlines was going to the most recent airline to add fuel surcharges.

On Tuesday news came out that Iran's government was considering cutting crude oil production. In a later report Iranian officials denied that production cuts were imminent, but said a reduction has been discussed.

The IEA said high prices are cutting demand for oil and petroleum products in the U.S. and Europe. They cut their global demand forecast for this year to 1.2 to 1.5 percent, down from 2.1 percent earlier in the year. They said gasoline demand will drop by about 1 percent.

Qatar oil minister said, "The oil price is out of control. Supply is sufficient and refineries don't ask for more." OPEC ministers see no need to meet before their September meeting.

Two of the four Bonny Light crude oil facilities in Nigeria has been restored. A force majeure on Bonny Light exports remains in place.

In a counter move to the rest of the airline industry, South African Airways plans to build its domestic, regional and international route network despite losing money fast due to rising oil prices.

On Wednesday the EIA, in its weekly report, said oil inventories rose by 200,00 barrels last week to 325.8 million barrels. It was less than the 2.25 million barrel increase analysts had been forecasting. Gasoline inventories fell by 1.7 million barrels to 210.2 million barrels. Analysts were expect a decline of 800,000 barrels. Distillates inventories grew by 1.4 million, more than analysts were expecting. The current distillate supply sits at 107.1 million barrels.

Refinery utilization jumped 1.6 percent to 86.6%.

Thursday the EIA report said natural gas inventories rose by 93 billion cubic feet last week, more than analysts expected.

A pipeline explosion in Nigeria appeared to be accidentally caused by a road construction crew and the oil markets didn't react to the news.

OPEC said its esimate of world oil demand growth for 2008 has decreased. They are now expecting global oil demand to grow by 1.35 percent compared to their previous estimate of 1.4 percent.

British Prime Minister Gordon Brown called again for OPEC to increase output to help bring down record high prices that are helping to fuel inflation around the globe.

Governor Bill Ritter told a U.S. Senate committee today that more research is needed into producing oil from oil shale before the government sells leases for commercial production on federal lands in Colorado.

Federal and industry officals said today that the oil and gas industry is better prepared for a rough hurricane season than they have been in years past.

BP Plc said Wednesday a small oil leak occured in a well being brought back online earlier this week at the nations's largest oil field in Prudhoe Bay. The well had been shut down since January for routine maintenance. Since the worker was right there when it happened, he was able to shut down the well within minutes.

Oil drilling in the Arctic may slow down now since the polar bear has been added to the U.S. Endangered Species Act.

Venzuelan President Hugo Chaves said crude oil would rise to '$400 or $500' a barrel in the event of a U.S. attack on his country.

Angola has now surpassed Nigeria as the top Africa oil producer as unrest has sharply cut Nigerian output.

On Friday, Saudi Arabia announced that it had opened its taps and have been pumping an additional 300,000 barrels of crude a day since last Saturday.

Goldman Sach's raised its forecast for oil prices for the second half of the year to $141 a barrel, up from $107 previously.

The number of rigs actively exploring for oil and natural gas rose this week by 16 to 1,862. 1,471 rigs were exploring for natural gas, 381 for oil and 10 were listed as miscellaneous. One year ago, the rig count stood at 1,744.

The Interior Department is moving forward with an oil and gas lease sale covering nearly 4 million acres in Alaska's National Petroleum Reserve. The government says the lease area could hold up to 3 billion barrels of oil. The decision includes a plan to set aside more than 600,000 acres of land considered environmentally sensitive.

To see all the oil news from the past week check back through the blog. To see the current chart of oil prices go to the bottom of the page.

Oil prices soar to another new record

noreply@blogger.com (Ryan Crawford) — Sat, 17 May 2008 01:35:00 +0000

Oil prices once again soared to a new record high today on the New York Mercantile Exchange. After soaring as high as $127.82 a barrel , a new record, oil futures settled for the day up $2.17 at $126.29, also a new record. This marks the 8th time in the last ten trading sessions that oil prices have set a new record high.

Gasoline prices also continue to climb at the pumps. AAA and the Oil Price Information Service said gasoline prices rose almost one cent to a new record high of $3.787 a gallon. Gasoline futures followed oil higher and jumped 5.777 cents to settle at $3.2438 a gallon

Diesel fuel prices also set a new record at the pump, $4.482 a gallon. Heating oil futures also climbed 8.04 cents to $3.7028 a gallon.

Natual gas didn't follow the trend higher. Instead natural gas futures fell 30.5 cents to settle at $11.094 per 1,000 cubic feet.

President Bush wrapped up a meeting with Saudi Arabia's King Abdullah today. The countries oil minister announced they have opened its taps and have been pumping an additional 300,000 barrels of crude a day since last Saturday. In the past Saudi Arabia has acknowledged pumping 11 million barrels a day. Now with the increase, it is pumping 9.45 million barrels a day.

The Bush administration has given in to congressional pressure and agreed to temporarily stop filling the Strategic Petroleum Reserve on July 1st.

Both of these move did nothing to deter the increase in oil futures. "All in all, we're seeing another strong move here on little fundamental news," said Jim Ritterbusch, president of Ritterbusch & Associates. The reason for the rising prices in the face of negative news is all about market expectations.

Goldman Sach's underscored the sentiment today when it hiked its forecast for oil prices for the second half of the year to $141 a barrel, up from $107 previously. Analysts believe the oil market is undergoing a "structural repricing" that will continue to play out for some time to come.

"We would view any pullback in oil, regardless of the size or duration -- although a correction could be as large as 15 percent -- as an opportunity to re-establish long positions in oil before the summer," Goldman Sahs advised traders.

Environmentalists are both happy and sad by the decision. Some would have preferred that part of the land off limits for 10 years would have been placed off limits permantently.

The National Petroleum Reserve-Alaska sits on federal land that is part of Alaska's North Slope, lying just west of the Arctic National Widlife Refuge.

Meanwhile, on the trading front the relative strength gained ground on the move higher today, ending the day at 70%. Still looks like we should see be seeing either a move sideways or a drop in prices. The 20-day moving average finally crossed the $120 level closing at $120.19. The 50-day moving average closed up for the day at $112.05

Volume dropped off nicely on both the June contracts and all months as a whole. The June contract saw 242,464 contracts traded with open interest dropping down to 142,410 open contracts. Expiration for the June contracts is next week. Overall contracts saw a sharp drop in the number of open contract, down over 1 million contracts to close with 5,490,142 open contracts.

Oil prices fall as options expire

noreply@blogger.com (Ryan Crawford) — Fri, 16 May 2008 00:32:00 +0000

Oil prices gave up early gains as expiration of options played havoc with prices. Oil futures were up near record high levels at times and down by more than $3 a barrel at other times. They managed to end the day slightly lower, down 10 cents to $124.12 a barrel on the New York Mercantile Exchange. Prices rose as high as $126.64 and fell as low as $120.75. Also contributing to the madness in the trading pits was the June crude oil contract expiring next week. Erratic prices can be expected ahead of expiration as investors square positions.

