3SOF

$WTIC - Oil - Light Crude Continuous Contract (futures)

Two channels - an upper and lower. Currently testing the 200 day ma.

First support 55
Then 50....

Between these two levels is a great place to start buying oil companies for the long term holder...IMO

All this talk about 40$ oil is ridiculous....time will tell


The bottom chart could be the Phantom support line.... coincidentally it calls between 50-55 support levels.





-Cal  >:D

Think about oil forecasts in the simplest sense possible. Here are the overriding factors....

*remember I am thinking about the LONG term

FACT 1: we have a gradually increasing demand and limited supply (meaning oil prices have to rise -all things held equal)

FACT 2: Eventually oil will run out and oil companies will go out of business. (unless they adapt into alternative energy companies)

FACT 3:  We don't actually know when oil will run out or when oil supplies will dwindle. War is a great time for it though... look at our war in IRAQ - oil rocketed... (buy oil companies during war times)

FACT 4:  Oil crunches are likely to happen during seasonal changes or period of economic expansion (china)

FACT 5: When oil starts running low oil companies will have hoards of cash to spend somehow. They either liquidate or buy alternative energy companies.

Good post Calven... Any comments on Natural Gas?  ???
- Dhiraj

In general I would say energy as a whole is bottoming...

Natural Gas
http://stockcharts.com/h-sc/ui?symbol=$NATGAS&period=DAILY&years=2&months=10&days=0&id=p46352739846

Unleaded Gas

http://stockcharts.com/h-sc/ui?symbol=$GASO&period=DAILY&years=2&months=10&days=0&id=p95735986176


It's probably a good time to load up on energy again...at least get your feet wet

cal  >:D

Hi Calven,

Good post Calven.  If this stock hits the support line, is that a good time to buy?

Well its actually a commodity. The chart I have show is basically the price of oil... 

You would want to buy "oil stocks" to play the oil bottom....

Basically Im saying old oil names are going to come back to life with winter within the next 4-6 weeks... maybe sooner

cal >:D

As I said a week ago , oil is bottoming. Crude oil now back above 60$ a barrel...

Market also showing weakness. Coincidence?

cal   :'(

Hi Calvern,
I agree with you.  There is a very good chart at this link.  The writer also thinks that oil has bottomed.  Sorry, I can't figure out how to post the chart here.
http://321energy.com/editorials/hoye/hoye120705.html

I bought a few options back at the end of Nov in $XNG and $OSX.  First time I ever did that, and never realised that it was so volatile, but doing okay on them so far.  I've been hearing that the options on OIH (an EFT) are more liquid.  Do you trade any options on $XNG, $OSX or OIH, or how do you trade them?
Thanks,
Brigitte

LuckyFish,

I like that chart you provided. Very nice! I think oil has bottomed for the short term at least. With oil bottoming and energy in general bottoming I think the COMPX and other major markets wills show some uncharacteristic weakness heading into the holiday season.

We will truly see how high gas prices affect consumers this holiday season. Time will tell, but I think spending this holiday season might slow a little...

Sorry, I don't trade options at this time although I do know a little about them.

I think $WTIC (Crude Oil) started bottoming last week. If you read up a few posts I posted charts showing my reasoning. Call options on Oil and energy in genera look good to me!

Good luck and Happy Trading,
Call

As I told you 2 weeks ago. Crude is bottoming.


Now here is the chart...


>:D

Like I said...Oil bottoming..should test new highs.

Yep, i've just been watching bloomberg and some analysts are confident we'll see 75-80/bl.

I have been telling everyone that oil prices are here to stay...

Everyone forgot about oil when it retraced back to the mid 50's... meanwhile I  quietly sold tech and bought back oil - needless to say its back near 70!   ;D

Oh and Cramer is a joke. He said oil was "Done for the next 6 months!" about 2-3 months ago on mad money, then I watch the show and he "magically" switched sentiment and acted like he never told millions of people this...... what a clown.

Anyone else notice this?

>:D

February crude closed at $68.35 a barrel on its final trading day, It gained $1.52, or 2.3%, for the session, and closed out the week up 6.9%. March crude rose $1.29, or 1.9% to end at $68.48 Friday. February natural gas rose 37.5 cents, or 4.2%, to close at $9.28 per million British thermal units for the session. The contract closed up 5.6% for the week.
According to chart above we can see that we are now near of 70$ level and I think that level are now inevitable. As a reminder, the NYMEX front contract tested a record high of $70.85 in late Aug 2005.  ;)

Nice symmetrical triangle pattern forming - could be a continuation eventually later in 06

It pays to look for stocks where indices breaking out ;)

Bullish --- Oil & gold ;)

Oil made a breakout around $68.00...

OIL and GOLD did breakout but in the past few days of trading we have seen the indexes that have already been flying high,when break out of a trend like that will start a pull back fairly quickly.So if you would have entered early last week,you are doing good.I think OIL and GOLD will pullback for the rest of this week either starting tomorrow or Wed.I could be dead wrong,but that is how I see it.But those are the sectors to play in the near future.

Quote from: akclide on April 17, 2006, 09:31:14 PM
OIL and GOLD did breakout but in the past few days of trading we have seen the indexes that have already been flying high,when break out of a trend like that will start a pull back fairly quickly.So if you would have entered early last week,you are doing good.I think OIL and GOLD will pullback for the rest of this week either starting tomorrow or Wed.I could be dead wrong,but that is how I see it.But those are the sectors to play in the near future.

I've been holding my GOLD stocks months ago i'm currently up 40% @ CLG 30% @ CBJ, bought CGR last week  and i'm already up 21% ...not bad akclide, I hope u got in also ;)

Quote from: akclide on April 17, 2006, 09:31:14 PM
OIL and GOLD did breakout but in the past few days of trading we have seen the indexes that have already been flying high,when break out of a trend like that will start a pull back fairly quickly.So if you would have entered early last week,you are doing good.I think OIL and GOLD will pullback for the rest of this week either starting tomorrow or Wed.I could be dead wrong,but that is how I see it.But those are the sectors to play in the near future.

Yup, you were right..you're deadly wrong ...i think OIL index will continue trending up this week...

Have you checked out these oil stocks HEC & TGC? Hopefully you did.... ;)

I am glad that I was wrong because that would mean you made a bundle.Excellent Goodluck

Crude should test support at $68.25  >:D

Quote from: nullzero on July 14, 2006, 11:17:37 AM
I think we are in for a recession. Here are some of the following fundamental reasons the market is tanking.

1) World instability ex.(Iraq, Israel conflict, North Korea, Iran nukes, Nigeria, world wide terrorist attacks, etc.)

2) Rising Energy prices (Oil, electricity cost, etc.)

3) Rising Inflation

4) Declining Dollar

5) Cooling real estate market

6) Political polarism and division in this country.

Im sure we can add a couple more lines to this list once we progress down the economic cycle of a recession. Unemployment, business slowdown, foreclosures, etc. Looking at the history books it looks a lot like the 1970s recession. Seems to me the markets will be in limbo for the next 2-5 years. Only way to make money is playing the stocks on a short term basis long or short taking your gains fast!

Quote from: nullzero on July 14, 2006, 03:19:46 PM
Its hard to touch any long position in a market like this. I think the only stocks that can hold up in this market are strong funadmental high yield div. stocks, any stock related to oil that is fundamentally strong ex. (SU, HES, VLO, XOM) and will benefit from higher oil prices, commoditys stocks and ETFs  like ex. (GLD, SLV, PD, FCX, N), and foreign stocks, ETF, foreign currency.

Good job Nullzero (applause) ;)


I'll be scanning oil stocks this weekend.... I'm seeing the oil Index will hit below $85 bucks this coming weeks to come ;)

Im currently long in SU, NBG, and BRLI. BRLI doesnt really hold true to a recession strategy but I felt it could have a strong upward push in the next couple days if the market turns (currently only down like -1% on this) Here is a summary of SU I highly recommend it.


[SU] - "Suncor Energy, Inc. operates as an integrated energy company in Canada. It operates through four segments: Oil Sands, Natural Gas, Energy Marketing and Refining, and Refining and Marketing. The Oil Sands segment offers light sweet crude oil/diesel and light sour crude oil/bitumen. The Natural Gas segment explores, develops, produces, and supplies natural gas, natural gas liquids, and crude oil. The Energy Marketing and Refining segment refines, transports, and markets petroleum and petrochemical products, such as gasoline, jet fuel, diesel, heating fuels, heavy fuel oils, and petrochemicals to industrial, commercial, wholesale, and refining customers."

http://www.suncor.com

Bought SU today up already a %, looks strong on this one. Room for lots of short squeeze the oil and gas industry has been targeted the week before in shorting and now they are panic covering.

Watch out!!  I think the market will drop again tomorrow :( :(
Monday July 17, 12:43 am ET
By Gillian Wong, Associated Press Writer 
Crude Oil Prices Rise Toward $78 a Barrel in Asian Trading on Mideast Turmoil


SINGAPORE (AP) -- Crude oil prices rose Monday as escalating fighting between Israel and militants in Lebanon created more geopolitical uncertainty in a market already jittery over volatility in producing countries.
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Light, sweet crude for August delivery gained 50 cents to $77.53 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore.

The contract reached an intraday record of $78.40 a barrel Friday before settling at an all-time closing high of $77.03.

Gasoline futures rose 1.01 cents to $2.335 a gallon Monday while heating oil prices added 1.65 cents to $2.0925 a gallon. Natural gas prices fell 19.7 cents to $6.150 per 1,000 cubic feet.

Fighting between Israel and militants in Lebanon, which escalated over the weekend, raised fears of a possible full-blown war in the Middle East.

Analysts said the violence was driving oil prices higher though it had no direct effect on oil supplies because it added more nervousness to a market already placed on edge by strong global demand and a tight supply cushion.

"Oil prices are higher because the conflict between Israel and Lebanon worsened over the weekend, and though that obviously doesn't have any direct impact on physical oil supply, people are having trouble seeing where this all ends," said Tobin Gorey, a commodity strategist with the Commonwealth Bank of Australia in Sydney.

Israel lobbed missiles at targets in all corners of Lebanon early Monday, killing 13 and wounding 53 in a surge of reprisals after Hezbollah rockets slammed into new targets deep inside Israel.

Both Israel and Hezbollah signaled over the weekend that their attacks would only intensify in an already brutal fight that has killed at least 174 in Lebanon and 23 in Israel.

Hezbollah on Sunday launched missile attacks on the Israeli city of Haifa after attacking an Israeli warship Friday night.

Israel has said one of the missiles in the Haifa attack came from Syria and said Iran had helped Hezbollah fire a sophisticated radar-guided missile at the Israeli warship.

Fearing the violence could spiral out of control, world leaders meeting in St. Petersburg produced a framework to end the crisis, and a U.N. envoy landed in Beirut for talks. The Group of Eight industrialized nations expressed concern over "rising civilian casualties on all sides" and urged both sides to stop the violence.

The fighting comes amid persistent oil market anxieties about the West's nuclear standoff with Iran, threats of supply disruptions in Nigeria and the Gulf of Mexico hurricane season. Last year, hurricanes Katrina and Rita devastated oil and natural gas production in the Gulf of Mexico.

Oil

This link is to a Wilkipedia writeup on the future availability of oil and other resources. it's worth a reading.

http://en.wikipedia.org/wiki/Peak_oil

Saudi King Abdullah drops quiet bombshell; U.S. media sleep through it Written by Steve Andrews and Randy Udall
Monday, 21 April 2008
On April 13
Reuters reported the following from Riyadh:
Saudi Arabia's King Abdullah said he had ordered some new oil discoveries left untapped to preserve oil wealth in the world's top exporter for future generations...

"When there were some new finds, I told them, 'no, leave it in the ground, with grace from god, our children need it'," King Abdullah said...

Saudi production capacity stands at around 11.3 million bpd, and is scheduled to rise to 12.5 million bpd next year.

The King's remarks seem to confirm a statement made last year by Saudi oil minister Ali al-Naimi who, when asked "How high can your production go?" replied, "We'll get to 12.5 million barrels a day and then we'll see."

If the Saudi announcement was a bombshell, American nearly newspapers ignored it. We decided to canvass experts we respect to see what they thought. Excerpts follow:

Tom Petrie, vice president, Merrill Lynch:

"King Abdullah's quote speaks to the fast-emerging reality of what I call 'practical peak oil.' The Saudis and other exporters are placing a new emphasis on elongating the petroleum exploitation and depletion cycle. This stems from a growing awareness of the challenges of conventional resource maturity, as well as rising resource nationalism. This is likely to result in an earlier occurrence of global peak oil output than many consumers yet recognize."

Charles T. Maxwell, senior energy analyst, Weeden & Co:

"If Saudi Arabia's oil reserves are not going to be made available to the world in future years, beyond the expansion they have already signaled (to 12.5 million barrels/day), then the geologic oil supply constraints that we are feeling in many other parts of the world are going to close in on us earlier and more severely than we previously thought. It's a major change in policy. It's a powerful message. It makes the geologic message that much more decisive."

Chris Skrebowski, editor of Petroleum Review:

"King Abdullah's statement represents the final seal of approval on an emerging Saudi policy of restricting output to save oil for future generations. In recent years the Saudis have been managing expectations of future capacity steadily downwards. No one now talks of their reaching 15mn b/d. If they reach 12.5mn b/d, while maintaining 1-2mn b/d of 'spare' capacity, we should plan for Saudi production to be 9-11mn b/d for the foreseeable future.

"High oil prices and bulging treasuries are giving producing countries the option of maximizing plateau production. We may never know if these decisions are being dictated by geology or driven by a political imperative of 'saving oil for later generations.' I suspect it's a mixture of the two.

"In any case, there is now a broad-based move by energy exporters, including Russia, Angola, Azerbaijan, and Norway, to restrict expansion to maximize plateau flows. If this takes hold, then global supplies will reach a peak rather earlier than analysis of future projects would indicate."

Matt Simmons, chairman of Simmons & Co. International:

"This statement by the Supreme Ruler of Saudi Arabia has far-reaching implications. That King Addullah would now instruct his servants to conserve the oil they pump and save some for the kids and grandkids of today's Saudi citizens is most profound.

"King Abdullah has exhibited a sense of wisdom not seen since his brother, King Faisal ruled the Kingdom until his tragic assassination. Assuming his health continues, he might lead Saudi Arabia successfully into a post-peak world and create sustainable middle class wealth for the 90% of Saudi Arabia who had accidentally been left behind.

Top in Oil ?  ???

hmmm

AP
Energy Sector Roundup: Another day, another record
Tuesday May 20, 3:48 pm ET 
Crude marches past $129, demand falls at the pump, greenhouse gas emissions rose last year


NEW YORK (AP) -- Following is a summary of top stories in the energy sector Tuesday afternoon.
Higher oil, Higher gas

Crude prices spiked to a yet another trading high, as supply concerns mounted and traders poured in for a last-minute buying binge before June contracts expired. At filling stations across the country, the national average price for a gallon of regular gasoline approached $4, touching $3.80 for the first time.

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The June contract for light, sweet crude traded as high as $129.60 on the New York Mercantile Exchange before settling at $129.07, up $2.02. The imminent expiration of that contract, which ended with the close of Tuesday trading, created additional volatility in the market.

In other Nymex trading, heating oil futures rose 9.99 cents to settle at $3.7750 a gallon, while gasoline futures gained 6.78 cents to settle at $3.3044 a gallon. Natural gas futures jumped 41.1 cents to settle at $11.365 per 1,000 cubic feet.

Gasoline Demand Falls as Price Climbs

A survey by MasterCard SpendingPulse finds gasoline demand at the pump last week fell 6.8 percent compared with the same week last year.

Study author Michael McNamara said in a phone interview the seasonal lift in gasoline demand that normally happens around this time of year continues to be stalled, possibly due to record high gasoline prices and a sluggish U.S. economy.

The average retail price for a gallon of regular gasoline is up 70 cents since the beginning of the year.

McNamara said gasoline purchases account for about 15 percent of total retail spending so far this year compared with 11.3 percent in 2003. "In dollar terms, through April, consumers spent $158 billion on gas," he said. "That compares with $88 billion in 2003."

SpendingPulse is a macroeconomic indicator of national retail sales based on aggregate sales activity in the MasterCard payments network, together with estimates for all other payment forms, including cash and check. MasterCard SpendingPulse does not represent MasterCard financial performance.

Greenhouse Gas Emissions Rose Last Year

The Energy Department's Energy Information Administration says carbon dioxide emissions in the U.S. increased last year, compared with emission levels in 2006.

EIA says 5.98 million tons of carbon dioxide went into the air in 2007, a 1.6 percent increase from the year before. EIA blames greater demand for heating and cooling, as well as "higher carbon intensity of electricity supply."

The electric power sector is the largest single source of carbon dioxide emission, accounting for 40 percent of the total, according to EIA. Emissions from the electric power sector rose 3 percent last year as power generation increased 2.5 percent.

EIA says the emissions increase is due to a decline in non-fossil-fueled generation, as hydro generation fell off.

Total energy-related carbon dioxide emissions in the U.S. are up 19.4 percent since 1990. They make up more than 80 percent of greenhouse gas emissions.

Pickens Says Oil Could Hit $150 This Year

In an interview with CNBC, billionaire Texas oilman T. Boone Pickens said he thinks crude oil could go as high as $150 a barrel this year.

Pickens said only natural gas is plentiful enough to offset dwindling supplies of oil, particularly for the U.S., and only a global recession would cause oil to fall.

Pickens said high oil prices are tied to depletion of supplies around the world and are not driven by speculators.

Lehman Raises Oil Services Price Targets

A Lehman Brothers analyst raised his price targets on 37 companies in the oil services and drilling sector, seeing a strong recovery in 2008 and 2009 for North American natural gas drilling along with significant international growth over the next few years.

Analyst James Crandell's top picks in the sector are Weatherford International Ltd., Halliburton Co., Schlumberger Ltd., Tidewater Inc., Nabors Industries Ltd., Hercules Offshore Inc., Core Laboratories NV and ION Geophysical Corp.

"Our long-standing investment opinion on the group remains positive, and we continue to recommend an overweight position on the group," Crandell said in a note to investors.

Quantum's German Partner to Increase Solar Capacity

Alternative energy company Quantum Fuel Systems Technologies Worldwide Inc. says its German partner will boost solar module manufacturing capacity for its European systems to meet growing demand.

Asola Advanced and Automotive Solar Systems GmbH will lift its capacity to 45 megawatts peak power annually and will build a new plant.

Quantum said it is in talks to build on its Asola partnership, and said the two companies signed a new long-term solar cell supply agreement with Ersol Solar Energy AG. Quantum and Asola will provide Ersol with 155 megawatts in solar cells this year.

The deal, combined with existing agreements, is expected to provide Quantum and Asola with more than $600 million in combined sales.

Quantum holds a 25 percent stake in Asola.

Quantum shares rose 19 cents, or 10.8 percent, to $1.94 in afternoon trading.

--Compiled by AP Business Writer Greg Stec. Questions or commen

Energy Dept. says oil, gas prices to stay high
Wednesday June 11, 1:41 pm ET
By H. Josef Hebert, Associated Press Writer
Energy Department predicts $4-a-gallon gas through next year, oil averaging $126 a barrel

WASHINGTON (AP) -- Motorists can expect gasoline prices around $4 gallon through next year, the Energy Department said Wednesday, with oil prices staying well above $100 a barrel.
Crude oil prices are likely to average $126 a barrel in 2009, $4 higher than this year, as oil supplies and demand are expected to remain tight, Guy Caruso, head of the department's Energy Information Administration, told a House hearing.

Gasoline prices are likely to peak at $4.15 a gallon in August and won't go down much after that, the agency projected in a report. Gasoline was forecast to average $3.92 a gallon through 2009.

The agency said that the high price of gasoline has reduced expected demand for this summer, but not enough to dampen prices.

Caruso told House members that new auto fuel economy requirements and the increased use of ethanol and other alternative fuels are expected to produce "a substantial reduction" in oil use and oil imports over the next two decades.

Predicting future oil and gasoline prices is highly uncertain with the volatile global oil markets, Caruso acknowledged. The agency projects oil prices declining to $86 a barrel in 2010 and then increasing to $107 by 2015.

Overall U.S. oil consumption is expected decline over the next two decades because of the production of more fuel-efficient cars and the growing use of ethanol as a motor fuel, Caruso said. Both were required by Congress last December.

Crude prices, meanwhile, soared Wednesday well above Caruso's projections as his agency announced that U.S. oil inventories fell more than expected last week. Light, sweet crude for July delivery jumped $4.50 to nearly $136 a barrel on the New York Mercantile Exchange.

Oil inventories fell by 4.6 million barrels last week, a much larger amount than had been predicted by analysts.

Oil is looking like a correction.......

The only way to offset the price we pay at the pump is to invest in oil or oil drilling companies.

Think about it. Good luck

Reuters
Oil jumps to new above $142 as equities wilt
Friday June 27, 8:15 am ET
By Jane Merriman and Santosh Menon


LONDON (Reuters) - Oil leapt to a new record high above $142 a barrel on Friday, extending gains after surging nearly 4 percent in the previous session, as tumbling global stock markets helped to trigger a wider commodities rally.


U.S. light crude for August delivery was $1.70 up at $141.34 a barrel by 8:12 a.m. EDT, off a record high of $142.26.

London Brent crude was $1.39 up at $141.22, off a record high of $142.13.

World stocks fell to a three-month low as a fast deteriorating global inflation picture intensified concerns over the outlook for corporate profits, hastening the rush of investors' funds into commodities.

"It has a lot to do with asset allocations. The equity markets are under serious pressure, breaking support levels. When equities are going nowhere, the money is parked into commodities," said Olivier Jakob at Petromatrix.

The MSCI main world equity index fell more than 0.6 percent to its lowest since March, with the index on track for the worst monthly performance in percentage terms since September 2002, according to Reuters data.

By contrast, commodities were strong, with gold near a one-month record high while U.S. corn futures jumped to a fresh record high.

Gold rallied to its highest level in a month as oil's rise, a weak dollar and tumbling world stock markets boosted the metal's safe haven appeal.

CURB SPECULATION

A 40 percent surge in oil prices this year has prompted U.S. politicians to take steps to try to curb speculation in the oil market, that some blame for pushing up prices.

The U.S. House of Representatives on Thursday approved legislation which directs the Commodity Futures Trading Commission (CFTC), the futures market regulator, to use all its authority including emergency powers to "curb immediately" the role of excessive speculation in energy futures markets.

There is a series of draft laws in Congress to attempt to address this issue, but energy market analysts say it has yet to be proved that funds have driven up the price.

"We believe the factors driving oil prices higher are fundamental and not speculative," Deutsche Bank said in a research note.

"Oil needs to rise to $150 a barrel for oil as a share of global GDP to reach the levels that occurred in the early 1980s," the bank said. "At that point we will start to see more signs of demand destruction and an eventual tipping point in oil markets."

Oil prices have doubled from $70 a year ago in response to supply disruptions and geopolitical tensions in the Middle East. Rising flows of cash into commodities from investors seeking to hedge against inflation and the weak dollar have added to gains.

Oil, which had been trading in a range for most of this week, broke out after Libya said it was studying possible options to cut output in response to potential U.S. actions against OPEC countries.

"We are studying all the options," Libya's most senior oil official, Shokri Ghanem, told Reuters, adding oil producers needed protection from what he viewed as U.S. attempts to extend its jurisdiction beyond its territory.

Traders said any hint of bullish news was being used as an excuse for funds to buy.

Talks between oil workers and Chevron continued in Nigeria, with the oil minister saying he was confident a deal could be reached, but union officials left open the possibility of a strike early next week.

Investing
Bolling: How to Solve the Oil Crisis 06/25/08 - 10:42 AM EDT


Oil is $130-something per barrel, and gasoline is over $4 per gallon. I am paying more for everything from milk to electricity to airline tickets. FedEx(FDX) and UPS(UPS) aren't delivering ... earnings. Retail stocks are getting hit because people aren't buying stuff with gas at $4.

And Starbucks cannot sell a $4 latte for the same reason. This is what happens when the world's most ravenous (for oil) country has no clearly defined energy policy. These are just a few of the results of a lack of national awareness of the problem and the potential solutions.

Barron's pointed out that the average U.S. consumer uses 25 barrels of oil per year. In China, that number is two barrels and in India it's less than a single barrel. The perception is that the growth in oil demand in those emerging countries will pick up and they will use more and more oil. True, we will need more oil.

What's the problem?

The world has been running out of oil?
The world has run out of "easy oil"?
The world is going to run out of accessible oil?
False, false and false.

We have billions upon billions of barrels and gas equivalents of oil available to the world. In fact, we have billions upon billions available to us in the U.S. We have an estimated 18 billion barrels off the Outer Continental Shelf.

Certain people in Congress would have us believe that those barrels are 10-plus years away from our refiners' cracking towers. That's just not true. I told you about the conversations I had with Transocean(RIG) officers and their time frames for that oil in the last column. I have since confirmed that opinion with other big-time ocean drillers, and the picture remains as clear as it was last week.


It would take anywhere from one to six years to produce a barrel from the Outer Continental Shelf. That's right, we could realize oil in as little as a year and as far into the future as six years for those really remote reservoirs. These are barrels we need now and will certainly need in the future. These are barrels that currently rest under a drilling moratorium. These are barrels that the next president should release as soon as possible. These are the barrels that will win the election for him.

Deepwater rigs can produce oil in a much shorter time frame than you might be led to believe. And the oil can be much cheaper to produce than the oil trapped in the tar sands of Canada or the shale of our own Western states, and even the Arctic National Wildlife Refuge.

Therefore, cheaper all the way down the pipeline, culminating in the gas tank of your nearest SUV. I truly hope we all start to drive vehicles with better fuel economy. I am turning in my Range Rover for a higher mpg vehicle next month.

We can "drill" shale in several protected land-bound areas of Montana, Colorado, and Louisiana. There may be as many as several hundred billion barrels of oil trapped in those areas. Although tougher to refine into usable oil than into gasoline, they are available to us nonetheless.

There is no doubt that we should begin aggressive means to address the demand side of the equation as well. We absolutely must change our habits. Americans are smart. Our driving habits are changing as we speak. I told you of the busy car dealership I saw in Los Angeles last weekend. The Smart Car is a joint venture between the people at the French watchmaker Swatch and Mercedes-Benz. This car gets from 35 to 45 mpg depending on the way you drive it. And they are just months away from a hybrid version -- all for about $11,000.


The only bright spot in a dim U.S. auto industry is the hybrid models. Ford(F) and General Motors' (GM) current and future promised models are in demand and will help reshape the way we buy cars. Chevrolet has promised a pretty hot hybrid to be developed soon. The Volt looks great and sounds great, but our auto guys in Detroit need to move fast. Japan and Korea certainly are.

We also must speed the process for permitting and approving our nuclear power sources. It takes about three years or more just to get approvals and another three to five to build a reactor. It could take 1,000 to 1,500 wind turbines turning full time to produce the power of one nuclear reactor. Can you imagine telling a community (hospitals, trains, offices) that there was going to be a brownout because the wind had died down for a while?

Uranium is the cheapest form of viable, accessible fuel for power production. It also happens that we are very friendly with Canada, Brazil, Australia, and our own western states -- combined, these places produce most of the uranium in the world. Cameco(CCJ) in Canada will eventually get to about 20% of the world's uranium production as soon as its Cigar Lake project is on line.

And, if France can generate 77% of her power from uranium, we should be able to double our current 18%, given the economics of oil and coal. If France can figure out a way to dispose of the spent fuel rods (they use hot fuel rod farms where spent fuel rods sit in water for five to seven years to cool before disposal) so should we.


One extremely important reason to drill now...

After several conversations with officials from major drillers like Transocean and Diamond Offshore(DO), I am even more convinced that we need to start the long process of exploration and producing oil from all available sources, especially the OCS.

After many discussions with these drillers, I am convinced that there is great reason to believe that Cuba has not only discussed the possibility of allowing China and Venezuela to drill on her sovereign leases, but has already begun seismic studies. This may seem innocuous, but it is not. You may say, "so what ... let Cuba ruin its coastline ... we are going to protect ours." There is a very important fact that no one has addressed. They all agree that these oil finds are immense. The scary scenario plays out like this:

Cuba, China and Venezuela develop some of these oil fields. They sit on Cuban land, which is adjacent to U.S land. The majority of the oil may actually sit underneath our land. If they get a jump on us and develop those fields, they may be pulling oil right out from under our feet.

If you want a real reason to lift the moratorium on our offshore oil leases, look no further.

Try telling your daughter or son that we are running out of oil because China grabbed it from us while we were trying to figure out whether or not we should drill our own land....then give her five hundred bucks to fill up the hybrid for the weekend.

Sorry about the lack of solid trade recommendations, this had to be said. I will get to the trades later.

Trade with your head not over it.



Eric Bolling is a host on the new Fox Business Network. Bolling was one of the developers and original panelists (nicknamed "The Admiral") on CNBC's "Fast Money."
Bolling is an active trader specializing in commodities, resource trades and ETFs.

Bolling is a member of several exchanges including The New York Mercantile Exchange (NMX), The Intercontinental Exchange (ICE) and The Commodity Exchange of New York.

After spending 5 years on the Board of Directors at the NYMEX, he became a strategic adviser to that Board of Directors where he assisted in bringing the company (NMX) public. He has been included in Trader Monthly Top 100 in 2005 and 2006. Bolling was the recipient of the Maybach Man of the Year Award in 2007 for his contribution of philanthropy and willingness to de-mystify investing to Main Street.

Bolling graduated from Rollins College in Winter Park, Florida and was awarded a fellowship to Duke University. Bolling was an accomplished baseball player. He was drafted by the Pittsburgh Pirates where he played before his career was cut short due to injuries. He honors his baseball past by sporting the NYMEX trader badge, R.B.I.

Don't blame the oil 'speculators'
A campaign in Congress to punish traders for record oil prices reveals a fundamental misunderstanding of how futures markets work.
By Jon Birger, senior writer
Last Updated: June 27, 2008: 9:11 AM EDT


NEW YORK (Fortune) -- "Make no mistake about it," U.S. Rep. Bart Stupak, D-Mich., said Monday while chairing a meeting of the House Energy and Commerce subcommittee on Oversight and Investigations. "Excessive speculation in commodity markets is having a devastating effect at the gas pump that is rippling through our entire economy."

Here's a suggestion: The next time a Congressional committee wants to hold a hearing on how "speculators" are driving up oil prices, each committee member should first be required to demonstrate - preferably in their opening remarks - a basic understanding of the mechanics of futures trading.

Even better, they should be required to explain in detail how it is that investors who never take delivery of a single barrel of crude - and thus never remove a drop of oil from the open market - are causing record high oil prices.

If there were such a requirement, I guarantee we'd never again see a circus like the one Stupak presided over Monday.

"Do I think [Washington politicans] understand the role of futures markets - how they facilitate price discovery and the transference of risk?" asks former U.S. Commodities Futures Trade Commission chief economist Gerald Gay. "No, they're clueless - at least most of them."

Bad public policy
If our representatives did understand the oil markets, they'd know that the true telltale sign of a speculative bubble is not rising trading volumes but rising oil inventories. Speculators would be hoarding oil - building up inventories either in anticipation of higher prices or as part of a scheme to drive prices there. Yet according to the Department of Energy, U.S. oil inventories are now at below-average levels. U.S. oil stocks stand at 309 million barrels, versus 330 million in June 2005.

So far, lawmakers have introduced nine different bills targeting oil speculators, though for the most part their prescriptions have been milder than their over-the-top rhetoric .

Bashing futures traders may well be good politics, but it's stupid public policy. By providing a mechanism for locking in prices, the futures market makes it easier for oil companies to make costly investments in new production - which is the key to lowering prices at the pump.

Futures trading also discourages hoarding in an otherwise tight market. Without speculators willing to take the other side of so many futures contracts, oil refiners and other end-users might be inclined to ramp up their spot-market purchases and store more oil as a hedge against further price increases.

And, of course, any increased draw on current supplies would lead to even higher oil and gasoline prices. Indeed, without a futures market, I believe we'd be decrying oil at $200 a barrel oil instead of oil at $135.

What do you think? Are 'speculators' scapegoats?
A more basic misconception in Washington involves what these so-called speculators are really buying. They're not buying oil, they're buying futures, and this is a crucial distinction. A futures contract is an agreement between a buyer and a seller to deliver a set amount of oil - typically 1,000 barrels - at a specific price on a specific date. The value of that contract rises and falls, depending upon market conditions, right up until the date of delivery.

Thing is, the pension funds, index funds, hedge funds and other so-called speculators almost never take delivery of any oil. The typical investment fund will buy, say, the August oil future and then sell it days before it comes due - typically rolling over the proceeds into the next month's contract.

"For speculators to be propping up the price of oil, they somehow have to be taking physical oil off the market," says energy markets expert Craig Pirrong, a finance professor at the University of Houston's Bauer College of Business.

Pirrong points out that when the federal government decided to bolster cheese prices in the 1970s, it did so by purchasing warehouses full of cheese and keeping it off the market. "Well, where's the cheese now?" Pirrong asks. "Where's all the oil that the speculators have held off the market?"

Even if you believe there's no way that oil trading volumes could be soaring without influencing oil prices, remember that influence then has to run two ways.

If an index fund is indirectly driving up spot oil prices every time it buys a future, then the converse must be true, too - there must be an equal and opposite downward push on spot prices every time that future is sold. In other words, futures market critics can't have it both ways.

There's something else politicians conveniently overlook: futures trading requires two to tango. For every investor who is betting oil prices will go up, there also needs to be an investor willing to take the opposite side of that bet.

In the past, there have been times when the overwhelming majority of speculators were "longs" betting on higher prices, while their commercial-trader counterparts - i.e. traders working for oil refiners, airlines, and other end-users of oil - were the "shorts" betting prices would fall.

But as New York Mercantile Exchange Chairman James Newsome explained to Stupak's Congressional committee, today's speculators are evenly split between shorts and longs. Moreover, the percentage of futures contracts held by speculators (as opposed to commercial traders) "actually decreased over the last year," Newsome told the subcommittee, "even at the same time that [oil] prices were increasing."

It's time to find a new scapegoat. My own nominee: Congress. But that's another column.

Oil mixed on gasoline supply growth
Wednesday July 9, 3:29 pm ET


Crude prices settled flat on Wednesday, after seesawing bigger-than-expected gain in gasoline supplies countered geopolitical tensions after Iran test-fired nine ballistic missiles, a move considered a possible threat to the flow of Middle East oil.


Light sweet crude for August delivery settled up a penny to $136.05 a barrel in NYMEX trading. Oil was up 99 cents just before the release of the government's weekly inventory report, released mid-morning, and spiked directly after before pulling back.

The Energy Department said crude stocks fell by 5.9 million barrels during the week ended July 4. An consensus estimate of analysts from Platts, the energy analysis division of McGraw-Hill, predicted crude would fall by only 1.9 million barrels.

The crude draw was countered by a bigger-than-expected rise in gasoline supplies as pump prices hit records over the holiday weekend.

Gasoline. Gasoline inventories were up by 900,000 barrels for the week, nearly double the 500,000-barrel boost expected by Platts. Over the holiday, gasoline stocks usually decline or are flat.

The rise in supplies "implied demand for gasoline is tapering off," said Tom Orr, head of research for Weeden & Co.

"Refiners are probably getting worried of building up stocks... that consumers may not want to buy," said Rachel Ziemba, energy analyst with RGE Monitor.

The price of gasoline at the pump in the U.S. held steady Wednesday at a record $4.108 a gallon, according to a daily survey from motorist advocacy group AAA. Prices have maintained their record level since Monday.

Iran. Earlier in the day, crude futures were up as much as $2.24 as investors were set on edge by the Iranian missile test.

According to state-owned television, Iran launched nine long- and mid-range missiles as part of a war games exercise. Tests included the firing of a 1,200 mile-range Shahab-3 missile, which is purportedly capable of hitting targets inside Israel.

"Our finger is always on the trigger," said General Hossein Salami, commander of Iran's Revolutionary Guard on state TV.

The tests added to concerns over Iran's nuclear program and the possibility that the country could blockade the Strait of Hormuz, a vital waterway that carries a large percentage of the world's oil supply.

Rhetoric from Iran has been mixed over the past week, sending ripples through the oil market. "It's a three-ring circus over there," said Orr.

A week ago, Iran threatened to blockade the Strait of Hormuz if the country was attacked, sending oil higher. Iran tried to close the strait once before by laying sea mines during the Iran-Iraq war of the 1980s.

And crude prices slid more than $9 a barrel Monday and Tuesday after Iranian president Mahmoud Ahmadinejad eases tensions by saying he did not expect a future armed conflict with Israel or the United States.

The threat of reduced production from Iran, the second-largest producing member of the Organization of Petroleum Exporting Countries, along with a potential blockade of the Strait of Hormuz, gives Iran a powerful economic one-two punch, said Neal Dingman, senior energy analyst with Dahlman Rose & Co.

Oil tumbles again; prices fall over $10 in 2 days
Wednesday July 16, 4:12 pm ET
By Adam Schreck, AP Business Writer 
Oil ends sharply lower for second straight day, dragging prices down more than $10 this week


NEW YORK (AP) -- Oil prices settled sharply lower for the second time in a row Wednesday, leaving crude more than $10 cheaper in just two days of frenzied trading and prompting speculation that the hard-charging market may be running out of steam.


Light, sweet crude for August delivery fell $4.14 to settle at $134.60 a barrel on the New York Mercantile Exchange, after earlier sinking as low as $132. The drop follows a $6.44 sell-off Tuesday, crude's biggest since the Gulf War.

The two-day slide of $10.58 a barrel marks a dramatic turnaround in crude prices, which as recently as Friday traded at record highs above $147 a barrel. But even with this week's sell-off, prices remain about 80 percent above where they were a year ago and up about 40 percent from the start of the year.

Analysts are unsure whether the drop represents a long-term shift in sentiment or simply a brief correction to crude's monthslong bull run. But the dizzying decline is prompting market veterans to ask how much support remains for such high prices.

"It's a sign that maybe the bull market is losing strength," said Michael Lynch, president of Strategic Energy & Economic Research Inc.

Perhaps just as significant as the declines was the sudden increase in volatility. Prices whipsawed by more than $10 Tuesday and $7 Wednesday ahead of the expiration of options contracts this week.

"I think anyone you talk to would have to be surprised by the magnitude of these huge price swings. This is extreme price volatility that no one can predict," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. Such large up-and-down swings, he added, can indicate the market is nearing its top.

Sharply increased crude and gasoline supplies were the immediate cause of Wednesday's decline.

The Energy Information Administration reported that U.S. crude oil supplies rose by 3 million barrels, or 1 percent, last week. That is the opposite of the 3 million barrel draw analysts surveyed by energy research firm Platts expected. Gasoline supplies also leapt unexpectedly.

"The numbers were decidedly bearish on just about all fronts," Ritterbusch said.

Industry observers cautioned that prices could still bounce back, just as they have following large drops in recent weeks.

"I do expect this bubble to burst. Is this is it? It might be ... but I'm not ready to say so yet," analyst and trader Stephen Schork said.

A number of market participants speculated that at least some of the week's sell-off was the result of cash-strapped banks selling energy contracts to raise money for other needs.

And widely used computers programed to sell once prices fall to certain thresholds can accelerate declines, much as an avalanche gains steam the further it slides.

"It absolutely adds a cascading effect," Schork said.

Yet concerns are growing that high energy prices are leading to real shifts in consumer behavior that could cause demand to shrivel considerably.

The Labor Department said consumer prices shot up 1.1 percent last month, the second fastest pace in 26 years. Rising energy prices accounted for two-thirds of that increase, which was far worse than expected.