My forecast yesterday was for prices to close closer to the top of the trading range. While being correct that oil prices should end the day closer to the top end of trading level it was simply due to the extreme trading range that was seen and not the tight trading range I was thinking should occur.

Helping oil prices also was a strengthen dollar.

Gas prices at the pump rose 1.8 cents overnight to $3.776. Meanwhile gasoline futures fell 1.46 cents to settle at $3.1658 a gallon.

Diesel fuel prices soared 3.6 cents to a new national average of $4.455 a gallon. Heating oil futures rose slightly 0.46 cents to settle at $3.6224 a gallon.

In the Thursday Energy Department report, natual gas supplies rose 93 billion cubic feet last week, more than analysts had expectec. This helped to push oil prices down from its earlier highs, analysts said. Natural gas futures ffell 19.9 cents to settle at $11.399 per 1,000 cubic feet.

Oil prices did not appear to react to a pipeline explosion that killed about 100 people in the northern Nigerian suburb of Lagos. Red Cross officials said the pipeline blast appeared to have been caused accidentally by a road construction crew.

OPEC said its estimate of world oil demand growth for 2008 has decreases. They currently expect global oil demand to grow by 1.35 percent in 2008 compared with a previous estimate of 1.4 percent.

British Prime Minister Gordon Brown called again for OPEC to increase output to help bring down record high prices that are helping to fuel inflation around the globe.

Currently there 360,000 acres of federal lands in Colorado that is being considered Oil shale reserves on federally owned lands hold an estimated 1.23 trillion barrels of oil. The Energy Policy Act of 2005 ordered the federal Bureau of Land Management to develop a plan for those resources. It had a deadline of February 2007 for a preliminary environmental impact study to be completed.

Most oil shale resources in the United States come from the Green River Formation in Colorado, Utah and Wyoming. The federally owned portion of oil shale is more than 50 times the country's proven conventional oil reserves and nearly five times the proven reserves of Saudia Arabia, according to the BLM.

Federal and industry officals said today that the oil and gas industry is better prepared for a rough hurricane season than they have been in year past.

Since Hurricane Katrina and Rita slammed the Gulf Coast is 2005, the industry has shored up its floating drilling rigs, near-shore and deep-water production platforms and other infrastructure to better withstand monstrous winds and waves.

Hurricane Katrina and Rita destroyed more than 100 platforms and shut in 92 percent of oil and 83 percent of natural gas output. The government has approved removal plans for 58. 792 oil and gas wells have been plugged permanently.

There are about 4,000 offshore platforms which provide a quarter of the nation's crude oil production and about 15 percent of its natural gas production. 834 offshore platforms are staffed.

Lynda Giguere, spokeswoman for the Department of Environmental Conservation said even though the spill was deemed minimal an investigation still is under way. There is no immediate word on how much was leaked, but it was a matter of gallons rather than barrels.

Oil drilling in the Arctic may slow down now since the polar bear has been added to the U.S. Endangered Species Act.

Venzuelan President Hugo Chaves said crude oil would rise to '$400 or $500' a barrel in the event of a U.S. attack on his country.

The reactivation of the U.S. Fourth Fleet in the Caribbean on July 1 and what he said is a possible U.S. base on the Guajira Peninsula, shared by Venezuela and Columbia, are both threats. He said his country doesn't plan to give the U.S. a base on the Guajira.

"If there's a war against Venezuela, with the oil in this soil, it won't depart from the Venezuelans, it won't go anywhere," he said.

In July Chaves will meet with Russian President Dmitry Medvedev in Moscow to discuss more arms purchases, which may include long and short-range anti-aircraft defense systems.

Angola has now surpassed Nigeria as the top Africa oil producer as unrest has sharply cut Nigerian output.

AAA said Thursday that 37.8 million Americans plan to travel over the Memorial Day holiday weekend. This is a one percent decrease compared to last year. This is the first time in six years the forecast has declined.

Relative strength remained unchanged today at 65% as the 20 day moving average crept ever higher to $119.68. The 50 day moving average also moved higher to $111.60

Volume picked up almost 40,000 contracts to 328,574. Open interest for the June contract continues to fall and now sits 197,081.

Forecast looking toward Friday is showing crude oil to be trading lower, closing out the day just above its low for the day. It may see a nice size drop taking it back down to $121.77.

Oil prices fall on a mixed inventories report

noreply@blogger.com (Ryan Crawford) — Thu, 15 May 2008 01:49:00 +0000

Oil prices fell on Wednesday afer the Energy Information Agency gave a mixed inventories report. Oil prices fel $1.58 to settle at $124.22 a barrel on the New York Mercantile Exchange. The EIA report said crude oil inventories rose by 200,000 barrel last week, now sitting at 325.8 million barrels of oil. This was less than the 2.25 million barrel rise analysts were expecting. Supplies have now increased 12.1 million barrels over the past four weeks.

Heating oil futures fell 8.11 cents to settle at $3.6178 a gallon after the EIA report showed distillate inventories grew by 1.4 million barrels. Analysts were expecting a smaller increase. Currently the supply is listed at 107.1 million barrels.

Gasoline futures fell 1.96 cents to settle at $3.1804 a gallon after the EIA report said supplies fell by 1.7 million barrels. Analysts had been expecting a decline of only 800,000 barrels. Stock piles now include 210.2 million barrels of gasoline inventories.

June natural gas futures rose 17.6 cents to settle at $11.589 per 1,000 cubic feet. Independence Hub, a major Gulf of Mexico natural gas platform, said the platform closed in April due to a leak will not reopen until next month. The initial leak has been repaired but another small leak still needs fixed. The loss of the the platform has removed 900,000 cubic feet of production. The facility has the potential to produce up to 1 billion cubic feet per day. The EIA is supposed to release its weekly natural gas inventories tomorrow. It is expected to show an increase of 85 billion cubic feet.

Refinery utilization jumped last week, up 1.6 percent to 86.6%.

Demand for gasoline was reported to have dropped slightly as well.

Meanwhile prices at the pump continued to climb to new records overnight as the national average price for gas rose 2.6 cents to $3.758 per gallon. Gas prices are now 67 cents higher than a year ago. It looks like they will continue to rise until at least the Memorial Day weekend. Diesel prices also set another new record high, closing at $4.419 per gallon.

"We've seen the crack spread widen materially in the last two weeks, which should encourage more gasolina production over the coming weeks as refiners see better profit margins," Thomas Hartmann, an analyst at Altavest Worldwide Trading said.