Testifying before Congress for the second day, Federal Reserve Chairman Ben Bernanke said central bank policymakers are facing "significant challenges" in righting the troubled U.S. economy, which is being buffeted by weak growth and inflation driven largely by rapidly rising food and energy prices.

"This is clearly a rough time," Bernanke said. "It is clear (economic) growth has been slow and the labor market is weak. So conditions are tough on average families."

American Airlines and Delta Air Lines, two of the three biggest U.S. carriers, each reported a loss of more than $1 billion in the second quarter, largely because of higher fuel costs.

"With each passing day, we are reading about more car companies cutting back on production, airlines slashing flights, and consumers driving less," said Edward Meir, an analyst at MF Global. "Of course, these are not new factors, and energy markets have ignored them for several months now as they have relentlessly pushed higher, but we suspect that as the pace of demand destruction accelerates it will be harder to ignore."

The dollar strengthened against the euro, giving traders less reason to go bargain shopping in the suddenly discounted energy market. A weaker dollar has enticed investors to buy oil and other commodities as hedges against inflation and a weakening dollar, but that incentive diminishes when the dollar gains ground.

It will be some time before any declines -- assuming they hold -- show up at the gas pump, where prices continued to advance.

U.S. retail gasoline prices added half a cent to $4.114 per gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. Diesel prices also marched higher, up nearly a penny to $4.839 a gallon.

In other Nymex trading, heating oil futures shed 7.8 cents to settle at $3.841 a gallon while gasoline futures lost 10.54 cents to settle at $3.2794 a gallon. Natural gas futures fell 7.9 cents to settle at $11.398 per 1,000 cubic feet.

August Brent crude fell $2.56 to settle at $136.19 a barrel on the ICE Futures exchange in London.

Oil Prices Rebound Above $131 After 3-day Drop.......

Oil markets looking for signs of buble burst.
Friday July 18, 12:08 pm ET

US pump price dips as oil markets search for signs of a bubble bursting


NEW YORK (AP) -- Oil prices edged modestly higher Friday as news of an output cut in Nigeria helped to halt, at least temporarily, the week's sharp decline in prices. Prices at the pump finally backed away from record highs in the U.S.


Given the market's inability to spark a larger rally Friday following the week's big sell-off, is it time to declare the energy bubble over?

Experts aren't ready to go that far just yet. Oil has bounced back from big drops more than once in its march to fresh records over the past year.

But in a sign sentiments have shifted, the question is being asked more often, even by industry observers who just days ago thought the market's meteoric run still had legs.

"If this is not the bubble's implosion, than it's a reasonable facsimile," analyst and trader Stephen Schork said in his daily market commentary. "Perhaps all we have witnessed was a replay of last August's subprime induced sell-off. Time will tell. Nevertheless, for the time being we no longer care to hold a bullish view."

Light, sweet crude for August delivery rose 59 cents to $129.88 a barrel on the New York Mercantile Exchange.

Investors who saw the suddenly discounted crude prices, which tumbled nearly 11 percent over the past three days, as a buying opportunity also added support the increase.

Friday's relatively modest gains follow a three-day swoon in which oil prices tumbled nearly $16. Just last week, oil hit an all-time high above $147 a barrel.

The week's declines heralded some welcome relief at the gas pump. The price for a gallon of regular fell to $4.105, down nearly a penny. Diesel prices also eased, dipping three-tenths of a cent to $4.842 a gallon.

A Nigerian military official said an explosion that destroyed an Eni SpA oil pipeline in the country's restive southern oil region Thursday was not an accident but "deliberate sabotage" by youth upset about the alleged nonpayment of fees by the energy company to the local population.

Nigeria's major militant group -- the Movement for the Emancipation of the Niger Delta -- had denied any involvement in the blast, which caused a sudden drop in pressure that stopped production on pipelines carrying 47,000 barrels of oil a day.

Eni said in a statement that the causes of the incident were unknown.

Based on how oil prices were developing from the technical point of view, analyst Olivier Jakob of Petromatrix in Switzerland said Nymex futures were "getting into deeper trouble."

"Buying here is an opportunity if you are a deep believer in $200 (a barrel), otherwise we think that caution would be better applied," Jakob said in a research note.

In other Nymex trade, heating oil futures rose 0.31 cent to $3.7469 a gallon while gasoline prices rose 4 cents to $3.2034 a gallon. Natural gas futures rose 7.8 cents to $10.615 per 1,000 cubic feet.

In London, Brent crude futures for September delivery rose 81 cents to $131.88 on the ICE Futures Exchange.

AP
Oil rises on Nigerian attack, Iran nuclear worries
Monday July 28, 3:12 pm ET
By Stevenson Jacobs, AP Business Writer 
Oil rises after pipeline attack in Nigeria, Iran nuclear worries; concerns about demand remain


NEW YORK (AP) -- Oil prices rose Monday, approaching $125 a barrel after militants sabotaged two oil pipelines in Nigeria and Iran claimed that it had doubled the size of its nuclear program but signaled a willingness to work with the U.S.


The gains, however, were tempered by more evidence that high gas prices are causing Americans to keep their cars off the roads. The U.S. Transportation Department said Monday that U.S. drivers logged 9.6 billion fewer vehicle miles in May -- or 3.7 percent -- compared to the same period last year, the biggest drop ever for the historically busy summer driving month.

Light, sweet crude for September delivery rose $1.47 to settle at $124.73 a barrel on the New York Mercantile Exchange.

Prices were expected rise some after crude's steep nosedive over the past two weeks. The contract fell $2.23 to settle at $123.26 a barrel on Friday -- oil's lowest point in weeks -- as record prices continue to dent in demand.

In another sign that high fuel prices are curbing consumption, the average price for gasoline in the U.S. fell just over a penny to $3.958 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express.

Oil rallied above $125 a barrel early Monday on more worries over Iran's nuclear program. Iranian President Mahmoud Ahmadinejad announced Saturday that Iran now has 6,000 centrifuges -- a figure that doubled past estimates and ratcheted up tension in the standoff between Western countries and OPEC's second-largest producer.

"The comments by the Iranian president are a reminder that the Iranian situation remains fluid," said Victor Shum, an energy analyst with consulting firm Purvin & Gertz in Singapore.

However, Ahmadinejad struck a lighter tone in comments aired Monday, telling NBC that Iran would be open to a "new approach" from the U.S. in seeking a peaceful resolution to his country's nuclear ambitions. He added that current oil prices were "not realistic," saying: "Some powers are manipulating the prices inside the market." He did not elaborate.

Ahmadinejad's comments were viewed as conciliatory among oil traders and helped take momentum out of crude's earlier rally, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

"We pumped a little geopolitical risk premium into the pricing structure and then we took it right back," said Ritterbusch.

He said Ahmadinejad's bearish oil comments also reflect an economic reality for the oil-rich nation: The higher crude prices go, the less people will be able to afford it, hurting producing countries' bottom lines.

"They would like to see lower prices because they're very concerned that high prices will choke off demand and hurt them in the long run," Ritterbusch said.

Meanwhile, an overnight attack on Nigerian oil installations boosted prices. The country's main militant group, The Movement for the Emancipation of the Niger Delta, attacked two oil pipelines in southern Rivers State believed to be owned by a unit of Royal Dutch Shell PLC.

Shell said a pipeline had been damaged in attacks and that some crude production had been shut down to prevent an oil spill. No other details were given.

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

Meanwhile, the strikingly large drop in miles driven by Americans underscored the rapidly shifting fuel consumption habits in the world's thirstiest consumer. Americans have travelled 29.8 billion fewer miles in the first five months of 2008 compared the same period over the previous year, U.S. Transportation Secratary Mary E. Peters said Monday.

"You're seeing demand destruction in motion," Flynn said. "And some of this demand is never coming back back because people aren't going to be buying those SUVs anymore because Detroit isn't making them."

In another sign traders think oil prices may have peaked, the U.S. Commodity Futures Trading Commission said that for the first time in 17 months, a majority of large commodities traders are shorting oil prices -- or betting that prices will fall.

The shift in sentiment follows crude stark descent over the past two weeks. Crude has fallen in seven of the last 10 sessions, and is down about 16 percent from its peak above $147 a barrel earlier this month. Still, prices remain about 65 percent higher than at this time last year.

In other Nymex trading Monday, heating oil futures rose 3.91 cents to settle at $3.562 a gallon while gasoline prices added 3.77 cents to settle at $3.07 a gallon. Natural gas futures added 5.7 cents to $9.141 per 1,000 cubic feet.

In London, Brent crude for September delivery rose $1.36 cents to $125.88 a barrel on the ICE Futures exchange.

Associated Press writers Pablo Gorondi in Budapest, Hungary, Gillian Wong in Singapore and Edward Harris in Lagos, Nigeria contributed to this report.

Oil hits 7-week low on demand worries, dollar gain.......

Into the close...Tuesday...07/29/2008


Oil prices tumble to 7-week low as demand worries grow, US dollar strengthens


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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Oil soars more than $4 on surprise drop in US gas supplies, resignation of Israeli PM


NEW YORK (AP) -- Oil prices soared over $4 a barrel Wednesday, halting a dramatic two-week slide after a surprise drop in U.S. gasoline supplies fed speculation that record fuel prices aren't keeping Americans off the roads.


But energy market analysts offered mixed views on whether prices would swing back toward record levels above $147 a barrel hit earlier this month or if Wednesday's big rally was just a temporary bump.

Light, sweet crude for September delivery jumped $4.58 cents to settle at $126.77 a barrel on the New York Mercantile Exchange, after earlier rising as high as $127.39. It was crude's biggest one-day rally since July 10, when prices ended $5.60 higher. Oil closed $2.54 lower on Tuesday at $122.19 a barrel.

The Energy Information Administration said in its weekly inventory report that U.S. gasoline supplies fell by 3.5 million barrels last week. Analysts surveyed by energy research firm Platts expected gas supplies to increase by 400,000 barrels. U.S. crude stockpiles also fell by 100,000 barrels last week, less than the 1.3 million barrels analysts had predicted.

The report gave some traders reasons to believe that crude's slide was overblown and that the drop in gas supplies mean prices have fallen enough to nudge Americans back onto the roads.

"It's stopping the bearish momentum that we've seen over the last few days," Phil Flynn, analyst at Alaron Trading Corp. in Chicago, said of the surprise decline in gas supplies.

But some analysts raised questions whether U.S. fuel demand was picking up. Tom Kloza, publisher and chief oil analyst of Oil Price Information Service in Wall, N.J., doubted that Americans are actually driving more, saying a seasonal bump in gas demand probably drew down supplies temporarily.

"It's nonsense to say that this proves that people are back to their old driving habits," Kloza said. "There just wasn't enough enthusiasm to push prices lower. "

Crude's jump was boosted by word that Israeli Prime Minister Ehud Olmert will quit his post in September, an announcement that raised doubts about the future of U.S.-backed Middle East peace efforts in the oil-producing region.

Also supporting prices was a report by Goldman Sachs, which affirmed its earlier forecast that crude will hit $149 a barrel by the end of the year.

The investment bank called weakness in U.S. energy demand "transient rather than permanent," saying the fundamentals of falling oil production and rising world energy consumption remain intact. Past forecasts for higher oil prices have caused jumps in prices as speculative buyers are drawn into the market.

Still, other analysts said oil's recovery doesn't mean prices are about to go higher again, but rather shows that traders saw a short-term buying opportunity after Tuesday's sell-off.

"I still expect to see further air being let out of this balloon," said Stephen Schork, an analyst and trader in Villanova, Pa.

He noted that U.S. demand for energy is falling across most sectors. Inventories of distillates, which include heating oil and diesel, rose by 2.4 million barrels, more than the 1.8 million barrels expected, according to the EIA report.

And Americans continue to cut back on their driving to cope with almost $4-a-gallon pump prices. The average price of a regular gas fell 1.5 cents on Wednesday to $3.926, according to auto club AAA, the Oil Prices Information Service and Wright Express.

"We clearly have demand destruction," Schork said.

Before Wednesday's rebound, crude prices had dropped in seven of the last 10 sessions, and are down about 14 percent from their peak above $147 a barrel earlier this month. Prices remain about 60 percent higher than at this time last year.

The dollar was stronger Wednesday against the euro, but the oil market seemed to be ignoring a trend that ordinarily would pressure prices. Investors buy commodities as a hedge against inflation and a weaker dollar but tend to sell when the American currency strengthens.

Oil also gained Tuesday's announcement from Royal Dutch Shell PLC that it may not be able to fulfill some oil export contracts after Nigerian militants sabotaged a pipeline in the Niger Delta.

Militant attacks on Nigerian oil facilities have trimmed nearly one quarter of the country's regular daily output. The strongest Nigerian militant group, the Movement for the Emancipation of the Niger Delta, said it sabotaged two pipelines early Monday in the southern oil-producing region.

In other Nymex trading, heating oil futures rose 5.08 cents to settle at $3.5203 a gallon while gasoline prices gained 12.74 cents to settle at $3.1351 a gallon. Natural gas futures rose 11.8 cents to settle at $9.248 per 1,000 cubic feet.

In London, September Brent crude rose $3.34 cents at $126.05 a barrel on the ICE Futures exchange.

I think we are being screwed at the pumps!  >:D

Big Oil's biggest quarter ever: $51.5B in all
Friday August 1, 2008
Exxon, Shell, Chevron, ConocoPhillips, BP, Total: add it up and you get a $51.5 billion Q2


HOUSTON (AP) -- Oil giants Chevron Corp. and Total SA wrapped up a string of gargantuan, record-breaking earnings reports Friday, a stretch in which six of the major international oil companies topped $50 billion in combined profit for the first time.


While the profits of unparalleled size have brought withering criticism from Washington and disgust from consumers across the country, very few were surprised. Crude prices during the second quarter were nearly double what they were a year ago.

Chevron said Friday its second-quarter profit rose 11 percent to a record $5.98 billion.

Revenue rose significantly to $82.9 billion from $56.1 billion a year ago.

But results for the second-largest U.S. oil company missed Wall Street forecasts and shares fell.

Like its competitors, Chevron made the bulk of its money at its exploration and production arm, also known as the upstream, where income nearly doubled from a year ago to $7.25 billion.

Chevron said the average sales price for crude and natural gas liquids was $109 a barrel in the quarter, up from $57 a barrel in the year-earlier period.

In addition to Chevron, soaring commodity prices led to record quarters for Exxon Mobil Corp., ConocoPhillips, BP PLC and Royal Dutch Shell PLC. Exxon Mobil stood apart even from this crowd, logging the largest ever quarterly operating profit for a U.S. company. Barring companies that made huge profits on one-time gains like bankruptcy settlements and spin-offs, Exxon Mobil holds the top 10 records for biggest U.S. quarterly earnings.

French energy company Total SA said Friday its profit climbed 38.7 percent in the second quarter to $7.38 billion. Quarterly sales rose 23 percent to $75.25 billion.

Altogether, the profits of the six companies jumped more than 40 percent in the second quarter to $51.5 billion, the first time big Western oil companies have ever reached that level.

Total's earnings were at the top end of analysts' expectations.

Unlike some other oil majors, Total reported production growth of 1.3 percent in the second quarter.

Also Friday, Norway's state-controlled StatoilHydro ASA reported a 37 percent rise in second-quarter net profits to $3.7 billion.

At Chevron, the company division that refines and sells gasoline actually swung to a loss of $734 million in the quarter after earning $1.3 billion a year ago. The culprit: those same crude prices that lifted upstream earnings.

Like its peers, Chevron doesn't produce enough oil on its own to feed its refineries, forcing it to buy some on the open market. And it wasn't able to raise the price of gasoline and other products fast enough to recover its own rising costs for oil.

Chevron also said that planned downtime at some refineries contributed to the loss.

"The higher cost of crude oil used in the refining process was not fully recovered in the price of gasoline and other refined products," said Chairman and CEO Dave O'Reilly. "As a result, our downstream operations incurred a loss in the second quarter, with most of the loss taking place in the United States."

Chevron said overall production in the quarter fell about 3 percent from a year ago, hurt in part by production-sharing contracts. However, on a conference call with analysts Friday, company officials said project startups will increase production in the second half of 2008 and the company should meet or exceed its full-year volume target.

Chevron shares slipped 71 cents in afternoon trading to $83.85. They've traded in a range of $76.40 to $104.63 in the past year.

Total shares fell 1.2 percent to 48.79 euros ($75.95) in Paris.

Oil prices close below $119 after inventory report
Wednesday August 6, 4:49 pm ET 
Oil prices end below $119 after US inventory report shows jump in crude, distillate supplies


Oil prices briefly dropped below $118 a barrel Wednesday -- $30 below their record high -- after a jump in U.S. crude and other fuel supplies fed beliefs that high energy prices are eating into demand.


Light, sweet crude for September delivery finished the session down 59 cents at $118.58 a barrel on the New York Mercantile Exchange. It was crude's lowest settlement price since May 2; prices earlier fell as low as $117.11, a $30, or 20 percent, drop from their trading high of $147.27, reached July 11. Some investors believe a 20 percent pullback signals the beginning of a bear market.

At the pump, falling crude kept weighing on prices. U.S. filling stations hungry for business ratcheted down the price for a gallon of regular on average by another penny overnight to $3.862, according to auto club AAA, Oil Price Information Service and Wright Express. Prices have now fallen more than 6 percent from all-time highs above $4 a gallon reached July 17.

Oil market traders are paying close attention to see if oil falls below $117, a key resistance level expected to trigger a rash of technical selling by computers programmed to dump oil contracts once prices fall below a certain threshold.

"There's a line in the sand just below $117. If you close below that, it signals traders are giving up on the bull market in oil," said Tom Kloza, publisher and chief oil analyst of the Oil Price Information Service in Wall, N.J. "Subsequent rallies may take us higher, but the highs for the year have probably been put in."

Still, Kloza said a surprise event -- such as a flare-up of violence in the Middle East or a major hurricane slamming the U.S. Gulf coast, could send prices soaring again. Other analysts say oil remains in a long-term upward trend, noting that futures contracts years out still peg prices above $100 a barrel.

The U.S. Energy Department's Energy Information Administration said crude supplies rose by 1.7 million barrels to 296.9 million for the week ended Aug. 1, slightly more than the 1.2 million-barrel increase expected by analysts surveyed by energy research firm Platts. The EIA said inventories of distillate fuel, which include diesel and heating oil, jumped 2.8 million barrels to 133.3 million barrels, above the 2.3 million barrels expected by analysts.

Meanwhile, EIA data showed gasoline stockpiles fell by 4.4 million barrels to 209.2 million barrels for the week ended Aug. 1, much more than the 1.4 million drop expected by analysts.

The government figures reflect the fuel that refiners have on hand. The big drop in gas stocks surprised some oil market traders, but analysts said it likely signals that gas distributors have taken more deliveries from the refiners as the summer driving season enters its last month -- not that U.S. motorists are suddenly ramping up their driving amid recent pullbacks in pump prices.

"I think we need to drop another 30 or 40 cents a gallon before we really see any change in driving habits," Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

Lending support to that idea, the EIA said demand for gasoline for the month ended Aug. 1 topped out at about 9.4 million barrels a day, 2.3 percent lower than the same period last year.

Investors again shrugged off tension over Iran's nuclear program. Six nations, including the U.S., agreed Wednesday to seek new U.N. sanctions against Iran after it failed to accept incentives aimed at defusing the dispute over its nuclear program.

The countries agreed that Iran's latest reply to the offer was "very disappointing" and "a stalling tactic" that left them no choice but to pursue sanctions against the oil-producing country, State Department spokesman Gonzalo Gallegos said.

The market also ignored a fire at a Turkish section of the Baku-Tbilisi-Ceyhan pipeline, a major supplier of crude to Western markets. The blaze disrupted the flow oil but did not halt shipments, said Murat Lecompte, a spokesman for pipeline shareholder BP PLC. The pipeline can pump slightly more than 1 million barrels of crude oil per day. The cause of the fire was unclear.

Investors appear to be reacting less to potentially bullish factors like the weather and geopolitical developments and instead was turning its attention more to fundamentals, "in particular the rocky demand outlook in certain countries," said analysts at JBC Energy in Vienna, Austria.

In other Nymex trading, heating oil futures fell 4.41 cents to settle at $3.2379 a gallon, while gasoline prices fell 0.71 cent to settle at $2.9493 a gallon. Natural gas futures rose 4.7 cents to settle at $8.773 per 1,000 cubic feet.

In London, September Brent crude fell 70 cents to settle at $117 a barrel.

Chart up showing the technical weakness crude is exhibiting. The chart implies that a re-test of the $100 is imminent. Notice how on the most recent test of $120 that oil is not springing off support as it should. Instead, it is lingering about, suggesting it wants to trade even lower.

In early June, when hitting the same support level, buyers rushed in and crude soared right back up where it came from. That is not the case this time around. This should theoretically be bullish for the market as a whole. But, we all know how the market loves to surprise us.

Crude Sign of The Times
The world has found the ceiling where demand destruction kicks into high gear.  It's when a barrel of oil reaches about $125 - $135.   

You can see the signs of demand destruction everywhere - in economic reports, quarterly conference calls, even from the oil shipping companies.   There is now an abundance of oil supply, so much so that oil tankers are being docked because they have no place to deliver their cargo.  From Bloomberg...
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7Zrbsi1WjEA

Supertanker owners are leaving more ships at anchor after rising fuel costs and the biggest weekly slump in hire rates for at least a decade made it less attractive to deliver cargoes.

The reason there's an overabundance of supply is because demand is falling rapidly.  Worldwide growth hit a wall in May because of high energy costs.  Almost every retailer and financial transaction company in the US noted it on their conference call this quarter.  Even General Motors threw in the towel on its Hummer division in May.  The pain to own one is just too great.  The demand for Hummers is nil.  A helpful shopping comparison from Carmax.com indicates that you can now buy a Hummer H3 for less than a Honda Civic. 

All this indicates that crude oil is not done going down.  The top is in and it will be a while before oil revisits the mid $150s because the world stops spinning when it gets close to that price. 

Oil sinks on stronger dollar to $115 a barrel
Friday August 8,2008 
Oil plummets as dollar's jump, signs of slowing growth lure investors out of energy to stocks


Oil prices dove to $115 a barrel on Friday, driven lower by a huge jump in the U.S. dollar, signs of moderating demand around the world and the burgeoning belief that commodities may have peaked.


Shrugging off concerns about a sabotaged oil pipeline in Turkey, investors pulled their money out of commodities and put it back into stocks -- giving crude oil a weekly loss of nearly $10 a barrel, and driving the Dow Jones industrial average up more than 300 points.

With energy losing its luster in the marketplace, the cost of roadside gasoline has been crawling lower. The average retail price for a gallon of gasoline slipped to $3.836 Friday. That's down about a penny from Thursday, and down nearly 28 cents from the record high of $4.114 reached July 17.

"We're probably going to see gasoline at the retail level around $3.50 for Labor Day," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

Light, sweet crude for September delivery slumped $4.82 to settle at $115.20 a barrel on the New York Mercantile Exchange -- its lowest settlement since May 1, when it settled at $112.52. During Friday's trading, crude dipped as low as $114.90. Prices for gasoline, heating oil and natural gas also dropped.

Many analysts have pointed to the $117-a-barrel mark for crude oil as technically significant -- a move below this level suggests, they say, that oil's recent slide is more than a brief pullback. Crude is now down $32 from its high of $147.27 on July 11.

"You have to remember that this market has baffled anyone who's used fundamentals or charts. But if you're a chartist, today is the death knell for the possibility of new highs in the marketplace," said Tom Kloza, publisher and chief oil analyst of the Oil Price Information Service in Wall, N.J.

Lehman Brothers chief energy economist Edward Morse issued a research note Friday saying that, barring a physical disruption to supplies, "we think oil prices have peaked."

As the dollar launched a massive rebound against the euro and yen after the European Central Bank and the Bank of England both left their benchmark interest rates unchanged, energy traders found reason to sell -- especially since the ECB indicated that there probably wouldn't be any more rate hikes to come.

Higher interest rates make a country's currency more attractive to invest in.

By the energy market's close, the euro had dropped to $1.5007 against the dollar, while the dollar rose to 110.22 yen. The British pound tumbled to $1.9193, after reaching its lowest point since November 2006.

The weak dollar had been boosting oil prices earlier this year, because dollar-denominated commodities are often used as hedges against inflation and a falling U.S. currency. Furthermore, the central banks' actions bolstered the growing belief in the energy markets that economies around the world are slowing alongside the United States, dampening global demand for crude oil products.

"The biggest driving factor now to the downside is the fact that the U.S. economy has a lot of company right now in terms of weakening economic growth," Cordier said, pointing to both China and India.

Behavioral changes have had a dampening effect too -- Morse noted that U.S. drivers are switching to more fuel-efficient cars, and Cordier pointed to Beijing's June decision to remove half the cars from its roads by the time the Olympics begin.

Nymex front-month crude futures are down nearly 22 percent from their record high. They are still up, however, nearly 60 percent from a year ago.

Earlier this year, Americans were paying about $1.65 billion a day for gasoline at the peak of prices and demand, Kloza said. The country appears to be headed for below $1.5 billion a day now that prices are coming down and demand is slowing, he said, but he pointed out that that's still three times what Americans were paying in 2002.

Heating oil futures fell 10.56 cents to finish at $3.1280 a gallon on the Nymex, where gasoline futures fell 11.53 cents to close at $2.8874 a gallon. Natural gas futures fell 32.3 cents to settle at $8.248 per 1,000 cubic feet.

In London, Brent crude for September delivery fell $4.53 to finish at $113.33 a barrel.

Nymex crude oil had risen $1.14 Thursday to close at $120.02 a barrel after Turkey's state-run news agency Anatolia said the pipeline, attacked by the separatist group Kurdistan Workers' Party, could be shut down for up to 15 days.

The pipeline can pump slightly more than 1 million barrels of crude oil per day, or more than 1 percent of the world's daily crude output. In Turkey, pipeline shareholder BP PLC and other oil companies declared what's called a force majeure after the pipeline attack, freeing them of contractual obligations to deliver crude.

Oil prices dip again on signs of waning demand
Tuesday August 12, 2008
Crude slips as IEA lowers oil demand forecast for developing nations; dollar keeps recovering


Oil prices fell again Tuesday, dampened by a stronger U.S. dollar and more evidence that developed countries such as the United States are cutting back on their energy use.
Light, sweet crude dipped by $1.44 to settle at $113.01 a barrel on the New York Mercantile Exchange, after falling as low as $112.31, a new three-month low. Oil is now nearly $35 below its July 11 record high of $147.27.


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

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

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

And some economists have said that given the pullback in gasoline prices, demand could come back if motorists feel more comfortable with the cost of filling their gas tanks. The average U.S. retail gasoline price was $3.799 a gallon on Tuesday, according to auto club AAA, the Oil Price Information Service and Wright Express. That is down a penny from Monday, and down 31.5 cents from its July 17 record high.

But the energy markets -- which have seen heavy liquidation from large speculative funds since crude hit its record high -- continued to make the bet that energy use is on the wane.

"The market's still heavily focused on demand deterioration," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

A stronger dollar also weighed on oil prices. The euro traded at $1.4914, about the same as late Monday but at its lowest levels since February. The pound, meanwhile, fell to $1.8988, trading at its lowest levels since November 2006.

"Sometimes the cause and effect is difficult to define. It's a self-perpetuating, vicious circle going on, where oil falls, strengthens the dollar, then the strengthening dollar forces oil down more," Ritterbusch said.

Meanwhile, traders continued to watch the conflict between Russia and Georgia, trying to figure out whether Russia's push into the country will result in a serious oil supply disruption. Russia ordered a halt to military action in Georgia on Tuesday, but Georgia insisted that Russian forces were still bombing and shelling.

BP PLC said Tuesday it shut down the 90,000-barrel-a-day oil pipeline running from Baku on the Caspian Sea to Supsa on Georgia's Black Sea coast earlier. The London-based oil company emphasized, however, that the move was precautionary.

Another larger pipeline operated by BP in the former Soviet Republic is already out of action after a fire last week on its Turkish stretch. A third pipeline in Georgia that BP uses to export oil, but does not operate, remains open.

In other Nymex trading, heating oil fell 4.14 cents to $3.0781 a gallon, while gasoline futures slipped 2.34 cents to $2.8432 a gallon. Natural gas futures slid 1.9 cents to $8.33 per 1,000 cubic feet.

On London's ICE futures exchange, Brent crude for September fell $1.52 to $111.15 a barrel.

CNNMoney.com
Oil prices surge on weak inventory report.
Wednesday August 13, 11:48 am ET


Oil prices soared Wednesday after the government reported a surprisingly sharp decline in the nation's petroleum inventories.
U.S. crude for September delivery rose $1.92 to $114.93 a barrel in electronic trading. Oil had traded up 88 cents to $113.89 a barrel just before the report's release.


The Energy Department said crude stocks fell by 400,000 barrels during the week ended Aug. 8. The report also said gasoline supplies fell by 6.4 million barrels, while distillates, which are used to make diesel fuel, fell by 1.7 million barrels.

Economists polled by Platts, a division of McGraw Hill Cos., had expected the government to report a 500,000 barrel rise in crude stocks, a 2.2 million barrel decline in gasoline stockpiles, and a rise in distillates of 1.9 million barrels.

Concerns that high fuel prices are cutting into demand have sent crude prices sharply lower in recent weeks.

Oil has been trending lower since the end of July and is down about $34, or 23%, from its all-time high.

However, the larger-than-expected decline in supplies suggested that demand may not have been as low as many investors had thought.

Fuel price pinch

The high price of fuel has been taking a toll on U.S. consumers.

The most recent evidence comes in a report on retail sales released Wednesday by the Commerce Department.

The report showed that retail sales had fallen slightly in July, but that sales of gasoline had grown nearly a percent due to higher prices at the pump.

"You strip out the gasoline and there's not much growth in what [consumers] are buying," said Rachel Ziemba, energy analyst at RGE Monitor.

Demand forecast

Many investors also believe the rising price of crude oil and gasoline has begun to cut demand in the United States, the world's largest oil consumer.

Gas prices remain more than a dollar higher than where they were 12 months ago. However, the average price of retail gas in the United States has fallen more than 8% to $3.787 gallon at the pump over the past 27 days, according to motorist group AAA.

Prices have fallen below the psychological barrier of $4 a gallon in all but 8 states, according to AAA data. But that might be causing a slight uptick in demand.

"With the prices being down at the pump, I think people are starting to drive a little bit more," said Mark Waggoner, president of Excel Futures in California.

Georgian conflict

The oil market had largely ignored threats to international supplies as investors were more concerned about demand.

However Tom Orr, head of research for Weeden & Co. said he believes the oil market has been undervalued, and expressed concern about a disruption in supplies due to the conflict between Russia and Georgia that flared up this week.

"It amazes me how little attention crude oil traders have paid to the conflict between Russia and Georgia. A month ago crude would have shot up $5 or maybe even $10 per barrel if it looked like we might lose a million barrels per day of supply," wrote Orr in a research report.

Fighting between Russia and Georgia over the breakaway regions of South Ossetia and Abkhazia continued Wednesday, despite a cease-fire brokered by French President Nicolas Sarkozy. According to reports, Russian troops raided the strategically important city of Gori and pressed on in the direction of Tbilisi, the nation's capital.

Georgia serves as an important hub for transporting oil and natural gas between Europe and Asia. The country's largest oil pipeline had been shut down before the fighting began due to a fire along its Turkish span, and worries about supply disruption failed to significantly rattle investors a day earlier.

Dollar: Mixed view

Also adding to investor concerns was a mixed U.S. dollar.

The dollar sent conflicting signals to investors on Wednesday, turning higher against the 15-nation euro, but falling versus the Japanese yen.

The U.S. currency has been steadily gaining strength amid worries about slowing economic growth outside the United States.

Oil is traded in dollars, so when the dollar strengthens, crude oil becomes relatively more expensive for foreign investors. Oil and other commodities are also commonly used as a hedge against inflation.

Oil touches 3-month low on stronger US dollar
Friday August 15, 2008 
Oil prices touch 3-month low as US dollar strengthens, demand for energy keeps falling

Oil fell to its lowest price in three months Friday, briefly touching the $111 level after the dollar muscled higher and OPEC predicted the world's thirst for fuel next year will fall to its lowest point since 2002.

Light, sweet crude for September delivery fell $1.24 to settle at $113.77 a barrel on the New York Mercantile Exchange after falling to $111.34, its lowest price since May 2 and more than $35 -- or 24 percent -- below its July 11 trading record above $147.

As high energy costs force countries around the globe to cut back on consumption, crude prices have plummeted and are now within striking distance of $100 a barrel, a level first reached Feb. 19.

At the pump, retail gas prices also continued falling, with a gallon of regular shedding about half a penny overnight to a new national average of $3.771, according to auto club AAA, the Oil Price Information Service and Wright Express. Gas peaked at $4.114 on July 17.

Crude fell after the dollar gained strength against the euro on U.S. data showing that industrial output rose more than expected in July. The 15-nation euro has lost some of its luster compared to its American rival amid growing evidence that European economies are slowing. The euro bought $1.4675 in trading Friday, down from $1.4811 late Thursday.

A rising dollar typically pushes oil prices lower as investors who buy crude and other commodities as hedges against inflation start dumping their positions to cut their losses. A stronger greenback also makes dollar-denominated commodities more expensive to overseas buyers, further eroding demand.

"The dollar is on fire again so that's causing people to re-evaluate everything," said Phil Flynn, oil analyst at Alaron Trading Corp. in Chicago. "It means oil prices could fall dramatically. We could see prices get to double digits if this continues."

An OPEC forecast of lower demand also put downward pressure on prices.

In its monthly oil report, the organization forecast world appetite for oil this year overall will fall by 30,000 barrels a day. While forecasting demand growing by a daily 1 million barrels a day this year, and another 900,000 barrels in 2009, the report noted that world demand growth next year will also be "the lowest since 2002," with demand growth from the major industrialized countries actually declining.

"They're basically saying we could have an oil glut because demand is slowing," Flynn said. "It's obvious that high prices do slow down demand and the market works."

The OPEC report came two days after the U.S. Department of Energy highlighted the ongoing drop in U.S. demand for energy as Americans struggle with high costs for gasoline, food and other goods.

Oil's steady decline has continued despite the simmering weeklong conflict between Russia and Georgia over two breakaway provinces. Western leaders worked Friday to persuade Russia to pull troops out of Georgia, but regional tensions soared after a top Russian general warned that Poland could face attack over its missile defense deal with the United States.

British oil company BP PLC said Thursday it has resumed pumping gas into the Baku-Tbilisi-Erzurum pipeline that runs through Georgia, but two oil pipelines remained closed. BP's Baku-Supsa oil pipeline was shut as a precaution, and the larger Baku-Tbilisi-Ceyhan line, a key supplier to Western countries, remains shut after a fire earlier this month on the Turkish section of the line.

Analysts noted that the conflict in Georgia, while likely not driven primarily by energy concerns, highlights Moscow's influence over oil and natural gas reserves in the region. Russia exports more oil than any country except Saudi Arabia, and is the world's leading producer of natural gas.

Only weeks ago, such a clash would likely have sent oil prices soaring. But the market has largely ignored the fighting in Georgia because traders have already priced in the geopolitical risk, analysts say. Crude's monthlong nosedive has also made it harder for bullish traders to spark a rally, despite a possible threat to oil installations.

Also weighing on prices Friday was the expiration of September oil contract options at the end of the day, a trading cycle that often increases volatility.

In other Nymex trading, heating oil futures rose 2 cents to settle at $3.1191 a gallon, while gasoline prices slipped 5.18 cents to settle at $2.8602 a gallon. Natural gas futures fell 4.4 cents to settle at $8.092 per 1,000 cubic feet.

In London, September Brent crude fell $1.13 to settle at $112.55 a barrel.

Oil prices fall over $6 on stronger dollar
Friday August 22, 2008
Oil prices plunge $6 a barrel after dollar strengthens, Russia begins Georgia pullback


Oil prices tumbled more than $6 a barrel Friday -- the biggest one-day percentage plunge in nearly four years -- after a rebounding dollar and a Russian troop pullback in Georgia sparked another frenzied sell-off.


Crude's nosedive wiped out all the gains from the previous day's big rally and reaffirmed the belief that high energy prices and a softening global economy are still cutting into consumer demand for fossil fuels in the U.S. and overseas.

Light, sweet crude for October delivery fell $6.59, or 5.43 percent, to settle at $114.59 a barrel on the New York Mercantile Exchange.

It was crude's largest single-day price drop percentage-wise since Dec. 27, 2004, when prices dropped 6.47 percent. In dollar terms, it was oil's steepest one-day slide since Jan. 17, 1991, just after the start of the Gulf War. Crude prices had risen for three straight days, including an almost $6 rally on Thursday.

"This is extreme volatility," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill. "The fact that we erased all of yesterday's gains so fast suggests that we're still in a bear market. There's just not much demand out there."

At the pump, a gallon of regular fell another penny overnight to a new national average of $3.692, according to auto club AAA, the Oil Price Information Service and Wright Express. Prices had peaked at $4.114 a gallon on July 17, but have come down as high energy costs force Americans cut back on their driving.

Crude's violent fall accelerated throughout the day on renewed bullishness in the U.S. dollar and an apparent easing of geopolitical tensions. Speaking at an economic conference Friday, Federal Reserve Chairman Ben Bernanke said he would "act as necessary" to control inflation -- comments which sent the greenback higher compared to rival currencies.

A falling dollar encourages selling from investors who bought crude oil and other commodities as a hedge against inflation and weakness in the U.S. currency. The euro fell to $1.4806 in early New York trading Friday from $1.4772 late in New York the night before.

"The dollar got pounded yesterday and everybody rushed to buy commodities as a safe haven. Now the dollar is strengthening so everybody's dumping commodities again," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago.

On Thursday, worries about Russian hostilities helped push crude prices up $5.62 to $121.18, crude's highest settlement price in over two weeks.

"Obviously, yesterday's rally was overcooked and we're simply taking back some of that speculative risk premium we injected into the market," said Ritterbusch.

Russian troops began withdrawing from key Georgian positions on Friday, the day the pullback was to be completed under a U.S.-backed cease-fire. Still, there were conflicting statements about the extent of Russia's withdrawal.

Russia's defense minister said Friday the pullback from most Georgian territories to pro-Moscow separatist regions was complete, but U.S. State Department spokesman Robert Wood said that establishing buffer zones was "definitely not part of the agreement."

Oil traders were still eyeing the conflict amid concerns that another flare-up of violence could sever key oil shipments bound for Western countries. Russia is the world's second largest oil exporter, providing a quarter of EU countries' crude supplies and half of their natural gas.

"It's still speculative whether Russia will use oil as a weapon to punish the West," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "But it has certainly focused the market on that geopolitical threat."

The United States and Poland signed a deal Wednesday to place a U.S. missile defense base just 115 miles from Russia's westernmost border, a provocative move that was immediately denounced by Moscow.

Russia's Foreign Ministry warned that Moscow's response to further development of the missile defense shield would go beyond diplomacy.

U.S. Secretary of State Condoleezza Rice has dismissed any suggestion that the missile defense interceptors to be based in Poland constitute a threat to Russia. Washington insists the base is intended only as a defense against long-distance missiles from Iran.

London-based BP PLC last week shut down its Baku-Supsa oil pipeline -- which runs through the center of Georgia from Baku in Azerbaijan to Supsa on Georgia's Black Sea coast -- because of security concerns.

The line, which has a 150,000-barrel-a-day capacity, had recently been pumping around 90,000 barrels a day, according to a BP spokeswoman.

The British oil company also said that testing was to begin Wednesday on the closed Baku-Tbilisi-Ceyhan oil pipeline -- which runs through Georgia as well -- ahead of a move to restart full operations as early as next week.