For the second day in a row the dollar strengthened against major currencies. Also on the news front the consumer price index increased by just 0.2% in April while the core index increased just 0.1%. The reading on inflation was a bit weaker than expected.

A group of Democratic senators want to make a massive arms sale to Saudia Arabia contingent on getting cheaper oil. The arms package is woth some 4$20 billion dolars. The group has introduced a resolution in the Senate to block the pending sale.

Imperial Oil, Canada's largest oil company, lost a legal bid to overturn a federal regulatory decision which could delay a planned C$8 billion($7.98 billion) oil-sands project in Alberta for a year.

No group has claimed responsibility for an attack on a Nigerian vessel. The attackers had asked for a ransom of 30 million naira($259,000) for the hostages' release after hijacking a boat carrying supplies for the US oil group Chevron. 9 Nigerians a Portuguese and a Ukranian were al being held hostage by their kidnappers.

In 2007, more than 200 foreign workers were taken hostage, often being released after a ranson was paid.

Oil's relative strength slipped back slightly to 65%. The 20 day moving average climbed to $119.20 while the 50 day moving average climbed to $111.17. As expiration draws closer open interest continues to drop for the June contract. Volume decreased to 289,528 contracts and the open interest continued to decline as well, finishing the day with 217,333 open June contracts. Over all contract time periods volume dropped for the second day in a row down to 553,272 while the total number of open contracts climbed to 6,713,419.

It appears we should see oil settle near its high end tomorrow. This could be considered either a tight day of trading or a nice rise in prices is coming tomorrow. The relative strength still is suggesting a contraction should be seen so we may end the day with a tight trading range.

Oil prices hit another new record

noreply@blogger.com (Ryan Crawford) — Wed, 14 May 2008 00:22:00 +0000

Oil prices rose up to just shy of $127 a barrel today on the New York Mercantile Exchange before managing to trim their gains and close just short of last Friday's record close. Trouble overseas seems to be the main reason why oil prices shot up once again. The dollar strengthed and a report out indicated that demand is waning for oil and petroleum products.

Oil prices shot up to $126.98 before managing to pull back for a gain $1.57 at $125.80 for the day.

Gas prices at the pump rose another 1.4 cents overnight to $3.732 according to a survey of stations of AA and the Oil Price Infromation Service. Prices have now risen to the level the Energy Department forecast they'll peak in June, on a monthly average basis. According to the Energy Department forecast the prices could go higher but their average will peak at around $3.73 a gallon. Meanwhile gas futures closed higher at $3.20 a gallon up 3.58 cents.

Diesel prices also rose to a national average of $4.39 a gallon on Tuesday up 2.9 cents from Monday. Heating oil futures rose 13.91 cents to settle at $3.6989 a gallon after rising as high as $3.7146. Heating oil futures were boosted by reports that supplies of distillates, which include heating oil and diesel, fell last month in Europe. Distillate stocks fell sharply in April, down 1.4 percent from March and 7.2 percent lower than a year ago data from Euroilstock showed.

June natural gas future rose 12.1 cents to settle at $11.422 per 1,000 cubic feet.

It is forecast oil prices may become more volatile in coming days as investors square positions ahead of the June contract's expiration next week.

News came out today that Iran's government is considering cutting crude oil production. The news made its way to the trading floor quickly. In a later news report, Iranian officials denied that production cuts were imminent, but said a reduction has been discussed. With the bad shape of Iran's economy it is doubtful that they will actually cut production.

In Iran , two recently discovered oil fields, named Sefidzakhor and Dey, located in the southern Fars Province, will be developed in the current Iranian year(started March 20), said Iran's petroleum minister on Monday.

It is estimated 25,000 barrels per day of oi will be produced by completing the development. Another 15,000 bpd will be added to the country's crude oil production capacity by completing development of Sarvestan and Sa'adatabad oil fields.

The Fars Province produces over 122 million cubic geet of natural gas daily.

Establishing Pars refinery with a capacity of 120,000 bpd in one of the other plans of the petroleum ministryin Fars Province.

The International Energy Agency said high prices are cutting demand for oil and petroleum products in the U.S. and Europe. The IEA cut its global oil demand forecast for this year to 1.2 percent for 1.5 percent. In the U.S. they said oil demand may contract by as much as 2.1 percent this year, while demand for gasoline will drop by about 1 percent.

Energy investors were also worried today about a reported drop in crude imports by China. Analysts were uncertain whether the 7.9 magnitude earthquake in central China would have a significant impact on demand.

The U.S. Senate voted 97-1 to direct President Bush to stop adding to the nation's strategic petroleum reserve, until crude prices fall below $75. Meanwhile the Senate rejected a broader Republican energy plan that calls for opening an Alaska wildlife refuge and some offshore waters to oil development. Supporters couldn't get the needed 60 votes to overcome a Democratic-led filibuster threat.

Opponents say areas such as the Arctic National Wildlife Refuge and coastal waters ought to remain out of the hands of the oil companies. They have been off-limits for the past 25 years.

San Francisco Federal Reserve Bank President Janey Yellen said she would be happy if the futures markets were right in forecasting a Fed rate increase by the end of the year. Analysts believe higher rates could weaken commodity prices.

Tomorrow the Energy Information Agency is to release its weekly look at inventories and the report is expected to show crude and distillate inventories grew while gasoline inventories remained unchanged.

Exxon Mobil asked Alaska on Monday to pay $800 million in damages, claiming the state breached a deal when it revokes gas and oil leases on a North Slope oil field. They also filed a separate request for reconsideration of a gas field deveopment proposal that was rejected by State Resouces Commissioner Tom Irwin last month.

Both filings were submitted to the Alaska Department of Natural Resources by Exxon Mobil on behalf of itself and its lease partners over the revocation of Point Thomson oil and gas leases.

The field in question is vital to a successful natural gas pipeline project under consideration by the state since Point Thomson holds nearly one-fourth of the 35 trillion cubic feet of natural gas reserves the state and the industry hope one day to ship in a gas line to Midwestern markets.

Exxon Mobil has a 36 percent interest in the field, BP Plc has a 32 percent interest, Chevon has 25 percent and ConocoPhilips has 5 percent. The rest is owned by minority owners.

Exxon initially said its claims for damages was submitted as a "precautionary matter." About four hours later, the department received the request to reconsider its decision to reject the plan last month.

Exxon Mobil, BP Plc and Chevron purchased leases 31 years ago to drill at Point Thomson. They have not produced any oil or gas from the tract. The lack of activity prompted the state to attempt to reclaim the leases late in 2006 and give other companies the opportunity to move forwards with the development of Point Thomson.