That line, owned by a consortium of energy companies led by BP, has been closed for more than two weeks after a fire on its Turkish stretch. Kurdish rebels have taken responsibility for that blaze.

In other Nymex trading, heating oil fell 16.95 cents to settle at $3.1311 a gallon, while gasoline futures fell 17.66 cents to settle at $2.8686 a gallon. Natural gas futures fell 40.9 cents to settle at $7.843 per 1,000 cubic feet.

In London, October Brent crude fell $6.24 to settle at $113.92 a barrel.

Gas prices up as Gustav threatens Gulf refineries
Friday August 29, 5:30 pm ET
Gas prices move higher as Gustav spins toward Gulf refineries; crude rebounds


Retail gas prices swung higher Friday -- the first increase in 43 days -- as analysts warned that a direct hit on U.S. energy infrastructure by Hurricane Gustav could send pump prices hurtling toward $5 a gallon.


Meanwhile, oil prices ended the day slightly lower, falling for a second straight session. But prices fluctuated sharply as some traders feared supply disruptions and others bet the government will release supplies from the Strategic Petroleum Reserve if Gustav wreaks havoc in the Gulf of Mexico area -- home to a quarter of U.S. crude supplies and 40 percent of refining capacity.

Gustav, which regained hurricane strength Friday, was spinning away from Jamaica on a course toward Gulf Coast states including Louisiana -- three years to the day since Hurricane Katrina slammed into the state and tore up oil rigs and refineries.

Fears of another monster storm have sent wholesale gasoline prices shooting up in the Gulf region, forcing filling stations to pass on the costs by raising pump prices ahead of Labor Day weekend.

A gallon of regular gasoline jumped about a penny overnight to a national average of $3.669, according to auto club AAA, the Oil Price Information Service and Wright Express.

That's the first increase since prices peaked at an average $4.114 a gallon on July 17, an all-time high.

Jeff Rubin, chief economist at investment bank CIBC World Markets, said that record could be shattered if Gustav seriously disrupts offshore energy production.

In 2005, pump prices jumped from slightly more than $2 a gallon to above $3 after Katrina and Hurricane Rita destroyed more than 100 oil platforms and damaged several refineries.

"The price consequences could be even worse this time," Rubin said in a report, noting that oil and gasoline inventories are lower than when Katrina and Rita hit. "Any replays of the 2005 storm season could see gasoline prices soar to $5 per gallon."

Gustav was moving northwest of Jamaica toward the Cayman Islands after triggering floods and killing 59 people in Haiti and eight more in the Dominican Republic.

Light, sweet crude for October delivery fell 13 cents to settle $115.46 a barrel on the New York Mercantile Exchange, after earlier rising as high as $118.76. On Thursday, prices fell $2.56 at $115.59 a barrel, the first time this week it closed lower.

Analysts attributed the volatility to doubts over whether Gustav will affect offshore energy production, as well as speculation that the Energy Department will tap the Strategic Petroleum Reserve should the storm threatens supplies.

"Until this hurricane hits, the trend has to be higher toward the $120 level," said Jonathan Kornafel, Asia director for brokerage Hudson Capital Energy in Singapore. "If this turns out to be a nonevent, the market could really come roaring back down."

As Gustav advanced, oil companies were pulling employees off installations.

Royal Dutch Shell PLC has evacuated nearly 670 workers. BP PLC was also removing personnel from the region, while Exxon Mobil said it was bracing its structures for heavy wind and rain.

Transocean Inc., the world's largest offshore drilling contractor, said Friday it had evacuated about 400 workers from 11 offshore drilling rigs in the Gulf. Transocean still has 1,150 workers in the region.

Weather research firm Planalytics predicted as much as 80 percent of the Gulf's oil and gas production could be shut down as a precaution if Gustav enters the region as a major storm.

Forecasters said Gustav might slip between Mexico's Yucatan Peninsula and the western tip of Cuba on Sunday, then march toward a Tuesday collision with the U.S. Gulf Coast -- anywhere from south Texas to the Florida panhandle.

"It seems there will be at the very least a slight hit to production," Kornafel said. "But everything is up in the air until Monday or Tuesday."

Gustav is the first storm of the 2008 Atlantic hurricane season to pose a serious threat to offshore oil and gas installations in the Gulf.

Some analysts, however, noted that lower appetite for oil products in the United States could well dampen Gustav's effect on the Gulf area's oil output.

"U.S. oil demand is currently 1.6 million barrels a day lower than when Katrina struck," said Olivier Jakob of Petromatrix in Switzerland. "There is today more U.S. refining capacity offline for economic reasons than can be destroyed by Gustav."

In other Nymex trading, heating oil lost 0.07 cent to settle at $3.1819 a gallon, while gasoline fell 1.15 cents to settle at $3.0099 a gallon. Natural gas fell 10.7 cents to settle at $7.943 per 1,000 cubic feet.

In London, October Brent crude fell 12 cents to settle at $114.05 a barrel.

Oil prices end higher as stock market rallies
Thursday September 18, 2008
After hitting $100 a barrel, oil holds some gains and ends higher as stock market rebounds


Oil prices rose modestly but closed well off their session highs Thursday as a late-day stock market rally soothed investors' concerns about the economy and demand for energy. Earlier, the contract topped $100 a barrel as investors uneasy about the worsening financial crisis flocked to commodities as a safe haven.


Light, sweet crude for October delivery added 72 cents to settle at $97.88 a barrel on the New York Mercantile Exchange. The contract had reached as high as $102.24 as worries intensified about the stability of the U.S. financial system and as investors fled the equities market in favor of commodities.

"Oil's torn. It doesn't know if it's a financial indicator or a commodity," said Phil Flynn, an energy analyst at Alaron Trading Corp. in Chicago. "It rallied with gold and silver early on and then later, with the stock market."

Crude seesawed through the day, reflecting a financial system in crisis.

Investors first sought commodities including oil as a hedge against the economic fallout from the financial crisis; they sent the October contract soaring $4 and past $100. The market was reacting in part to moves by the Federal Reserve and other foreign central banks to pump as much as $180 billion into global money markets in an effort to boost liquidity.

The emergency measure follows a week of chaos on Wall Street that saw the demise of Lehman Brothers Holdings Inc., the forced takeover of Merrill Lynch and Co., and the unprecedented government bailout of American International Group Inc.

But traders then recoiled when they realized that a financial meltdown and weak global economy would further erode already flagging demand for energy.

Then, late in the day, the stock market surged on a CNBC report that the federal government was considering the creation of an entity that would hold the bad debt that has crippled U.S. financial institutions. The report sent the Dow Jones industrials soaring more than 400 points, which in turn raised oil traders' hopes that the financial crisis won't do more serious damage to the economy and demand for oil.

Crude prices have steadily fallen since reaching a record $147.27 a barrel on July 11. Last Friday, oil fell below $100 for the first time since April.

Oil had jumped Wednesday as investors fled equities to crude, gold and other commodities as a short-term safe haven amid global market unrest.

Stepped-up attacks by Nigerian militants against the country's oil infrastructure helped support oil prices. In a fifth day of violence, Nigeria's main militant group said Wednesday that it had destroyed an oil-pumping station and a pipeline crossing southern Nigeria in a rare daylight attack.

A spokesman for Nigeria's state oil company said Wednesday that militant attacks are now cutting the country's daily oil production by about 1 million barrels a day, 40 percent of what the country produced before the militant campaign began three years ago.

"In the last few days, militant attacks in Nigeria have been stirring up again, but that's on the back burner right now," said Victor Shum, an energy analyst with consultancy Gertz & Purvin in Singapore. "I see downward pressure on oil in the near-term, with the key support level at $90."

Meanwhile, the U.S. government reported Wednesday a bigger-than-expected drop in crude supplies, reflecting the shutdown of virtually all Gulf Coast oil production because of Hurricane Ike and Hurricane Gustav.

The Energy Information Administration said U.S. crude stocks fell by 6.3 million barrels for the week ending Sept. 12, much bigger than the 3.7 million barrel drop expected by analysts surveyed by the energy research firm Platts.

Also on Thursday, the House approved measures to curb speculation in oil and other commodity markets by hedge funds and large institutional traders. However, the White House said President Bush likely would veto the bill if it gets to his desk.

In other Nymex trading, heating oil futures fell nearly 4.23 cents to settle at $2.7824 a gallon, while gasoline prices added nearly 2 cents to finish at $2.4824 a gallon. Natural gas for October delivery slipped nearly 3 cents to close at $7.621 per 1,000 cubic feet.

In London, November Brent crude added 35 cents to end at $95.19 a barrel on the ICE Futures exchange.

OPEC makes deepest oil cut ever to rescue prices
Wednesday December 17, 2008, 11:54 am EST


ORAN, Algeria (Reuters) - OPEC oil ministers agreed their deepest oil cut ever on Wednesday, slashing 2.2 million barrels per day from oil markets in a race to balance supply with rapidly crumbling demand for fuel.

The 12 members of the Organization of the Petroleum Exporting Countries were also aiming to build a floor under prices that have dropped more than $100 from a July peak above $147 a barrel.

The cut, effective from January 1, comes on top of existing reductions of 2 million bpd agreed by OPEC at its last two meetings. It lowers the group's supply target to 24.845 million bpd.

"I hope we surprised you -- if not, we have to do something about it, said OPEC President Chakib Khelil, host of the conference.

Oil fell more than $3 toward $40 following the deal, after weekly U.S. data showed inventories in the world's biggest consumer continued to swell.

A deepening recession has battered world demand and fuel inventories are bulging worldwide. Prices already have plunged by two-thirds since the summer and analysts say the oil market is under the sway of world financial turmoil.

"The world economy is driving the price more than anything OPEC can do at this stage," said Gary Ross, CEO of consultancy PIRA Energy. "It will be hard for the cuts to have any traction with regard to price in a deteriorating economic environment."

OPEC's president said the group would do its utmost to ensure new restraints were strictly enforced.

"I can tell you it's going to be implemented and it's going to be implemented very well because we do not have a choice," said Khelil, also Algeria's energy minister.

"If not, the situation is going to get worse."

Saudi Arabia, the world's biggest oil exporter, has led by example -- reducing supplies to customers even before a cut has been agreed to help push prices back toward the $75 level Saudi King Abdullah has identified as "fair."

"The purpose of the cut is to bring the market into balance and avoid the gyrations of the price," said Saudi Oil Minister Ali al-Naimi. "The cut may lead to higher prices or may not."

The cut, the third this year, brings a total reduction in OPEC supply to 4.2 million bpd, nearly a five percent cut in world oil supplies. OPEC is due to meet again on Mar 15.

FEELING THE PAIN

Oil below $50 is uncomfortable for all producing nations, but especially for OPEC members Venezuela and Iran which are dependent on higher prices to fund ambitious domestic programs.

It is hoped that a sharp supply cut will set oil on the path toward $75.

"You must understand the purpose of the $75 price is for a much more noble cause," the Saudi Oil Minister said. "You need every producer to produce and marginal producers cannot produce at $40 a barrel."

"Therefore we believe that $75 is probably more conducive to marginal producers to continue so we don't have a shortage in the market and we avoid the future sky-rocketing of prices."

Analysts said a limited recovery in prices would put a bit more strain on a recessionary global economy, but it may help pull the world back from the brink of deflation -- a growing source of concern.

The influential Saudi Oil Minister clearly outlined the kingdom's route to lower production.

It is pumping 8.2 million bpd against 9.7 million bpd in August. Saudi Arabia's implied output target is about 8.477 million bpd under existing OPEC curbs.

To have a lasting price impact, any OPEC deal must to be strictly observed.

According to independent observers cited in OPEC's monthly report on Tuesday, the group's compliance in November to existing cuts was only just over 50 percent.

Analysts said deeper cuts would further test discipline in the group. That restraint would be needed to slim down growing world oil stocks.

OPEC has encouraged other producers to cut back too. Russia and Azerbaijan are attending the Oran meeting as observers and have said they could rein in exports in future, but stopped short of am immediate pledge.

Leading a high level delegation, Russia's Deputy Prime Minister Igor Sechin said in a speech to OPEC that Moscow did not plan to join in coordinated output cuts and did not want to join the group.

(Additional reporting by Simon Webb, Katya Golubkova and Alex Lawler in Oran, Randy Fabi in Abuja, writing by Peg Mackey, editing by William Hardy)

CNNMoney.com
Oil off its highs on supply report
Wednesday February 4, 10:53 am ET
By Julianne Pepitone, CNNMoney.com contributing writer


Oil prices remained higher Wednesday, but off their peaks, after the nation's oil supply rose more than expected.
U.S. light crude for March delivery was up 25 cents to $41.03 a barrel. Oil traded up 77 cents just prior to the report's release.


The troubled economy has sunk demand, which in turn has caused a large buildup in crude supplies. Oil prices have plummeted from a record high of $147.27 a barrel last summer.

In its weekly inventory report, the Energy Information Administration said crude stocks rose 7.2 million barrels in the week ended Jan. 30. Analysts were looking for an increase of 2.9 million barrels of crude oil, according to a consensus estimate of industry analysts surveyed by Platts, a global energy information provider.

Crude oil inventories were above the upper limit of the average range for this time of year, the report said.

The Organization of Petroleum Exporting Countries, whose members produce about 40% of the world's crude, has been pressured to put a floor under prices as stockpiles grow.

OPEC pumped an estimated 26.23 million barrels per day in January, down from 27.24 million the previous month, according to a Reuters oil company survey released Tuesday.

OPEC's recent cuts, which were announced in December, come on top of a previously announced cut of 2 million barrels per day in 2008. The moves aim to bring parity to the current oversupply and ailing demand.

The EIA report also said stockpiles of gasoline rose by 300,000 barrels last week, with the total supply being in the upper half of the average range. Analysts were looking for an increase of 1.3 million barrels.

Distillates, used to make heating oil and diesel fuel, decreased by 1.4 million barrels. Analysts were looking for a decrease of 1.2 million barrels. The total supply was above the upper limit of the average range for this time of year.

Oil prices fall further on economic gloom
Wednesday February 18, 2009, 4:39 pm EST


NEW YORK (Reuters) - Oil prices fell nearly 1 percent to below $35 a barrel on Wednesday as dealers bet that slumping fuel demand in top consumer the United States has forced crude inventories to an 11-year high.

U.S. crude for March delivery slipped 31 cents to settle at $34.62 a barrel, while U.S. crude for April delivery fell $1.13 to $37.41 and London Brent for April delivery fell $1.48 to $39.55.

The losses came as dealers anticipated a government report on Thursday would show crude stockpiles in the United States rose last week by 3 million barrels to the highest since May 1998.

Oil stocks in the world's largest energy consumer have already risen by 20 percent since September as the economic downturn has crushed business and consumer demand, helping pull oil prices more than $110 off their peaks last summer.

The American Petroleum Institute said on Wednesday crude stocks rose last week by 1.6 million barrels. The EIA report is widely seen as more accurate than the API's because U.S. energy firms are required to participate.

Oil's losses tracked a decline in the U.S. stock market after data showed U.S. housing starts and building permits dropped to record lows in January, signaling a potential deepening of the recession.

The White House on Wednesday unveiled a $275 billion plan aimed at stemming foreclosures in the slumping housing sector.

Weakness in the global economy and sliding demand for energy have rung alarm bells for the Organization of the Petroleum Exporting Countries, which has been seeking to cut 4.2 million bpd of output since September to prop up oil prices.

Several OPEC members have signaled the cartel could deepen its cuts when it next meets March 15 in Vienna.

U.S. Energy Secretary Stephen Chu said he would not weigh in on whether OPEC should cut production, saying such consultation was "not in my domain."

The comment marked a shift from previous U.S. energy secretaries who met regularly with the energy ministers of OPEC's member nations, discussed the oil market and expressed both privately and publicly the U.S. position on OPEC production levels.

Oil falls below $35 on more bad economic news
Oil prices fall below $35 ahead of report expected to show growing crude inventories
John Porretto, AP Energy Writer
Wednesday February 18, 2009, 4:20 pm EST


HOUSTON (AP) -- Benchmark oil prices fell below $35 a barrel Wednesday as another dose of bad economic news only raised concerns about the global downturn's impact on energy demand.


Economic expectations for the U.S. were sharply downgraded by the Federal Reserve, which predicted that more people will lose jobs and the economy will contract.

Light, sweet crude for March delivery fell 31 cents to settle at $34.62 a barrel on the New York Mercantile Exchange. The March contract expires on Friday, and most of the trading was for the April contract.

Benchmark crude for April delivery fell $1.13 to settle at $37.41.

There is little faith in the energy markets that the $787 billion stimulus bill signed this week will lead to a quick turnaround.

There's just "a deafening lack of any fresh foundation for economic growth," the energy consultancy Cameron Hanover said in a note to clients Wednesday.

"Many traders had hoped and expected progress on the stimulus bill would somehow solve the economy's worst woes and fears," the note said. "At this stage, it does not seem to have done that."

The Federal Reserve on Wednesday projected the unemployment rate will rise to between 8.5 and 8.8 percent this year. The old forecasts, issued in mid-November, predicted the jobless rate would rise to between 7.1 and 7.6 percent.

The Fed also believes the economy will contract this year between 0.5 and 1.3 percent. The old forecast said the economy could shrink by 0.2 percent or expand by 1.1 percent.

It also said production at the nation's factories, mines and utilities fell 1.8 percent last month, the third straight month for a decline. That means a huge cut back in energy demand.

Factories and utilities consume an enormous amount of natural gas. Natural gas prices this week fell to their lowest levels since September 2006.

Another report from the Commerce Department said construction of new homes and apartments plunged 16.8 percent in January from the previous month, to a seasonally adjusted annual rate of 466,000 units, a record low. Builders are slashing home construction as skyrocketing home foreclosures dump more empty properties on an already glutted market.

In an effort to prop up the economy, the White House on Wednesday said the government will spend $75 billion to help prevent millions of Americans from losing their homes.

But energy demand has already plummeted and U.S. stockpiles of crude are hitting record levels.

Analysts expect crude stocks to grow by another 3.5 million barrels when the Energy Department releases oil inventory data for the week ended Feb. 13, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

After building to a record of nearly 35 million barrels, oil inventories at Cushing, Oklahoma -- the delivery point for Nymex crude oil futures contracts -- could climb further, Platts said.

Analysts also expect refiners to cut back even more as they try to match the steep decline in gasoline demand in recent months.

The American Petroleum Institute said Wednesday overall demand for oil, as measured by domestic deliveries, was down in January from a year ago, though U.S. gasoline demand registered its first monthly increase in more than a year. U.S. gasoline demand rose 1.7 percent last month from a year ago, according to the monthly report from API, the oil and gas industry's trade organization.

Yet deliveries of distillate fuel oil, which includes diesel fuel, fell 3.5 percent, and jet fuel deliveries slipped nearly 9 percent.

"All told, weak demand across the board has given us the lowest deliveries for January in seven years," said API statistics manager Ron Planting.

Beyond worries about the U.S. economy, Vienna's JBC Energy noted in its newsletter that "a slump in European stock indices and U.S. automakers' demand for extra government funds added to the negative sentiment in the market."

General Motors Corp. and Chrysler LLC asked the government Tuesday for an additional $14 billion in aid. GM presented a survival plan that also calls for cutting a total of 47,000 jobs globally and Chrysler said it will cut 3,000 more jobs.

GM, the world's largest automaker, said it could run out of money by March without new funds.

"That's 47,000 more people who will be driving less," said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney. "It's mind-blowing. It makes you wonder whether these companies should survive."

In other Nymex trading, gasoline futures slipped 5.66 cents to settle at $1.0652 a gallon. Heating oil fell 4 cents to settle at $1.1469 a gallon, while natural gas for March delivery slid about a penny to settle at $4.203 per 1,000 cubic feet.

In London, the March Brent contract fell $1.48 to settle at $39.55 on the ICE Futures exchange.

Oil falls below $38 as economic outlook worsens
Friday February 20, 2009, 8:19 am EST


LONDON (Reuters) - Oil fell more than $2 a barrel to below $38 on Friday, retreating as the global economic outlook deteriorated, dragging stock markets down across the world.

Oil prices rallied strongly on Thursday, jumping 14 percent after data showing an unexpected draw in U.S. crude stocks. But worries over the health of oil demand have resurfaced, with sentiment dented by sharp falls in equity markets.

European shares tumbled to a six-year low as investors fretted about capital increases and bank nationalization on the back of a deepening economic downturn. The broad Topix index of Japanese shares closed at its lowest level in about 25 years.

Worries over the fragility of the global economy boosted gold, which saw a rush to safety take bullion up more than 1 percent to its highest since March last year.

U.S. crude futures for March delivery, which expire on Friday, were down $2.04 at $37.44 a barrel by 8:12 a.m. EDT, after posting the biggest settlement gain since December 31 in the previous session.

April delivery fell $1.75 to $38.42, while Brent for April delivery dropped $1.58 to $40.41 a barrel.

"The overall driving trend will be the economy as the market remains demand-focused," said Harry Tchilinguirian, commodities analyst at BNP Paribas in London. "We expect this to be the case for the entire first half of the year."

BLEAKEST DIAGNOSIS EVER

Most pressure was on the expiring March U.S. crude contract, which has been weighed down by very high crude inventories at Cushing, Oklahoma, the delivery point for NYMEX futures.

Brent and later U.S. crude futures months were more stable.

"Brent bounced back above $40 yesterday," said Christopher Bellew, broker at Bache Commodities. "In spite of economic gloom and bearish data, Brent is holding its sideways range."

In its monthly report on Friday, the Bank of Japan reiterated that economic conditions were deteriorating rapidly -- its bleakest diagnosis ever -- and would likely continue to worsen for the time being.

Japan has been hit particularly hard by the global slump, triggered by the U.S. housing market meltdown, due to its heavy dependence on exports and chronically weak domestic consumption.

Crude inventories in the United States, the world's top consumer, fell slightly last week on lower imports and higher demand, the U.S. Energy Information Administration said, snapping seven straight weeks of builds against market expectations.

The bullish oil data countered pessimism in the U.S. stock market, where the Dow industrials index closed at its lowest in more than six years on a gloomy jobs report and fears that banks could be nationalized.

Crude prices have fallen more than $100 a barrel from the peaks hit last July as the worsening economic crisis has bitten into oil demand, prompting the Organization of the Petroleum Exporting Countries (OPEC) to agree to deep output cuts.

In the latest indication that OPEC members are complying with the agreed cuts, Kuwait notified at least two buyers in Asia that it will keep curbs of 5 percent below contracted volumes for April-June term crude oil supplies, steady from March, trade sources said.

U.S. economic reports due out later in the day include the consumer price index and real earnings for January, as well as the Economic Cycle Research Institute's (ECRI) weekly index of economic activity.

Oil falls slightly as stockpiles weigh
Wednesday April 15, 2009, 3:54 pm EDT


NEW YORK (Reuters) - Oil prices fell marginally on Wednesday as government data showed U.S. crude stocks last week were at the highest level since September 1990.

The Energy Information Administration's weekly inventory report showed a 5.6-million-barrel rise in U.S. crude stocks, to 366.7 million barrels, beating analysts' expectations of a 1.9-million-barrel build.

U.S. crude for May delivery settled down 16 cents at $49.25 a barrel after a day of see-saw trading. ICE Brent crude settled down 17 cents at $51.79.

"Another week, another bearish inventory report. It has been negative week after week and yet the market hasn't collapsed," said Tom Bentz, senior commodity analyst at BNP Paribas Commodity Futures Inc in New York.

"It's defying fundamental logic, focusing instead on the dollar, the strength in the stock market and inflation fears -- that's what's keeping the oil price up."

The bearish inventory data outweighed a modest rise on the stock market, with the Dow Jones industrial average staying positive on Wednesday.

Oil prices have tumbled nearly $100 per barrel since last July, as the global recession dented oil demand, but they have recovered in recent months from a low of $32.40 in December.

A rally in equity markets this month, in the hope that the world economic outlook might be brightening, has helped boost oil prices, despite its weak supply-demand fundamentals.

"We still expect the U.S. stock market to be the intermediate price driver for most commodity complexes over the next few weeks," Edward Meir of MF Global said in a research note.

However, ExxonMobil Corp Chief Executive Rex Tillerson said on Wednesday in an interview with Reuters that high inventory levels will affect oil prices even when the U.S. economy rebounds.

He added that crude oil price should remain range-bound for a while as high inventory levels and concerns about the world economy outweigh attempts by OPEC to curb supply.

OPEC had announced production cuts of up to 4.2 million barrels a day since September in an attempt to stem the slide in oil prices.

The Organization of the Petroleum Exporting Countries said Wednesday that world oil demand would fall by 1.37 million barrels per day in 2009, up from its previous forecast for a fall of 1.01 million bpd.

"In the coming months, the market is expected to remain under pressure from uncertainties in the economic outlook, demand deterioration and the substantial supply overhang," OPEC said.

Both the International Energy Agency and the U.S. government agency EIA have also just reduced their global demand forecasts.

In its monthly outlook released on Tuesday, the EIA cut its 2009 world oil demand forecast by 180,000 barrels per day to just over 84 million bpd.

Gloomy economic indicators remained on Wednesday, with Federal Reserve Data showing U.S. industrial output shrank more than expected in March.

Crude Oil
West Texas Crude also made a false breakout, below support at $47, before reversing to test resistance at $50. Penetration of resistance would warn of a bear trap — confirmed if crude recovers above $55. Reversal below $47, on the other hand, would confirm a down-swing to test primary support at $35.

Crude Oil...
West Texas Crude formed a flag continuation pattern. Upward breakout would offer a target of $70, calculated as 50 + [55 - 35]. Downward breakout, while less likely, would test primary support at $35.

Oil prices jump to high for the year
Crude prices surge as EIA reports lower-than-expected jump in crude storage levels
On Wednesday May 6, 2009, 3:37 pm EDT


SIOUX FALLS, S.D. (AP) -- Oil prices surged to a 2009 high Wednesday after a government report showed that unused crude being placed in storage slowed a bit last week.

Benchmark crude for June delivery rose 4.6 percent, or $2.50, to settle at $56.34 a barrel on the New York Mercantile Exchange. It was the highest close since mid-November.

Demand for energy during the recession has been decimated, leaving storage facilities more bloated than in any year since Iraq's invasion of Kuwait in 1990.

Prices for crude and gasoline have plunged as a result, providing a break for everyone from industrial companies to consumers, though that must be taken in the context of shuttered factories and layoffs.

In that same context, however, government data that in a normal year might send energy prices falling, actually sent them up across the board Wednesday.

Prices for oil, natural gas, heating oil and gasoline all rose on data showing levels of crude in storage continues to rise. What sent prices sharply higher, however, is that levels did not rise more than they did.

Crude levels for the week ended May 1 rose by 600,000 barrels to 375.3 million barrels, the Energy Department's Energy Information Administration said in its weekly report. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had expected a build up of 2.2 million barrels.

An overnight report from the American Petroleum Institute even showed a 1-million-barrel slip in crude oil stocks and a 2.9-million-barrel drop in gas supplies.

In a market environment where everyone is looking for scraps of good news, it provided a shot of optimism that the economy may be on the mend.

"A sign that demand is improving perhaps? Or maybe those refiners are still indifferent to increasing supply," Phil Flynn, an analyst at Alaron Trading Corp., wrote in a morning note. "It was probably a little of both."

Meanwhile, the national retail average price for a gallon jumped more than 3 cents overnight to $2.11 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. That is about 7 cents a gallon below what it was a month ago, but $1.50 below its year-ago price.

The EIA in its report said gasoline in storage slipped by 200,000 barrels, even though demand continues to fall. That is partly because refineries have pulled back on production as they try to match falling demand, but there is also evidence that the refineries that make gasoline are beginning to ramp up.

While demand for gas fell 1 percent over the four weeks ending May 1 with U.S. consumers still rattled, refineries increased capacity by more than 3 percent.

There is little to suggest demand for energy is picking up, but Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said there is more optimism about the general economy.

"We could see a little more vacation driving than we anticipated," Ritterbusch said. "That's being offset by the fact that refinery runs are coming back to meet any unexpected needs."

There have been other hints in recent days that recession may be loosening its grip.

The ADP National Employment Report, an unofficial gauge of the labor market, said Wednesday that private sector employment fell by 491,000 last month. In the context of today's economy, that was taken as good news. It was much better than the 708,000 jobs lost in March.

On Tuesday, Fed Chairman Ben Bernanke gave his most optimistic prediction yet about the end of the U.S. recession, saying he expects the economy to start growing again this year.

U.S. bank stress test results set for release on Thursday and April unemployment figures due out Friday should provide more insight into the state of the economy and the odds that energy prices will rise.

Oil has traded near $50 a barrel for more than a month after dropping from a record $147 last July and rising from below $35 in February.

In other Nymex trading, gasoline for June delivery rose 5.58 cents to settle at $1.628 a gallon and heating oil gained about 4.5 cents to settle at $1.4713 a gallon. Natural gas for June delivery jumped 27.2 cents to settle at $3.887 per 1,000 cubic feet.

In London, Brent prices rose $2.03 to settle at $56.15 a barrel on the ICE Futures exchange.

Associated Press Writers Pablo Gorondi in Budapest, Hungary, Alex Kennedy in Singapore, Pan Pylas in London and Ernest Scheyder in New York contributed to this report.

Crude Prices Decline As US Retail Sales Release Dissapoints
On Wednesday May 13, 2009, 5:19 pm EDT

Despite a large drop in crude inventories, crude prices declined for the session as global equities sputtered throughout the day. Crude prices have benefited in the past months from an increase in investor risk appetite, but today was the source of weakness as prices fell despite bullish supply data.



Commodities - Energy

Crude Prices Decline As US Retail Sales Release Disappoints

Crude Oil (WTI)                   $57.800               -$1.050          -1.78%

Despite a large drop in crude inventories, crude prices declined for the session as global equities sputtered throughout the day. Crude prices have benefitted in the past months from an increase in investor risk appetite, but today was the source of weakness as prices fell despite bullish supply data. Even with the unexpected drop in supplies, crude fundamentals remain stacked against current prices. In the face of several weeks of negative fundamental data, crude prices still gained on market optimism. Now that hopes of a near-term economic rebound are being challenged further by releases, crude prices will likely cave in to those fundamentals. In the way of data, US housing figures continue to disappoint while today is Retail Sales report (declining 0.4%) suggests sharper contraction in consumer spending than expected; all factors that would place further downward pressure on crude prices. Given the interconnected nature of markets, investors selling positions to meet margin calls today also exacerbated price declines. As it stands, fundamental pressures that were unrequited for the past few months will likely begin to push prices lower. Barring a return to equity rallies, expect prices to decline in the near to medium term.

Crude Oil

West Texas Crude continues in a strong primary up-trend, with a short retracement respecting the latest support level at $55. The target for the advance is $65, calculated as 55 + [ 55 - 45 ]. Reversal below the rising (green) trendline is not expected, but would warn that the up-trend is weakening.
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=48316)

Oil hits six-month high before holiday weekend
Oil hits six-month high, gasoline continues toward $2.40 a gallon before the holiday
On Wednesday May 20, 2009, 3:44 pm EDT


NEW YORK (AP) -- Oil prices hit a six-month high Wednesday, climbing above $62 a barrel after a government report showed a drop in U.S. oil supplies for the second straight week. Benchmark crude for July delivery rose $1.94 to settle at $62.04 a barrel on the New York Mercantile Exchange before noon. Crude prices jumped to $62.14 earlier in the day, the highest price for crude since Nov. 11.

In London, Brent prices increased $1.67 settle at $60.59 a barrel on the ICE Futures exchange.

Crude stockpiles dropped by 2.1 million barrels for the week ended May 15, according to Energy Department's Energy Information Administration. Gasoline inventories dropped by 4.3 million barrels.

That was a bigger decline than analysts had expected, especially for gasoline.

One of the main drivers this year for energy prices has been the enormous amount of crude and gasoline in storage. Recently, benchmark crude prices also have been heavily influenced by the stock market and the strength of the dollar.

A number of other issues, from fires at refineries, to falling inventories, to the first big driving holiday of the year, are sending gas prices upward.

Retail gasoline prices have risen every day this month.

"If you mix that with fires at refineries this week, and the optimism that's in the equities markets right now, you have the ingredients for a rally" in energy prices, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

Still, oil supplies remain at 19-year highs as Americans cut back on spending. For weeks, government data has shown that the country's consumption of petroleum products has dropped to its lowest levels in a decade.

At the pump, gas prices added two cents overnight to a new national average of over $2.334 a gallon Wednesday, according to AAA and the Oil Price Information Service. Gas is 27.6 cents a gallon more expensive than a month ago, but it's $1.466 a gallon cheaper than last year.

Kloza said he expects gas prices to continue to climb near $2.40 just before Memorial Day weekend as a drop in refinery activity forces pump prices higher.

In other Nymex trading, gasoline for June delivery fell less than a penny to settle at $1.8095 a gallon and heating oil rose 5.45 cents to settle at $1.5411 a gallon. Natural gas for June delivery added 6.8 cents to settle at $4.098 per 1,000 cubic feet.

Running into resistance @ the 200-day MA.......

Oil drops below $61 as big rally pauses
Oil prices fall from six-month high as a slow economic recover comes into focus
On Thursday May 21, 2009, 3:31 pm EDT

NEW YORK (AP) -- Energy prices tumbled Thursday after the Federal Reserve predicted that even if the worst of the recession is over, the economy will continue to shrink this year.

Benchmark crude for July delivery fell 99 cents to settle at $61.05 a barrel on the New York Mercantile Exchange. Prices at one point had fallen to a penny within $60. In London, Brent prices fell 66 cents to settle at $59.93 a barrel on the ICE Futures exchange.

The ailing economy has pushed energy prices down because consumers and businesses have reduced spending, whether it's on commuting to work or producing goods.

On Thursday, energy prices fell further after the Labor Department reported that there are nearly 6.7 million people filing for unemployment benefits, the highest total on records dating to 1967.

Major industries that rely on natural gas have pulled back and in addition to layoffs, have idled or shuttered factories.

That has led to a steep drop off in natural gas prices and on Thursday, the Energy Department's Energy Information Administration said that last week natural gas in underground storage far exceeded the five-year average. Analysts had expected growth, but not as much as the government reported.

Prices for natural gas on Nymex tumbled 7.5 percent.

That can be good news for consumers, because utilities use a lot of natural gas, meaning bills could come down.

Meanwhile, renewed clashes between government troops and militants in Nigeria, part of a long-standing dispute over the distribution of oil revenues from the Niger Delta, continued to support oil prices.

According to JBC Energy, the situation in the Niger Delta "appears to be worsening." JBC estimated that output in Africa's largest crude exporter was down 900,000 barrels a day since the escalation of militant activity in the summer of 2005.

Nigeria is the fifth largest exporter of oil to the United States and problems there can affect energy prices here.

In other Nymex trading, gasoline for June delivery fell less than a penny to settle at $1.7997 a gallon and heating oil dropped 1.17 cents to settle at $1.5411 a gallon. Natural gas for June delivery slid 37.2 cents to settle at $3.726 per 1,000 cubic feet.

Oil prices strike new high for 2009
Extended rally continues for oil; gas and oil prices hit new high for 2009

Oil rise boosts US energy stocks
June 10 2009

US stocks rose on Wednesday morning as Wall Street remained focused on inflation indicators, with commodity prices continuing to rise and the dollar slipping further.

The price of oil briefly topped $71 for the first time since October last year, but then fell back. By mid-morning US crude was up $0.97 at $70.98.

This boosted energy stocks, including Chevron, which gained 1.8 per cent to $71.43 and ConocoPhillips, which picked up 1.9 per cent to $46.40.

Other commodities also continued the week's gains, with rising metals prices driving shares in Alcoa, the aluminium producer, which rose 3.1 per cent to $11.50 and Freeport McMoRan, the copper miner, which advanced 2.6 per cent to $60.47.

Materials ane energy stocks drove the benchmark S&P 500 index higher, and after half an hour of trade, it was 0.4 per cent up at 946.44. The Dow Jones Industrial Average gained 0.6 per cent to 8,812.26 but the Nasdaq Composite index fell 0.2 per cent to 1,856.38.

Home Depot boosted the consumer sector after it said profits may be flat this year, having previously forecast a 7 per cent decline. The company reaffirmed its sales targets, but said profit margins could be slightly higher. Its shares lifted 1.9 per cent to $24.80.

The news also helped rival home improvement retailer Lowe's find gains, picking up 0.9 per cent to $20.65.

Brown-Forman added to the optimism on consumer spending after it reported better results than expected. The company, which owns the Jack Daniels and Southern Comfort drink brands, saw sales fall less than analysts had predicted and its shares climbed 2.8 per cent to $46.55.

Banking stocks were sluggish on the growing signs of inflation and economic data showing mortgage applications fell over 7 per cent last week.

Goldman Sachs and Morgan Stanley, which both said on Tuesday that they had been granted permission to repay money from the government's Troubled Asset Relief Program, saw their price targets lifted at JPMorgan, which cited the strength of the companies' fixed income units.

But shares in both companies fell after Lloyd Bankfein, Goldman's chief executive, said the current upturn in global markets did not signal the end of the recession, saying it would be long and protracted. Shares in Goldman lost 0.9 per cent to $147.91 while Morgan Stanley fell 2.4 per cent to $30.25.

Citigroup finally got its long awaited $58bn stock swap under way, the day after the board met Sheila Bair, chairman of the Federal Desposit Insurance Corporation, in an effort to diffuse growing tensions between the two parties. Even though Ms Bair did not address the position of Vikram Pandit, the chief executive whom the regulator is pushing to replace, people close to the matter said the meeting had a conciliatory tone. The shares rose 4.7 per cent to $3.57.

Meanwhile Ameriprise became the latest in a long line of financial companies to announce it would issue shares in order to raise further capital. The financial services company said it might use the money to make acquisitions, although it didn't name specific targets. Its shares fell 9.2 per cent to $25.79.

Elsewhere, shares in real estate broker CB Richard Ellis spiked 15.5 per cent to $9.40 after the company said it will raise $400m by selling bonds and a further $100m by selling shares to Paulson & Co, the hedge fund. The company also said it may sell up to $50m more in equity and use the money to pay off debt.

European stocks were higher early on Wall Street. The FTSE Eurofirst 300 index was up 1.7 per cent at 884.31. Asian equity markets closed mainly up, led by the Nikkei 225 average, which closed 2.1 per cent higher at 9,991.49

Bond yields were generally up, with the yield on the 10-year Treasury note rising 2 basis point to 3.876 per cent although that on the two-year note fell 1bp to 1.294 per cent.

The dollar was weaker against major currencies early in New York, losing 0.7 per cent against the pound to $1.64.

Gold was trading $0.01 higher at $954.79 per troy ounce.

Crude Oil
West Texas Crude continues a strong primary advance, warning of rising inflation. Short retracement back to $65 warns of an accelerating up-trend — normally followed by a sharp correction.

Hole-In-The-Wall Reversal For Crude
Crude Oil
West Texas Crude warns of a secondary correction, with a gap below the rising trendline — sometimes called a hole-in-the-wall reversal. The target of $63 is calculated as 73 - [ 55 - 45 ].

Crude Oil...
Brent Crude broke downwards from its rising trend channel, warning of a secondary correction. Reversal above $70 is unlikely, but would indicate a false signal — and test of the upper trend channel. The primary up-trend remains, with support at $50.

Falling Dollar & Inventories Lift Crude

Crude Oil
Crude oil and commodities prices rallied sharply, but remain in a secondary correction. Brent crude breakout above $67/barrel would indicate that the correction is weakening, while respect of resistance would signal another down-swing. The primary trend remains upward — assisting precious metal prices as inflation fears rise.

US crude oil inventories are declining as consumption edges upwards while imports ease — increasing upward pressure on crude prices.