A Superior Court judge in December ordered state officials to weigh other options before stripping the leases. Two months later, Exxon filed its 23rd development plan. It involved $1.2 billion gas recycling and condensate production project to be developed over six years. The company say it already has the drilling rig secured and planned to begin development this year.

OPEC ministers see no need to meet before their September meeting. Oil minister of Qatar Abdullah al-Attiyah said, "The oil price is out of control. Supply is sufficient and refineries don't ask for more."

Two of the four Bonny Light crude oil facilities in Nigeria has been restored. There was no comment as to how much production was restored. A force najeure on Bonny Light exports remains in place.

In a counter move to the rest of the airline industry, South African Airways plans to build its domestic, regional and international route network despite losing money fast due to rising oil prices.

Relative strength inches upward once again today as it moved up to 72%, moving closer to the normal upper end of its range. Volume increase today to 350,221 contracts being traded on NYMEX, up from 316,844 yesterday. Meanwhile open interest for the June contract, set to expire next week, continued to drop, losing over 31,000 contracts, down to 231,284 open contracts at the end of the day. Overall there are 6,671,954 open oil contracts currently covering all time frames, up over 5,000 contracts from yesterday.

The 20 and 50-day moving averages climbed once again up to $118.71 and 110.66 respectively.

A retracement should still be in the cards for oil prices. Today saw oil prices close in the higher end of their trading range. This should bode well for a potential decrease tomorrow in prices. I highly doubt, though, it will be a big decrease in price.

Oil prices slip after first reaching yet another new record high

noreply@blogger.com (Ryan Crawford) — Tue, 13 May 2008 00:11:00 +0000

Oil prices spiked to a new record above $126 a barrel this morning before heading lower as investors took their profits and an earthquake in China suggested a possible drop in demand.

After trading as high as $126.40 oil prices settled for the day down $1.73 from Friday's closing record, to close at $124.23. This marked the first time in six trading sessions that oil prices closed down.

According to AAA and the Oil Price Information Service the pain at pump got worse overnight as the price at pump is now averaging $3.718 a gallon, up 1.1 cents overnight. Meanwhile the gas futures fell 3.7 cents to settle at $3.1642 after trading at a record level of $3.218.

Retail diesel prices rose 3.1 cents overnight to a record national average of $4.316 a gallon. Heating oil prices managed to closer lower today dropping 7.62 cents to settle at $3.5598.

Natural gas fell 2 cents to settle at $11.301 per 1,000 cubic feet after rising to its own trading record of $11.675.

The Bush administration said today that they will resist the calls to sell crude from the U.S. Strategic Petroleum Reserve to help boost available oil supplies in the market. White House press secretary Dana Perino told reports past attempts to influence energy prices by using the oil stockpile have not been successfull.

Perino also rejected new calls from Congress to stop adding oil to the reserve. "The president believes that we need an even larger Strategic Petroleum Reserve in order to protect ourselves against oil shocks," she said. As a result the Energy Department will continue with its plan to accept bids this week from oil companies to supply millions of barrels of additional crude to the stockpile.

The Senate is expected to vote on Tuesday to stop futures deliveries to the reserve.

BP Plc began returning crude production to it six shutdown units that were shutdown on Friday after a truck clearing snow from a blizzard hit a power line which lead to the outage. All units were back up on Saturday and production is reported to be ramping up slowly.

Oil imports to China, the world's second-biggest consumer, dropped 3.9 percent from last year to 14.24 million metrix tons, about 3.5 million barrels a day., the Bejing-based Customs General Administration of China said on its website today. This was the first decline in 18 months.

In India, production at factories, utilities and mines rose 3 percent from last year after gaining 8.6 percent in February. Economists surveyed forecast a 5.8 percent increase.

"If you have a continuation of that drop in Chinese imports, if that extends beyond a month, and if you have a slowdown in India, that obviously changes the dynamic for the oil market," said Kyle Cooper, director of research a IAF Advisors in Houston.

On Monday OPEC President Chakib Khelil said geopolitical factors, speculation and the value of the dollar would continue to affect oil prices for the next months or years.

"There is a geopolitical situation that the market expects to continue. You have the Iran crisis, the crisis that may develop with Venezuela, with the possibilty of the United States imposing an embargo on Venezuela," he said. "You have also problems in Nigeria," Khelil said.

"You have all those elements plus the recession problems in the United States and a strong fall of dollar, which has had a terrible impact on oil prices," he added.

On Friday, Columbia said it recovered documents from a slain guerrilla that indicate Venezuelan President Hugo Chavez has offered assitance to Columbian rebels. Some U.S. lawmakers have cited the documents to argue that the White House should add Venezuela to a list of state terror sponsors that includes North Korea, Iran, Syria, Sudan and Cuba.

Such a move would most likely spur Venezuela to cut off oil exports to the U.S., but analysts believe such a provocative diplomatic step is unlikely.

Yet another airline company has added fuel surcharges. Starting tomorrow Canadian baed Westjet Airlines will add a ticket surcharge ranging from C$20 to C$45 per ticket.

Saudia Arabia it considering delaying crude oil shipments to Taiwan because the island is reconsidering its bid for a water and power project in the Middle East kingdom.

The island's parliament has told Taiwan Power Co., part of a consortium including two Saudi companies, to halt its plan to bid for the $4 billion project.

The Taiwanese government, via Taiwan Power, Taiwan Water Corp, and Taiwan Cogeneration Corp, had planned to invest $720 million in the seawater desalination and power generation project.

Taiwan water is state run. Taiwan Power is the biggest shareholder of Taiwan Cogeneration, a producer of electricit and steam. Saudia Arabia is the island's biggest supplier of oil.

The slid in oil prices did takethe relative strength back down to 69% today from 77% yesterday. The 20 day moving average is at $118.08 and the 50 day moving average is at $110.17. Volume was up by over 4,000 shares to 316,844 contracts trading hands today. Open interest for the June contract currently sit at 262,650 down from 280,224 on Friday. Over all time periods volume was up as was open interest. Currently I see oil prices continuning to slide for a couple more days at least before leveling off in the $116-$120 range for a couple of weeks and then advancing forward once again toward the $140-$150 per barrel area.

Oil prices and news roundup for week ending May 9th, 2008

noreply@blogger.com (Ryan Crawford) — Sun, 11 May 2008 00:46:00 +0000

Oil prices have risen in price each of the past six trading sessions, rising $9.95 or 8.55% from their close on Friday, May 2nd to the high on Friday, May 9th. As of the close this Friday oil prices had risen 8.29% this week.

Along with rising oil prices, heating oil and gasoline prices also rose to new records this week. Heating oil settled on Friday at $3.6360 up 41.73 cents or 8.85%. Gasoline rose to $3.2012 on Friday up 23.48 cents for the week or 9.27%. Natural gas price rose for the week as well to $11.537 up 76 cents or 9.34%.

Making news this week Arjun Murti of Goldman Sachs predicted that oil prices should reach $150-200 a barrel within the next two years. Meanwhile Keith Fitz-Gerald raised his guidance for oil prices to $225 per barrel.

The Energy Information Administration predicted oil prices will average $110 a barrel this year, up $9 from last month's forecast. It also cut demand for U.S. petroleum products by 330,000 barrel per day this year; last month they predicted a drop 210,000 barrels per day. It said thanks to strong demand from overseas that global oil demand will grow by about 12 million barrels per day, unchanged from last month's forecast.

Indonesia announced that it is considering leaving OPEC next year since it has primarily become a oil importer instead of an oil exporter. Meanwhile Brazil is thinking of joining OPEC and seeing if they can help to bring down oil prices.

The Movement for the Emancipation of the Niger Delta(MEND) said former President Jimmy Carter has accepted its offer to mediate in the conflict going on in Nigeria "on the condition that the Nigerian government and any other relevant stake holder invites him." On Tuesday the rebel group promised it would halt attacks on the oil industry in Nigeria if the Nigerian government would allow Carter to act as a mediator.

MEND's campaign of violence has cut oil output in Nigeria by around one fifth.

Crude inventories for the week climbed by 5.7 million barrels, much higher than the 1.5 million barrels that were forecast. Gas inventories rose by 800,000, better than the expect 500,000 decline that was forecast. Heating oil inventories dropped 100,000 barrels, analysts were expecting an increase of 1.3 million barrels. Natural gas inventories rose by 65 billion cubic feet last week. Refineries were running at 85% of capacity, slightly lower than last week, and much lower than normal for this time of the year.

Singapore Airlines announced it would be raising fuel surcharge fees once again anywhere from $5-$20 per flight depending on destination.

France's Total Oil reported 1Q profit of 18 percent, adjusted net income increased 9 percent to 3.25 billion euros($4.87 billion) thanks to higher commodity prices.

Members of Congress are talking about halting the buildup of the Strategic Petroleum Reserve. It currently sits at a record level of 701.3 million barrels. It has a current maximum capacity of 727 million barrels and President Bush wants to ultimately double the capacity to 1.5 billion barrels to protect against any supply disruptions.

Another Congressional proposal is for limiting the minimum collateral requirements for oil traders. They are wanting to set the minimum margin requirement to at least 25%. They hope this would discourage speculative spending.

Governors of Texas and Connecticut and some Republicans are calling for easing the federal mandate that requires blending 15 bilion gallons of corn-based biofuels into the nations gasoline supply by 2015.

The House Judicary Committee has called on OPEC's secretary general to make himself available to testify at a hearing on high gasoline prices later this month. Lawmakes are pushin legislation to allow members of OPEC to be sues under U.S. antitrust laws.

President Bush and Republicans senators are jumping on high oil prices to renew their drive to allow drilling in parts of the Artic National Wildlife Refuge.

President Bus his planning to ask OPEC to increase oil production once again when he visits Saudia Arabia on May 16th. OPEC Secretary General reiterated his position that oil supplies are adequate and there is no need for the cartel to boost production. He also noted that several member countries are having a hard time finding buyers for their additional supplies.

Motorists in some part of California, Hawaii and New York are already pay $4 per gallon for gasoline. at the pumps.

A KPMG survey of petroleum executives found 55 percent believe oil prices will drop below $100 by the end of the year, while 21 percent prices will end the year between $101 and $110 and 15 percent believe oil prices will be between $111 and $120 a barrel. Only 9 percent believe oil prices will stay above $120 a barrel through the end of the year.

In the same survey executives said 44 percent of their companies plan to boost capital spending on exploration and producition by 10 percent during the next year.

Alberta, Canada Premier has threatened to sell its huge reserves of oil sands to other countries if the U.S. goes ahead with plans to impose restrictions on fuels made from Canada's oil sands since they have higher greenhouse gas emissions than conventional fuels.

Venezuela announced that it has proven oil reserves have increased by 30 percent to 130 billion barrels of proven oil reserves.

The number of rigs looking for oil and natural gas increase for seven this week.

OPEC pumped an average of 31.87 million barrels per day in April, down by 350,000 barrels in large part due tp the steep output losses in Nigeria. The latest estimates show OPEC, minus Iraq missed their 29.673 million barrels per day target by 183,000 barrels.

A blizzard hampered visibility in Alaska's Prudhoe Bay region and frontloader struck a compressed air line while moving snowdrifts. This force the shutdown of 380,000 barrels of oil. The power supply had been re-energized and the hopes were to have full operation by Saturday.

For more details on any of the news stories from this week check back through the blog.

(See bottom for chart of oil prices.)

Oil prices to yet another new record

noreply@blogger.com (Ryan Crawford) — Sat, 10 May 2008 01:57:00 +0000

Oil prices rose to another record high today on the New York Mercantile Exchange. After rising as high as $126.25 before they settled up $2.27 at $125.96 making it almost a $10 gain in oil prices for the week. Prices are up more than 100% in the past year. So far in 2008, oil prices have averaged $103.17 a barrel.

At the pumps gas prices climbed as well overnight, jumping 2.6 cents to a record $3.617 a gallon, according to a survey of gas statiosn by AAA and the Oil Price Information Service.

Meanwhile gasoline futures rose 6.34 cents to settle at a record $3.2012 a gallon after rising as high as $3.2038. Heating oil for June delivery rose 12.62 cents to settle at $3.636 after rising as high as $3.6524 earlier in the session. Natural gas futures rose 27.4 cents to $11.537 per 1,000 cubic feet after earlier hitting a record $11.569.

In a new KPMG survey of 372 petroleum industry executives, 55 percent said they believe oil prices will drop below $100 a barrel by the end of the year. 21 percent or those that responded predicted prices will end the year between $101 and $110 a barrel, while 15 percent forecast oil prices will be between $111 and $120 a barrel.

Only 9 percent said they expect oil prices to stay above $120 a barrel through the end of the year.

Of the executives surveyed, 44 percent said their companies plan to boost capital spending on exploration and production by 10 percent during the next year.

The survey was conducted last month and the data was released Friday. It included executives for major oil companies, independent exploration and production outfits and other energy companies.

Brazilian President Luiz Inacio Lula da Silva said in an interview with a leading German magazine that Brazil wants to join OPEC to help lower global oil prices. He said it plans to exploit its massive offshore oil reserves to make itself "a major oil exporter."

It is believed Brazil has proven reserves of 11.8 billion barrels.

Alberta, Canada Premier Ed Stelmach said the province will simply sell its huge reserves to other countries if the U.S. goes ahead with plans to impose import restrictions on fuels made from Canada's oil sands.