Hi traders.
My last update Crude 24-11-2009
Cheers!!

Crude Oil...
Crude is headed for a test of primary support at $70. Bearish divergence on 63-day Twiggs Momentum warns of further weakness. Failure of support would offer a target of $60/barrel.
Target calculation: 70 - ( 80 - 70 ) = 60

Oil falls below $74 as global stock markets slump
Oil falls below $74 a barrel as Asian markets follow US stocks down

Alex Kennedy, Associated Press Writer, On Tuesday August 31, 2010, 1:01 am
SINGAPORE (AP) -- Oil prices fell below $74 a barrel Tuesday in Asia, extending losses from the previous session as global stock markets slump after a disappointing U.S. consumer spending number.

Benchmark crude for October delivery was down 71 cents to $73.99 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract lost 47 cents to settle at $74.70 on Monday.

Oil traders have been following closely global stock markets as a barometer of overall investor sentiment. The Dow Jones industrial average dropped 1.4 percent Monday after the Commerce Department said consumer spending in the U.S. rose just 0.4 percent in July.

Most major Asia stock markets also fell Tuesday, led by a 2.9 percent plunge in Japan's Nikkei 225 index.

"Oil continues to spend much of its time trailing the stock market," Ritterbusch and Associates said in a report. "Bearish underlying fundamentals make it extremely easy for oil to drift lower in response to weakening equities."

Investors will be looking to August employment data for clues about the strength of the U.S. economy.

In other Nymex trading in September contracts, heating oil fell 1.02 cent to $2.015 a gallon and gasoline slid 0.31 cent to $1.931 a gallon. Natural gas for October delivery rose 1.3 cents to $3.825 per 1,000 cubic feet.

Brent crude was down 63 cents at $75.97 a barrel on the ICE futures exchange.

Today's Market Focus.......

•   December 10-year T-notes this morning are trading down -13.5 ticks. Dec 10-year T-note prices yesterday moved higher for a second day and closed up +11 ticks at 125-200. Bullish factors included (1) the larger-than-expected decline in the Aug Chicago purchasing managers index which fell to a 9-month low (-5.6 to 56.7 versus expectations of -5.3 to 57.0), (2) the prediction from PIMCO, the manager of the world's biggest bond-fund, that the Fed's action to boost the economy are insufficient, given a "frozen" housing market, slow growth, high unemployment and significant debt, (3) the Aug 10 FOMC meeting minutes in which policy makers said they saw "increased downside risks to the outlook for both growth and inflation" and voiced concern that further shocks would cause "significant slowing in growth," and (4) month-end buying of Treasuries by hedge funds and portfolio managers who need to buy newly issued Treasuries (i.e., Aug refunding o f 10-year T-notes) in order to rebalance their portfolios to match changes in bond indexes with which they are benchmarked. Bearish factors included (1) the larger-than-expected increase in the Jun S&P Case-Shiller composite-20 home price index (+0.3% m/m and +4.2% y/y versus expectations of +0.2% m/m and +3.6% y/y), (2) the larger-than-expected increase in Aug US consumer confidence (+2.5 to 53.5 versus expectations of +0.3 to 50.7), and (3) reduced safe-haven demand for Treasuries after the stock market rallied.

•   The dollar index this morning is weaker and posted a 1-1/2 week low in overnight trade with the dollar/yen -0.16 yen and the euro/dollar +1.24 cents. The dollar index yesterday finished slightly higher. Bullish factors included (1) the Aug Euro-Zone unemployment rate holding at a 12-year high of 10.0% for the fifth consecutive month, its highest level in 12 years, which was euro-negative, (2) the Aug 10 FOMC meeting minutes in which policy makers signaled no plans to resume large-scale asset purchases, and (3) an increase in the safe-haven demand for the dollar after the FDIC reported that US "problem" banks rose to 829 at the end of Q2, up +7% from 775 at the end of Q1. Bearish factors included (1) reduced safe-haven demand for the dollar after the stock market rallied, (2) strength in the yen on speculation the action taken on Monday by the BOJ and the Japanese government to halt the yen's strength and boost economic growth will be insufficient, and (3) eu ro-positive comments from Standard & Poor's that the risk of a renewed recession in Europe is "remote."

•   October crude oil prices this morning are trading up +64 cents a barrel and October gasoline is +1.71 cents per gallon. Oct crude oil prices yesterday tumbled after mid-morning and closed down -$2.78 a barrel. Oct gasoline closed lower by -5.04 cents per gallon. Bearish factors included (1) the larger-than-expected decline in the Aug Chicago purchasing managers index which fell to its lowest level in 9 months and signals the economic recovery and energy demand may be cooling, and (2) the outlook for weekly US crude supplies to increase when the DOE releases its inventory report on Wed. Bullish factors included (1) the weaker dollar, (2) the better-than-expected Aug US consumer confidence, (3) the larger-than-expected increase in home prices in the Jun S&P Case-Shiller home price index, and (4) the prediction from DnB Nor ASA that crude oil prices will be supported at $70 a barrel for another year as the cost of oil production in deeper water rises and fears of a double-dip recession ease. Expectations for Wednesday's weekly DOE inventory report are for crude oil stockpiles to rise +1.3 million bbl, gasoline supplies to fall -375,000 bbl, distillate inventories to gain 1.1 million bbl and the refinery capacity rate to remain unchanged at 87.7%.

Crude Oil...

Crude is headed for a test of primary support at $70. Twiggs Momentum (63-day) oscillating around zero indicates uncertainty. Failure of support would offer a target of $60/barrel*, while recovery above $80 would signal an advance to $90.

Target calculation: 70 - ( 80 - 70 ) = 60

Crude Oil...

Crude rallied off the rising trendline and is headed for another test of $83/barrel. Twiggs Momentum (63-day) oscillating in a narrow band around zero reflects a ranging market, between $70 and $83, that is likely to continue for some time.

Crude Oil...

Crude broke resistance at $78/barrel and is now retracing to test the new support level. Respect would signal a rally to $83. The longer-term picture remains dull, however, with Twiggs Momentum (63-day) oscillating in a narrow band around zero. Expect a ranging market, between $70 and $83, to continue for some time.

Crude Oil...
Crude is consolidating below $80/barrel. Reversal below the new support level at $78/barrel would warn of another correction, while respect would indicate a test of $83. The longer-term picture remains dull with Twiggs Momentum (63-day) oscillating in a narrow band around zero. The ranging market, between $70 and $83, may continue for some time.

Crude Oil...
Crude is consolidating between $78 and $80 per barrel. The narrow rectangle favors continuation of the rally — confirmed if there is a breakout above $80. Reversal below is unlikely, but would warn of another correction. The longer-term picture remains dull with Twiggs Momentum (63-day) oscillating in a narrow band around zero. The ranging market, between $70 and $83, may continue for some time.

Crude Oil...

Crude respected the new support level at $83 per barrel, signaling a test of the 2010 high at $90. Twiggs Momentum (63-day) holding outside its former range confirms the new up-trend.

Tuesday, Oct. 26, 2010
Oil prices hesitate on stronger dollar, economy...

NEW YORK (AP) — Oil prices moved between small losses and small gains on Tuesday, as the dollar got a little stronger and stocks wavered after disappointing earnings reports and lower home prices. Benchmark crude for December delivery rose 15 cents to $82.67 a barrel on the New York Mercantile Exchange.

Gas pump prices drifted lower, with the national average for a gallon of regular at $2.81, according to AAA, Wright Express and Oil Price Information Service. That's almost two cents lower than a week ago and 14 cents higher than a year ago.

Slight gains by the dollar against the euro made crude priced in dollars more expensive for investors holding other currencies.

"It seems that the U.S. dollar continues to be strongly correlated with the oil market, as the recent U.S. dollar weakness has helped oil prices to remain fairly strong above $80 per barrel area, amid these fragile economic conditions," said analysts at Sucden Financial in London.

Stock markets were lower in late-morning trading. A surprise loss at US Steel for the third quarter and concern about weak demand for steel used in cars, appliances and housing drove down steelmaker shares.

The housing market remains anemic in most parts of the country. Home prices fell in 15 of 20 cities measured in the Standard & Poor's/Case-Shiller index for August. Consumer confidence in the economy improved a bit this month from September, but remained weak.

The Energy Department releases its weekly reading on petroleum inventories on Wednesday. In a note to investors, energy consultants MF Global said an expected rise in stockpile levels because of slowing fuel demand is putting downward pressure on prices.

Analysts think crude inventories grew by 1.5 million barrels last week, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Gasoline and distillate stocks--diesel and heating oil--are also expected to rise.

"While the numbers could bring some surprises this week, one week's report will not change a continued bearish supply-usage situation as large supply surpluses will remain intact," energy consultants Ritterbusch and Associates said in a report.

Crude will likely hover above $80 at least until the Federal Reserve says what measures it will take to spur U.S. economic growth at its meeting on Nov. 2 and 3.

"Energy futures could continue to chop sideways through the rest of this week as both the bulls and the bears are apt to exercise caution ahead of next week's Fed meeting," Ritterbusch said.

In other Nymex trading in November contracts, heating oil was unchanged at $2.2550 a gallon and gasoline gained 1.03 cents at $2.0867 a gallon. Natural gas gained 7.8 cents at $3.395 per 1,000 cubic feet.

In London, Brent crude rose 13 cents to $83.67 a barrel on the ICE Futures exchange.

Crude Surge...

The Energy Report for Thursday, October 28, 2010

Crude Surge! Let's forget all that quantitative easing stuff for a moment and focus on some of that old time supply and demand stuff. The Energy Information Agency reported that crude oil supplies hit the highest level ever, in this county, for this time of year. Well at least since the EIA has been tracking monthly data.

After a whopper build of 5.0 million barrels, we see supply hit a hefty 366.2 million barrels which according to Dow Jones newswires is the highest level of supply at this time of year since 1931. To put that in perspective, that was a year when the "Model A" was the car of choice for many Americans and Herbert Hoover was President. Of course this bounty of crude supply did not translate to gasoline supply which according to the EIA fell 4. 4 million barrels last week and probably kept the entire petroleum complex from falling totally apart.

Gas exports were a contributing factor as the strike in France created an increased demand for our supply. Gasoline production increased last week, averaging 9.2 million barrels per day while imports a mere 1.0 million barrels per day. Over the last four weeks, motor gasoline demand has averaged 9.0 million barrels per day, down by 0.8 percent from the same period last year.

Distillates, according the EIA, fell by 1.6 million barrels. If the French had not been siphoning off supply, that number might have been larger. The impact of the strike influenced our demand numbers which averaged 3.9 million barrels per day over the last four weeks, up by 8.7 percent from the same period last year. Distillate fuel demand has averaged 3.9 million barrels per day over the last four weeks, up by 8.7 percent from the same period last year.

The EIA reported that refineries operated at 83.7 percent of their operable capacity last week and over all oil use hit the lowest level since December. Demand is still weak over all and may be restricted somewhat by the price spike caused by the QE2 threat!  With oil trading in a tight trading range for the majority of this year it is time to get my daily buy and sell points. Just call me at 800-935-6487 or email me at [email protected]. And see me every day on the Fox Business Network!



There is a substantial risk of loss in trading futures and options.Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Commodity Technicals: CRUDE OIL...

CRUDE OIL: Continues To Consolidate.


CRUDE OIL: Our outlook on Crude Oil remains that of consolidation with upside bias. It was seen wiping out its Monday and Tuesday gains in today's trading session. However, while that is limited to the 79.90 level more consolidation is likely. Having said that, the commodity requires a break out either way from its range(79.90 and 84.40) to create directional moves.  Resistance lies at the 82.95 level where a break will aim at its Oct 07'2010 high located at 84.40 and then the 87.22 level, its 2010 high. A violation of the latter will resume its long term uptrend towards the 90.00 level, its psycho level and then the 92.00 level. Conversely, further corrective weakness if seen will aim at the 80.29 level with a cut through there turning attention to the 78.01 level. We look for this level to reverse roles and provide support if tested. All in all, Crude Oil continues to consolidate but still retains its overall bullish medium term uptrend.


(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=49566)

Trade Recommendations for Wed. Oct. 27th...

Tomorrow we have mortgage apps, durable orders, new home sales, and crude inventories to spice things up.  API reported a build of 6.4 million barrels today compared to the 1.5 analysts were expecting.  Although API is unreliable for the most part, it just reminds us how easily we can get a surprise report on a weekly basis.  The current strength in the dollar is putting pressure on commodity prices amidst mixed economic data.  Case Schiller was down 0.3% where we had the initial negative reaction, and then consumer confidence rose more than expected which justified the support most of the day.  Most markets had inside days, but the market to keep an eye on is treasuries.  Todays test of lower support coincides with treasuries jumping the gun after a strong 2yr note sale, as I would anticipate higher treasuries into the FOMC announcement, and a quick reversal in the days to come.  As QE2 is around the corner, we have some position squaring ahead of the news next week, which will be the catalyst to continue the current trends.  The question is how much more can we try and lift the dollar, inversely pushing down on the euro over the next few sessions.  We've hit the 76% retracement level on the Euro at 1.38, barring a breach of the previous low at 1.3690, we still have a chance to take out the recent highs.  If we do indeed continue to retrace, then we're looking at an initial target of 1.3555.

1)  Hold Dec. Emini S&P longs, with a 1172 stop.  Exit 1196.

2)  Hold Dec. Crude oil longs, with a 81.27 stop.  Exit 83.70.

3)  Wait for additional comments on the Euro.  If the market doesn't weaken further overnight, we may possibly consider purchasing using a 1.3760 stop.

Crude Oil...

Crude retraced to test medium-term support at $82 per barrel. The flag formation favors continuation of the up-trend. Expect a test of the 2010 high at $90. Twiggs Momentum (21-day) respecting the zero line would confirm the primary up-trend.

Crude Oil...

Nymex WTI Crude is headed for a test of resistance at $87 per barrel. Breakout would offer a target of $107*. A Twiggs Momentum (21-day) trough that respects the zero line would confirm the primary up-trend.

Target calculation: 87 + ( 87 - 67 ) = 107

Wednesday, November 10, 2010...

•   December crude oil prices this morning are trading -27 cents a barrel and December gasoline is -0.15 of a cent per gallon. Crude oil and gasoline prices yesterday erased an early rally after the dollar rebounded and they finished the day mixed: CLZ10 -$0.34, RBZ10 +0.650. Dec crude rallied to a 25-month high and Dec gasoline posted a 1-month high.

Bearish factors included (1) the rally in the dollar index to a 1-week high, and (2) the outlook for US crude oil inventories to increase to their highest level in 18 months when the DOE releases its weekly inventory report on Wed.

Bullish factors included (1) early weakness in the dollar which boosted investment demand for crude oil and its products, and (2) comments from Qatari Oil Minister Abdullah al-Attiyah who said that the world will "have to live with current oil prices," which suggests the erosion of the dollar may prompt OPEC to seek a higher price range for oil. Expectations for Wednesday's weekly inv entory report from the DOE are for crude oil supplies to increase +1.2 million bbl, gasoline inventories to fall -1.0 million bbl, distillate stockpiles to decline -2.0 million bbl and the refinery capacity rate to increase +0.1 to 81.9%.

Thursday, November 11, 2010...

•   December crude oil prices this morning are trading +46 cents a barrel and December gasoline is +0.43 of a cent per gallon. Crude oil surged to a 25-month high in overnight trade after Moody's Investors Service raised China's debt rating, which spurred a rally in most commodities on optimism that demand and the economic recovery will continue. Crude oil and gasoline prices yesterday moved higher after an unexpected drop in crude inventories and then shed some of their advance as the dollar rallied but still finished higher: CLZ10 +$1.09, RBZ10 +5.120. Dec crude rallied to a 25-month high and Dec gasoline posted a 6-month high.
                Bullish factors included (1) the unexpected drop in weekly crude oil inventories (-3.27 million bbl versus expectations of +1.3 million bbl), (2) the larger-than-expected declines in weekly gasoline and distillate inventories (gasoline -1.92 million bbl versus expectations of -1.0 million bbl and distillates -4.97 million bbl versus expectation s of -2.0 million bbl), and (3) the prediction from Goldman Sachs that oil prices will be "substantially" higher by 2012 as the global surplus shrinks and excess production capacity drops.
                Bearish factors included (1) the rally in the dollar index to a 2-week high, (2) reduced demand by China after Oct China crude oil imports fell to 16.1 MMT, or 3.8 million bpd, down -29.6% m/m and -15% y/y to their lowest level in 18 months, and (3) the larger-than-expected increase in the refinery capacity rate, +0.6 to 82.4% versus expectations of +0.1 to 81.9%, which bodes well for further increases in crude products in the weeks ahead.

Friday, November 12, 2010...

•   December crude oil prices this morning are trading sharply lower by -$1.76 a barrel and December gasoline is -3.12 cents per gallon. Most commodity prices tumbled in overnight trade on concern that further Chinese rate hikes will slow economic growth and demand for commodities. Crude oil and gasoline prices yesterday rallied early but shed their gains after the stock market weakened and the dollar strengthened and they finally finished unchanged to slightly lower: CLZ10 +$0.00, RBZ10 -0.005. Dec crude rallied to a 25-month high and Dec gasoline posted a 6-month high.
                Bullish factors included (1) the action by Moody's Investors Service to raise China's debt rating, which spurred a rally in most commodities on optimism that the global economic recovery and strong energy demand will continue, (2) the action by OPEC to raise its 2011 global oil demand forecast by 1.2 million bpd to 86.95 million bpd, up +120,000 bpd from last month's forecast, and (3) the +12% y/y incre ase in Oct China crude processing as Chinese refiners processed a record 37 million metric tons, or 8.8 million barrels a day of crude in Oct, a sign of strong demand.
                Bearish factors included (1) the rally in the dollar index to a 2-week high, (2) the retreat in stock prices, which dampens confidence in the economic outlook and fuel demand, and (3) the drop in compliance by OPEC members on their production quotas in Oct to 51% from 55% in Sep as rising oil prices prompted cartel members to cheat on their quotas and overproduce.

Crude Oil...

Nymex WTI Crude broke through resistance at $86/$87 per barrel, offering a target of $107*. A Twiggs Momentum (21-day) trough above the zero line confirms the strong up-trend.

* Target calculation: 87 + ( 87 - 67 ) = 107

Monday, 15 November 2010...

•December crude oil prices this morning are trading +74 cents a barrel and December gasoline is +2.39 cents per gallon. Crude oil and gasoline prices last Friday moved lower and finished with large losses as the dollar strengthened along with speculation that China may raise interest rates which might crimp fuel demand: CLZ10 -$2.93, RBZ10 -2.580. Dec crude slipped to a 1-week low while Dec gasoline posted a 6-month high but erased its gains and closed lower.
               Bearish factors included (1) the early rally in the dollar index to a 5-week high, which curbs investment demand for commodities, (2) the jump in Oct China consumer prices to a 25-month high, which bolstered speculation that Chinese economic growth and demand for commodities may slow if it increases interest rates further to combat inflation, and (3) the prediction from the IEA that oil production outside of OPEC will be 53.4 million barrels a day in 2011, +250,000 barrels a day more than last month's estimate due to increased production in North America and China.
               A bullish factor for energy prices last Friday was the spike in gasoline to a 6-month high after the Nov US University of Michigan consumer confidence rose more than forecast to a 5-month high.

Tuesday, November 16, 2010...

•   December crude oil prices this morning are trading -$1.05 a barrel and slipped to a 1-1/2 week low and December gasoline is -1.71 cents per gallon. Crude oil and gasoline prices yesterday moved higher early as an improvement in global economic indicators pointed to higher fuel demand but sustained dollar strength knocked prices back and they settled slightly lower: CLZ10 -$0.02, RBZ10 -2.580.

                Bearish factors included (1) the rally in the dollar index to a 1-1/4 month high, which reduces investment demand in commodities, and (2) the larger-than-expected decline in the Nov Empire manufacturing index, which contracted at its worst level in 19 months and signals weakened energy demand.