The U.S. is preparing to block the military and other federal agencies from buying fuel made from oil sands crude and other sources that produce higher greenhouse gas emissions than conventional fuels.

Stelmach said he has told U.S. officials that Alberta will no longer allow itself to depend primarily on the American market for exports.

It is estimated that Canada's oil sands could yield up to 175 billion barrels of oil.

Venezuela Oil Minister Rafael Ramirez said Venezuela's proven crude oil reserves have increased by 30 percent. Venezuela now has 130 billion barrels of proven oil reserves. After Canada's massive reserve of harder to process oil sands, that is the biggest reserve outside the Middle East.

Ramirez said Venezuela added 30 billion barrels to its total last month, and plans to quantify additional heavy crude deposits in the country's Orinoco River basin.

This week the number of rigs looking for oil and natural gas in the United States rose by seven to 1,846. Of the rigs running nationwise, 1,475 were looking for natural gas, 361 for oil, and 10 were listed as miscellaneous.. One year ago the rig count stood at 1,740.

According to a Platts(http://www.platts.com/) survey of OPEC and oil industry officials released on Friday, OPEC pumped an average of 31.87 million barrels of crude oil per day in April. Compared to March this was down by 350,000 barrels per day. The sharp drop was largely the result of steep output losses in Nigeria.

Excluding Iraq, the 12 members which participate in output agreements pumped an average 29.49 million barrel per day, down from an estimated 29.85 million barrels per day in March.

"OPEC production has been relatively steady in recent months, but the sharp fall in Nigerian output shows how vulnerable overall supply from the group can be to developments in one country," said John Kingston, Platts global director of oil. "Given that space capacity is also relatively tight, any disruption has a bigger impact on markets."

The latest estimates show the OPEC-12 missing their 29.673 million barrels per day target by 183,000 barrels.

With a blizzard hampering visibility, an operator of a frontloader struck a compressed air line while moving snowdrifts at a central power station in Alaska's Prudhoe Bay region, damaging the power supply to processing centers. This halted the 380,000 barrels of crude oil per day that flow down the trans-Alaska oil pipeline. Officials said production would be "way down" and would ramp back up over the next several days.

Bp's Northstar field also went off-line as a result of the power outage. Northstar produces about 79,000 barrels of crude daily from a man made island in the Beaufort Sea. All told, Alaska's North Slope field produces about 730,000 barrel each day.

The power supply has been re-energized, with four of the plants expected back online later Friday. The hopes are to have the rest operating by Saturday.

According to Lehman Brothers, Saudia Arabia is getting ready to buy influence with the next president of the United States. It is currently working on boosting its output by 1.3 million barrel a day, more than the expected increase in global demand next year--but the secretive nation is likely to keep its political tool, excess production capacity, close to it chest until it has a new U.S. president to win over.

Saud production is currently a little less than 10 million barrels per day. Even though Saudi Arabia guards its oil production and reserves as state secret, it recently announced three long-awaited oilfields have begun production.

While the RSI keeps on rising now up to 77 the number of open June contracts keeps fallings, now down to 280,224 from 302,673 yesterday. This is more than 100,000 less contracts then on April 28th. Overall open contracts total 6,588,778 up from 6,545605 yesterday. The 20 day moving average is at $117.43 and the 50 day moving average is also moving higher each day. Yesterday it was at $109.23 today it settled at $109.71. We should be seeing near term top forming on the charts and a breather should be in store. The weekend break may just end up providing this break.

Oil prices up; gasoline and diesel set new record pump prices

noreply@blogger.com (Ryan Crawford) — Fri, 09 May 2008 00:19:00 +0000

Oil prices rose once again today on quite low volume. After spending much of the day in negative territory, down as low as $121.58, oil closed up 16 cents at $123.69 a barrel on the New York Mercanile Exchange. It did once again set an all time intraday record high of $124.61.

According to AAA pump prices went up 2.7 cents to a new record of $3.645. Diesel prices also rose 0.9 cents to a new record at $4.251.

Meanwhile gas futures price rose 1.96 cents to settle at another record close of $3.1378. Distilliate futures, which include heating oil and diesel fuel rose 6.25 cents to $3.5098.

It's widelt expected the average price of gas will soon rise as high as $4. Motorists in many areas, including parts of California, Hawaii and New York are already paying that much, or more.

If oil prices go the way the pundits are expecting, there's no "way we'll stay under $4 a gallon," said Fadel Gheit, an analyst at Oppenheimer & Co. in New York.

After Goldman Sachs reiterated its forecast for $150-$200 oil on Monday Keith Fitz-Gerald came out with a revised forecast for oil. He has been saying since December 2007 that oil would hit $187 per barrel within the next three years. Today Keith came out with a new forecast for oil to reach $225 per barrel.

"The math is really simple here," Fitz-Gerald said. "We are burning through supplies at a rate that's four times to five times faster than we're discovering new reserves. Throw in a few [surpised]...perhaps a terrorist event...and add in the accelerating use of oil and gasoline in Third World countries, and we have the recipe for far higher prices. That's already in the oven."

To put things in a more appropriate perspective, oil prices have risen $11 a barrel or 9.8% in the past week alone.

In addition to the proprietary strategy he used to project market prices, Fitz-Gerald said he relief on some of the observations he's been making as part of the investor trip he's leading through China. "Bejing alone is adding 14,000 cars a day. Across China, the number is obviously higher. [The] same [is true] in India, but I don't have the figures at my fingertips. Then there's the other side...evidence suggests that OPEC reserve figures may be artificially high. Imagine what's going to happen when people figure out that there really isn't as much oil as everybody thinks. $225.21 is not out of the question...after we get to $187."

Fitz-Gerald sees oil and gasoline prices going higher...much higher. And four factors will be the key catalysts. They are:

Obfuscation by OPEC: Members of OPEC have been misrepresenting their reserve capabilities for years. The key players have reported no new discoveries for decades.

Terrorism Threats: The odds of a terrorist act will interrupt oil supplies in the near term or the long term are higher than most security experts would ever publicly confirm.

The Dollar Doldrums: Oil is priced in dollars. The dollar is in the dumper. Indeed, rising inflation and falling interest rates have put the greenback into a steep downward spiral. If the Federal Reserve continues cutting interest rates, the dollar will continue to drop against global currencies OPEC members will counter the greenback decline by marking up the price of crude, causing prices to increase still more in dollar-denominated terms.

Cruising Goes Global: As more Chinese and Indians purchase automobiles they will continue to consume more and more oil. The fact that China's oil imports jumped 18% in one month is evidence enough that this is happening. Tata Motors has unveiled a $2,500 car, the Nano. It underscores the fact that international carmakers are looking to recruit a whole new group of motorists.

The fall out of all this is that U.S. refiners will end up paying more for oil, and then supplies will start to dry up as countries opt to halt exports and keep the precious black gold for themselves.

China has embraced a different strategy to create captive supplies of crude. It has been cutting deal with countries U.S. refiners either can't or won't deal with. They have been investing in Africa and Iran. It has signed deals with Sudan, Chad and the Congo. Trade between Africa and China has advanced at a rate of 40% a year since 2001. In 2006, bilateral trade between the two was $50 billion. Already 14% of China's oil imports come from Angola. About 60% of Sudan's oil goes to China.

Meanwhile, OPEC Secretary General, Abdalla Salem El-Badri on Thursday reiterated his position that oil supplies are adequate, and there is no need for the cartel to boost production. He said several OPEC oil projects are coming on line. He also noted several member countries are having a hard time finding buyers for their additional supplies.

It's anybody's game on which direction oil prices are going to move over the next couple of years.

The Energy Department released natural gas inventories which rose by 65 billion cubic feet last week. They remain slightly below the 5-year average. On the news natural gas fell 6.4 cents to $11.263.

The market still looks like it could halt its upward trend or even pullback in the short term. Currently the relative strength is in the upper portion of its normal range. The 20 day moving average currently stands at $116.62 and the 50 day moving average is at $109.23. The number of front month open contracts dropped once again today down to 302,673 fom 327,550 yesterday. Meanwhile, all oil contracts increased by 50,000 and are now up over 500,000 contracts since April 25th at 6,545,605 contracts.

(See chart of current oil prices at bottom of webpage)

Oil prices rise on supply data

noreply@blogger.com (Ryan Crawford) — Thu, 08 May 2008 00:58:00 +0000

Oil prices rose again today after dropping initially on a government report that indicated crude oil and gasoline supplies were better than analysts expected last week.

Just before the Energy Information Administration released its weekly report, the light sweet crude contract was up 21 cents at $122.05, then retreated as low as $120.54 before bouncing back to settle at $123.53 a barrel. It rose as high as $123.80 during trading.

Crude prices for the June contract dropped off as investors reacted to the positive supply report. Once the market realized the numbers are not as bullish as people thought they bought back really quickly. Normally the market needs at least 20 minutes to digest the information.

Crude oil inventories clmbed by 5.7 million barrels for the week ending May 2nd. Analysts had forecasted a gain of 1.5 million barrels according to a survey from Platts, an energy research firm.

At 325.6 million barrels, U.S. crude oil inventories are in the middle of the average range for this time of year.

Accoring to AAA's web site Wednesday, gas rose 0.8 cents overnight to $3.618 per gallon, just shy of their all time record of $3.623 set on May 1st. In the meantime diesel prices slipped back slightly to $4.24 per gallon down from it's record high of $4.25.

Gas futures rose 1.27 cents to $3.1182 after the report showed gasoline inventories rose by 800,000 barrels. This was better than the 500,000 barrels decline that was forecast. Inventories are in the upper half of the average range for this time of the year.

Heating oil futures rose 9.38 cetns to $3.4473 on a surprise drop of 100,000 barrels. Forecasts were for an increase of 1.3 million barrels. Distillate fuels are in the lower half of the average range for this time of the year and are nearly 13 percent below a year ago.

Tight electricity supplies in China, South Africa, Chile, Argentina and parts of the Middle East have set off a worldwide boom in demand for diesel for use in electric genereators, adding to the robust demand for use in passenger vehicles in Europe.

Trader said there was concern an earthquake in Japan would shut nuclear power plants near the tremor and trigger an increase in fuel imports to compensate. Japanese public broadcaster NHK said the quake had no effect on the facilities.

Refineries were running at 85% of capacity last week, a slight decline from the week prior. Typically they are running at 90% of capacity this time of the year.

Natural gas rose 24.4 cents to $11.327

Crude oil prices have been rising on supply disruptions in Nigeria and volatile weather in the Gulf of Mexico. The unusual weather has been the cause of shipping snags that have causes crude oil deliveries from overseas to be held offshore while awaiting safe weather for unloading.

Putting pressure on gas prices has been the crack spread. Wholesale gasoline prices are at about $128 a barrel, an $8 or $9 a barrel premium after paying for crude at recent prices. Last year crude was roughly $65 a barrel and gas was at $100 a barrel, giving a $35 premium. This has cut into refiner profits and have caused refiners to hold off on gas production.

Gas is not profitable and the equipment that is used to refine crude oil into gasoline are fatiguing. Even if a refiner had economic incentiv to make gasoline, refineries simply can't maximize output.

While oil prices rose today, Singapore Airlines announced that is would be increasing its fuel surcharge to cope with the rapidly rising cost of jet fuel. It last raised its surcharge in March.

On long-haul flights between Asia and North America, the fee will rise to $150 an increase of $20 per flight. The surcharge will increase $5 to $35 per flight in Southwest Asia, and increase $15 to $95 on other flights.

While airlines are feeling the pinch the oil companies are reaping the rewards. Today Frnace's Total Oil reported a 1Q gain of 18 percent thanks to higher commodity prices.

Excluding an after-tax inventory effect, adjusted net income increased 9 percent to 3.25 billion euros($4.87 billion). The company's exploration and production business accounted for 85 percent of overall operating profit.

Due to these outrageous profits members of Congress are talking about halting the buildup of the Strategic Petroleum Reserve, the nations emergency oil stockpile. It currently sits at a record level of 701.3 million barrels. The White House want to fill teh reserve to its 727 million barrel capacity this year and to ultimately double the capacity to 1.5 billion barrels to protect against potential supply disruptions.

The Bush administration has said additions of 70,000 barrels per day to the reserve hasn't had a "meaningful impact on out nation's supplies of oil." The U.S. Energy Information Administration estimates the impact on gasoline prices in the U.S. at between four and five cents per galloon. Some lawmakers think the impact could be as much as 24 cents a gallon. Lawmakers are considering attaching legislation to halt the buildup to must-pass legislation financing for the war in Iraq.

Another proposal is raising the minimum collateral requirements for oil traders. Currently exchanges set their own margin requirements. On some exchanges, crude oil contracts can be sought or sold for as little as 5% of their nominal value. $100,000 worth of oil will cost you $5,000 to $7,000. Sen. Byron Dorgan(D. North Dakota) says he is drafting legislation that would raise margin requirements to at least 25%. This is hoped to discourage speculative trading.

Governors of Texas and Connecticut and some Republicans are calling for easing the federal mandate that requires blending 15 billion gallons of corn-based biofuels into the nations gasoline supply by 2015. Biofuel industry officials say loosening the mandate would lead to higher gas prices because of supply disruptions and higer costs of replacement gasoline.

The House Judiciary Committee has called on OPEC's secretary general, Abdalla Salem El-Badri, to make himself available to testify at a hearing on high gasoline prices later this month. Lawmakers are pushing legislation to allow members of OPEC to be sued under U.S. antitrust laws.

President Bush and Republican senators are jumping on high oil prices to renew their drive to allow drilling in parts of the Arctic National Wildlife Refuge, including parts that are currently off-limits.

President Bush is planning to ask OPEC to increase oil production once again when he visits Saudia Arabia on May 16th.

Exxon Mobil has lifted a force majeure on its crude oil exports from Nigeria. A union workers strike late in April disrupted Exxon's 800,000 barrels per day production. The output has since resumed. The company said it was looking to minimize the impact of the supply disruption.

Both parties say negotiations continue over workers' pay. The talks being held in Lagos are to resume on Thursday.

In the futures market their was 344,379 contracts traded today up from 294,780 yesterday. Currently their are 327,550 open contracts down from yesterday's 347,081.

The 20 day moving average is at $115.91 and the 50 day moving average is at $108.73. The relative strength is setting quite high right now at 73%. At the present time a pullback or a drift sideways in oil prices could come at any time.

(See current chart of oil prices at the bottom of the page)

Oil Prices Not Being Driven By Gasoline

noreply@blogger.com (Ryan Crawford) — Tue, 06 May 2008 23:47:00 +0000

Oil prices surged higher today to another record close. Some believe that it isn't gasoline that is causing oil prices to continue to move higher. According to CNBC U.S. gasoline is no longer the leading fundamental driving oil markets, according to a report penned by Arjun Murti of Goldman Sachs Tuesday.

"Gasoline, at least in the short-run, has traded more like an annoying by-product of crude than as its core fundamental driver," Goldman's report said. "Weakness in U.S. gasoline margins is not the surprise the surprise is that the weakness not only has not mattered to crude oil markets, but if anything, is helping to keep oil supply/demand in balance."

Meanwhile Murti says demand for middle distillates, like diesel, gasoil, heating oil and jet fuel and kerosene is racing up. The difference in prices between gasoline and middle distillates, known as a crack spread, has been exceptionally strong signaling tightness in global refining capacity.

Just a year ago US RBOB spot gasoline prices were worth some $92.60 per barrel while NWE jet was priced in at some $83.3, a discount of over $9 per barrel. Today that same jet fuel is nearly $30 more expensive than RBOB, and has led to U.S. refinery Valero switching production by up to 7 percent from gasoline to gasoil.

"High crude oil prices despite weak U.S. gasoline cracks is sending the signal that global oil markets do not need or perhaps want the U.S. gasoline consumer to recover," Goldman's report writes.

Adding bearish momentum to the price of gasoline in the medium-term is also the increased production of ethanol. Up to 7 percent of a barrel of gasoline has to be made of ethanol in the United States, further pushing gasoline production into the "by-product" category.

But overall trend is undeniable according to products traders. They say demand for jet fuel can only continue to rise as Europe races to compete with soaring demand from the Middle East & Asia. This they say means strength in middle distillates is likely to remain a long-term rather than short-term trend.

Today oil prices jumped to a new record of $122.73 a barrel before retreating to settle up $1.87 at $121.84 on the New York Mercantile Exchange.

Oil prices have nearly doubled from about $62 a barrel one year ago and a new Goldman Sachs prediction says that oil prices could rise to $150 to $200 within two years. Others like Tim Evans, an analyst at Citigroup Inc, counters Goldman's analysis with a note predicting that crude oil prices could as easily fall to $40 a barrel as rise to $200 over the next two years because supplies are, as Evans put it, comfortable.

It's not the first time Murti has espoused a super spike theory, in an April 2005 note, he predicted the oil market was in the early stages of an unprecented rally that would send oil prices from a then-record of about $57 a barrel to $105.

Also today in it's monthly report the Energy Department's Energy Information Administration predicted oil prices will average $110 a barrel this year, up $9 from last month's forecast. The EIA also said high prices will cut T.S. demand for petroleum products by 330,000 barrels a day this years; last month, the EIA predicted U.S. petroleum consumption would fall by 210,000 barrels a day.

Strong demand from countries such as China, India, Russia, Brazil and in the Middle East will support high oil prices and keep global oil demand growing by about 12 million barrels a day this year, unchanged from last month's forecast, the EIA said.

Overnight gas prices slipped 0.1 cents to $3.61, according to AAA and the Oil Price Information Service. In it's report the EIA said gas prices will peak at a monthly average of about $3.73 a galloon in June, about 13 cents higher than its previous forecast. Gas futures closed the day up 5.26 cents to settle at $3.1055 a gallon after earlier setting a new intraday trading record of $3.126.

Heating oil rose 4.7 cents to settle at $3.3535 a gallon after rising to a trading record of $3.3712.

Natural gas advanced to $11.083.

Indonesia Energy Minister Purnomo Yusgiantoro told reporters in Jakarta the government may leave the Organization of Petroleum Exporting Countries(OPEC) as early as next year due to shrinking production. This has made the country a net importer of oil. He indicated Indonesia may leave OPEC in 2009 since it has paid its membership fee for this year.

The country has been weighing leaving OPEC since at least 2005 as output at aging wells declined and investment in exploration has slowed. At a meeting yesterday, officials withdrawing from OPEC for as long as the country's production remains below 1 million barrels of oil a day.

Southeast Asia's biggest economy imports about one-third of its oil product needs because it lacks adequate refining capacity and faces falling oil output. The Indonesian government has lowered its oil sales estimate for 2008 to 927,000 barrels a day from 950,000 barrels a day last year.

It's crude oil output likely fell to 859,853 barrels a day in April from 867,516 barrels a day in March.

Indonesia plans to sell 7 million barrels of oil, or half of its stockpile this year to increase revenue as crude prices reached a record. This may add $665 million to state coffers, on the assumption that Indonesian's oil price averages $95 a barrel this year.

In Nigeria rebels promised on Tuesday to halt attacks on the oil industry if the Nigerian government would allow former U.S. President Jimmy Carter to act as a mediator.

The rebel Movement for the Emancipation of the Niger Delta(MEND) said Carter has accepted its offer to mediate in the conflict "on the condition that the Nigerian government and any other relevant stake holder invites him."

The Carter Centre's vice president for peace programs, John Stremlau, said the former president would take such a request from all parties seriously but it was "woefully premature to suggest he will plunge himself into mediating this conflict."

MEND's campaign of violence has cut output in Nigeria by around one fifth. The bombing of a Royal Dutch Shell flowstation in the southern Nigerian state of Bayelsa on Saturday marked MEND's fifth strike in just over a month and the attacks are expected to worsen with the trial of militant leader Henry Okah beginning next month, analysts say.

(See bottom of webpage for current chart of crude oil prices)