                Bullish factors included (1) the larger-than-expected increase in Oct US retail sales, which posted its biggest increase since March and boosted speculation that fuel demand will increase, (2) the larger-than-expected expansion of Q3 Japan GDP, which signals a higher rate of energy consump tion than expected, and (3) the rally in equity prices, which boosts confidence in the economic outlook and energy demand.

Wednesday, November 17, 2010...


•   December crude oil prices this morning are trading -71 cents a barrel and December gasoline is -1.21 cents per gallon. Crude oil slipped to a fresh 2-week low in overnight trade on concern China's action to curb inflation will reduce its demand for commodities. Crude oil and gasoline prices yesterday moved sharply lower due to strength in the dollar and on speculation the European debt crisis and steps by China to cool inflation will reduce demand for energy: CLZ10 -$2.52, RBZ10 -3.030. Dec crude fell to a 2-week low and Dec gasoline dropped to a 1-1/2 week low.

                Bearish factors included (1) the rally in the dollar index to a 1-1/2 month high, which reduces investment demand in commodities, (2) the action by South Korea to raise interest rates along with speculation that China will hike its interest rates further to cool inflation, and (3) weaker than expected US economic data on producer prices, industrial production and the NAHB housing market index, which signals fuel demand may be constrained as the economy struggles to expand.

                Bullish factors included (1) the prediction from the AAA that US travel during this year's Thanksgiving holiday weekend may increase +11% from last year, which may lead to increased gasoline demand, (2) the action by the Nigerian rebel group MEND to attack an Exxon Mobile oil installation in Nigeria along with its threats for "further attacks across the Niger delta in coming weeks," which may reduce crude production in Nigeria, Africa's biggest producer, and (3) the outlook for a cut in US energy supplies when the DOE reports weekly crude inventories on Wed. Expectations for Wednesday's weekly inventories from the DOE are for crude oil supplies to drop -700,000 bbl, gasoline stockpiles to decline -1.0 million bbl, distillate inventories to fall -2.0 million bbl and the refinery capacity rate to rise +0.5 to 82.9%.

Thursday, November 18, 2010...


•   December crude oil prices this morning are trading +$1.24 a barrel and December gasoline is +2.96 cents per gallon. Crude oil and gasoline prices yesterday moved lower on speculation that actions by China to slow its economy will reduce oil demand in the world's biggest energy-consuming country although gasoline rallied late to settle little changed: CLZ10 -$1.90, RBZ10 +0.220. Dec crude and Dec gasoline both fell to 2-week lows.

                Bearish factors included (1) concerns that Chinese energy demand will weaken after the statement from China's cabinet that the government may impose price controls on "important daily necessities" and production materials, along with the report from the China Securities Journal that the PBOC may raise interest rates for a second time this year as soon as Nov 19, (2) concerns that US fuel demand will remain constrained after the drop in Oct US housing starts to a 1-1/2 year low signals renewed weakness in the US economy, and (3) the increase in US ethanol production to a record 895,00 barrels a day in the week ended Nov 12, which may curb gasoline demand from refiners.

                Bullish factors included (1) the weaker dollar, (2) the much larger-than-expected declines in weekly crude and gasoline inventories (crude -7.29 million bbl versus expectations of a -700,00 bbl draw and gasoline -2.66 million bbl to a 1-year low of 207.7 million, versus expectations of -1.0 million bbl), and (3) increased energy demand after total US consumption of petroleum products averaged 19.3 million barrels a day in the past 4 weeks, up +3.7% from 18.6 million during the same period a year earlier.

Friday, November 19, 2010...


•   December crude oil prices this morning are trading +2 cents a barrel and December gasoline is -0.08 of a cent per gallon. Crude oil and gasoline prices yesterday moved higher on optimism that a resolution to Ireland's debt crisis is near along with stronger-than-expected US economic data: CLZ10 +$1.41, RBZ10 +7.040.

                Bullish factors included (1) the weaker dollar, (2) a rally in global equity markets after Irish central bank Governor Holohan said he expects his country to ask the EU and the IMF for "tens of billion" of euros to rescue its banks, and (3) the stronger-than-expected increase in the Nov Philadelphia Fed manufacturing index which matched its best level in 5-1/2 years.

                Bearish factors was the action by the OECD to lower its growth forecast for the global economy next year to 4.2% from a May forecast of 4.5%, as it predicts a "soft spot" in 2011 as government stimulus is withdrawn and an investment recovery slows.

Monday, November 22, 2010...


•   January crude oil prices this morning are trading +33 cents barrel and January gasoline is +0.93 of a cent per gallon. Crude oil and gasoline prices last Friday settled lower on concern the action by China to curb bank lending will lead to slower economic growth and reduced demand for energy: CLF11 -$0.44, RBF11 -3.140.
               
                Bearish factors included (1) the action by China to raise its banks' reserve ratio requirements, which may slow its economy and fuel demand, and (2) the drop in global equity markets, which reduces optimism in the economic outlook and energy demand.
               
                Bullish factors include (1) optimism that a bailout of Ireland's banks will prevent the European sovereign-debt crisis from getting worse, which would slow economic growth and fuel demand, and (2) data from the API that said Oct US diesel consumption rose +8.4% y/y to 3.19 million barrels a day and that total diesel consumption during the first 10 months of this year is up +2.9% to 2.97 million barrels a da y, a sign that the US economy is rebounding.

Tuesday, 23 November 2010...


•January crude oil prices this morning are trading -76 cents a barrel and January gasoline is -2.02 cents per gallon. Crude oil and gasoline prices yesterday erased an early rally and moved lower on concern the European sovereign-debt crisis may spread and limit economic growth and energy demand: CLF11 -$0.24, RBF11 -2.94. Jan gasoline slipped to a 3-week low.

                Bearish factors included (1) concerns the European sovereign-debt crisis may worsen and limit economic growth and energy demand after Moody's Investors Service said that loans to Ireland from the EU and the IMF may increase the country's debt burden and pose a "credit negative" for Ireland, and (2) the rebound in the dollar which erased early losses and finished higher.

                Bullish factors include (1) early optimism that a bailout of Ireland's banks will prevent the European sovereign-debt crisis from spreading, and (2) the prediction from Goldman Sachs that recent actions by Chinese policy makers to contain inflation will have a "limited" impact on oil-demand growth and that exceptional strength in Chinese diesel demand could push China's oil demand to new highs in November and December this year. 

Wednesday, November 24, 2010...


•   January crude oil prices this morning are trading +24 cents a barrel and January gasoline is +1.30 cents per gallon. Crude oil and gasoline prices yesterday traded mostly lower as dollar strength offset the positive impact of the upwardly revised Q3 US GDP: CLF11 -$0.49, RBF11 -1.09. Jan gasoline slipped to a 3-week low.

                Bearish factors included (1) concern that the European sovereign-debt crisis may spread beyond Greece and Ireland to Portugal and Spain and constrict European economic growth and energy demand, (2) reduced investment demand for crude after the dollar index surged to a 1-3/4 month high after North and South Korea exchanged artillery fire, and (3) the updated 6-10 day weather forecast from the National Weather Service that calls for above-normal temperatures in the Northeast, which may curb demand for heating fuels.

                Bullish factors include (1) the larger-than-expected upward revision to Q3 US GDP, (2) attacks on Nigerian oil installations by Nigeria's main rebel group that have caused Nigeria's four state-run refineries to produce at only 30% of capacity, according to the Nigerian Department of Petroleum Resources, and (3) the outlook for US crude supplies to decline for a third week when the DOE on Wednesday reports weekly crude inventories. Expectations for Wednesday's weekly inventory report from the DOE are for crude oil supplies to fall -2.0 million bbl, gasoline stockpiles to drop -1.25 million bbl, distillate inventories to slip -1.0 million bbl and the refinery capacity rate to increase +0.4 to 84.4%.

Friday, November 26, 2010...


•   January crude oil prices this morning are trading down -65 cents a barrel and January gasoline is -0.74 of a cent per gallon. Crude oil and gasoline prices Wednesday moved higher throughout the day as an improvement in jobless claims and consumer confidence pumped up the stock market and fueled expectations for increased energy demand: CLF11 +$2.61, RBF11 +7.50.

                Bullish factors included (1) the weaker dollar, (2) the drop in weekly US initial unemployment claims to a 2-1/4 year low and the increase in the Nov University of Michigan consumer confidence to a 5-month high, which bolsters optimism the economic rebound will accelerate, and (3) comments from OPEC's Secretary-General who said oil prices above $100 a barrel would not necessarily derail the global recovery and that OPEC would only boost supplies if there was a physical shortage.

                Bearish factors include (1) the unexpected increases in weekly crude oil and gasoline inventories (crude +1.03 million bbl versus e xpectations of -2.0 million bbl and gasoline +1.91 million bbl versus expectations of -1.25 million bbl), and (2) the unexpected declines in Oct durable goods orders and Oct new home sales, which signals an uneven recovery that may limit energy demand.

Monday, November 29, 2010...


•   January crude oil prices this morning are up 77 cents a barrel and January gasoline is up 1.96 cents per gallon on cold weather in Europe, today's 3-year high in Eurozone economic confidence, and continued optimism about stronger economic data in the US. Crude oil and gasoline prices last Friday moved lower in quiet trade due to a stronger dollar and concern that global economic growth will slow as the European credit crisis spreads: CLF11 -$0.10, RBF11 -0.34. Jan crude posted a 1-1/2 week high in overnight trade but erased its gains and finished lower.

                Bearish factors included (1) the rally in the dollar index to a 2-month high, which reduces the investment demand for commodities, (2) concern the European sovereign-debt crisis will spread and slow global economic growth and energy demand, and (3) concerns that China will continue to limit loan growth which may slow its economy and energy demand after the Shanghai Securities News reported that the Chinese government m ay cut the target for new lending next year.

Tuesday, November 30, 2010...

•   January crude oil prices this morning are trading -29 cents a barrel and January gasoline is -1.24 cents per gallon. Crude oil and gasoline prices yesterday moved higher on optimism that an increase in holiday sales signals the economy and energy demand may strengthen: CLF11 +$1.97, RBF11 +6.34. Jan crude and Jan gasoline climbed to 2-week highs.

                Bullish factors included (1) data from the National Retail Federation that showed US shoppers over the Thanksgiving weekend increased purchases by +6.4% over the 2009 period, a sign of a stronger economy, and (2) the prediction from the US Climate Prediction Center that temperatures in the eastern half of the US will be below normal from Dec 6 to Dec 12, which may prompt stronger demand for heating fuels.

                Bearish factors included (1) the rally in the dollar index to a 2-1/4 month high, which reduces the investment demand for commodities, and (2) weakness in f=global equity markets which reduces confidence in the global econo mic outlook.

Wednesday, December 1, 2010...

•   January crude oil prices this morning are trading +$1.30 a barrel and January gasoline is +5.22 cents per gallon. Crude oil and gasoline prices yesterday fell as the dollar gained on concern the European sovereign-debt crisis is spreading: CLF11 -$1.62, RBF11 -3.76. Jan gasoline rose to a 2-week high but erased its gains and finished lower.

                Bearish factors included (1) the rally in the dollar index to a 2-1/4 month high, which reduces the investment demand for commodities, (2) concern that the European debt crisis will spread and undercut the global economy and energy demand, and (3) concern that the US housing crisis may linger and limit fuel demand after the Sep S&P/CaseShiller composite-20 home price index fell for a third month.

                Bullish factors included (1) the larger-than-expected increase in Nov US consumer confidence to a 5-month high along with the unexpected increase in the Nov Chicago purchasing managers index to a 7-month high, which indicates the econ omy may strengthen and improve fuel demand, and (2) the outlook for a fall in weekly crude supplies when the DOE releases weekly crude oil inventory figures on Wed. Expectations for Wednesday's weekly crude inventories from the DOE are for crude oil supplies to fall -1.1 million bbl, gasoline stockpiles to gain +625,000 bbl, distillate inventories to drop -1.1 million bbl and the refinery capacity rate to rise +0.4 to 85.9%.

Thursday, December 2, 2010...

•   January crude oil prices this morning are trading down -11 cents a barrel and January gasoline is up +1.08 cents per gallon. Crude oil and gasoline prices yesterday rallied sharply on a weaker dollar, strong Chinese manufacturing activity and reduced European debt concerns: CLF11 +$2.64, RBF11 +9.71. Jan crude climbed to a 2-week high and Jan gasoline surged to a 6-3/4 month high.

                Bullish factors included (1) a weaker dollar, (2) speculation the ECB will act to prevent further contagion of the European sovereign-debt crisis when it meets Thursday, (3) the Nov China PMI manufacturing index which rose more than expected to its fastest pace in 7 months, and (4) the Nov ADP employment change which showed the biggest monthly increase in jobs in 3 years and boosts confidence in the economy and energy demand.

                Bearish factors included (1) the unexpected increase in weekly crude oil inventories (+1.07 million bbl versus expectations of -1.1 million bbl), and (2) snowstorms an d adverse weather throughout Europe that has disrupted air travel and limited auto travel, which may reduce fuel demand, and (3) the official end of the third-most active Atlantic hurricane season in history, according to the National Hurricane Center, which left the US unscathed and failed to disrupt crude or refinery production in the US Gulf coast.

Friday, December 3, 2010...


•   January crude oil prices this morning are trading up +9 cents a barrel and January gasoline is -0.49 of a cent per gallon. Crude oil and gasoline prices fluctuated on either side of unchanged yesterday until the dollar sold-off after mid-morning which prompted a rally in energy prices into the close: CLF11 +$1.25, RBF11 +4.89. Jan crude posted a 2-1/2 week high and Jan gasoline climbed to a 6-3/4 month high.

                Bullish factors included (1) a weaker dollar, (2) the action by the ECB to delay the withdrawal of its stimulus measures, and (3) strength in US retail sales after Retail Metrics reported that Nov US comparable store sales rose more than expected, which indicates strength in the economy that may lead to increased fuel demand.

                Bearish factors included (1) the prediction from tanker-tracker Oil Movements that OPEC will increase crude shipments by +0.4% to 23.56 million barrels a day in the four weeks to Dec 18, and (2) the larger-than-expected increase in weekly US initial unemployment claims, which questions the sustainability of the economic recovery and energy demand.

Monday, December 6, 2010...

•   January crude oil prices this morning are trading -18 cents a barrel and January gasoline is +0.14 of a cent per gallon. Crude oil posted a 26-month high in overnight trade before falling back. Crude oil and gasoline prices last Friday gyrated on both sides of unchanged early but a weaker dollar trumped a weak payrolls report and prices finished mixed: CLF11 +$1.19, RBF11 -0.32. Jan crude climbed to a 25-month high.

               Bullish factors included (1) the slide in the dollar index to a 1-1/2 week low, which boost investment demand for commodities, (2) the stronger-than-expected Nov ISM non-manufacturing index which expanded at its fastest pace in 6 months and indicates increased energy consumption, and (3) the prediction from JPMorgan Chase that OPEC is unlikely to increase crude oil production next year unless prices surge through $100 a barrel and that crude prices will advance to $120 a barrel by 2012 as consumption grows in emerging economies.

               The main bearish factor last Friday was the smaller-than-expected increase in Nov nonfarm payrolls along with the unexpected increase in the US Nov unemployment rate to a 7-month high of 9.8%, which questions the sustainability of the economic recovery and energy demand.

Tuesday, December 7, 2010...

.   January crude oil prices this morning are trading +$1.02 a barrel and January gasoline is +1.98 cents per gallon. Jan crude posted a 26-month high and Jan gasoline climbed to a fresh 7-month high in overnight trade as most commodity prices soared after President Obama agreed to extend tax cuts. Crude oil and gasoline prices yesterday erased an early rally and settled mixed as the dollar strengthened: CLF11 +$0.19, RBF11 -1.04. Jan crude rallied to a 26-month high and Jan gasoline posted a 7-month high but shed its gains and settled lower.

                Bullish factors included (1) comments from Fed Chairman Bernanke who said a return to recession "doesn't seem likely" because sectors of the economy such as housing can't become more depressed, (2) a possible increase in heating fuel demand after the National Weather Service Climate Prediction Center said temperatures in the US Midwest and Northeast will be lower than normal from Dec 8-16, and (3) the action by Nigerian rebel forces to damage a crude pipeline in Nigeria which may reduce crude oil output from Africa's biggest producer.

                Bearish factors included (1) strength in the dollar which curtails investment demand for commodities, and (2) the action by Moody's Investors Service to cut Hungary's debt to the lowest investment grade and indicate it may cut the rating to junk, which indicates a possible worsening of the European debt crisis that may limit economic growth and energy demand.

Wednesday, December 8, 2010...

•   January crude oil prices this morning are trading down -75 cents a barrel and January gasoline is -2.34 cents per gallon. Crude oil and gasoline prices yesterday rallied early after President Obama agreed to extend tax cuts but gave up their gains and closed lower as the dollar strengthened: CLF11 -$0.69, RBF11 -1.87. Jan crude rallied to a 26-month high but erased its gains and closed lower and Jan gasoline climbed to a 7-month high but shed its gains and finished lower.

                Bearish factors included (1) the rebound in the dollar which shook off early weakness and finished higher, (2) weakness in gasoline after Irving Oil and Valero Energy returned refinery units to service after scheduled maintenance, which will increase gasoline output, and (3) long liquidation in crude oil after prices jumped over $10 a barrel in the past 2-weeks (+13%) to a 26-month high.

                Bullish factors included (1) the action by President Obama to agree to extend the Bush-era tax cuts for 2 years, which may lift the economy and energy demand, (2) the prediction from the National Weather Service's Climate Prediction Center that temperatures from the US Midwest to the Northeast will be lower than normal from Dec 12 through Dec 20, and (3) the outlook for a decrease in US crude supplies when the DOE releases its weekly crude inventory data Wednesday. Expectations for Wednesday's weekly inventory report from the DOE are for crude oil supplies to fall -1.5 million bbl, gasoline stockpiles to increase +750,000 bbl, distillate inventories to drop -900,000 bbl and the refinery capacity rate to rise +1.0 to 83.6%.

Thursday, December 9, 2010...

•   January crude oil prices this morning are trading up +18 cents a barrel and January gasoline is +0.87 of a cent per gallon. Crude oil and gasoline prices yesterday fell after the dollar strengthened and gasoline supplies unexpectedly increased: CLF11 -$0.41, RBF11 -1.84.

                Bearish factors included (1) strength in the dollar, (2) the unexpected increase in weekly gasoline and distillate supplies (gasoline +3.81 million bbl versus expectations of a -300,000 bbl draw and distillates +2.15 million bbl versus expectations of -900,000 bbl), (3) the +6.1% increase in US ethanol production to a record 939,000 barrels a day in the week ended Dec 3, which may cut refinery demand for gasoline, and (4) a possible interest rate hike by China which could slow its energy demand after it said it will release its inflation data 2 days earlier than planned, which fuels speculation of an imminent interest rate hike.

                Bullish factors included (1) the larger-than-expected draw down of weekl y crude inventories (-3.82 million bbl versus expectations of -1.5 million bbl), (2) the action by the US Energy Department to bolster its crude oil price estimate for this year to $78.98 from a Nov estimate of $78.80 and to raise its 2011 crude price estimate to $86.08 a barrel from last month's forecast of $85.17 as it hiked its US oil consumption forecast for 2011 to 19.24 million bpd, up +80,000 bpd from last month's forecast, and (3) the prediction from Colorado State University of an above-average hurricane season for the Atlantic in 2011 with 17 named storms, above the average of 11 named storms which increase the chances of service disruptions and damage to Gulf Coast oil installations and refiners.

Friday, December 10, 2010...

•   January crude oil prices this morning are trading +55 cents a barrel and January gasoline is +0.47 of a cent per gallon. Crude oil and gasoline prices fluctuated on either side of unchanged and settled slightly higher as optimism the economy was improving offset the negative effects of a stronger dollar: CLF11 +$0.09, RBF11 +3.58.

                Bullish factors included (1) the larger-than-expected decline in weekly initial unemployment claims, which indicates improvement in the labor market, (2) the upward revision to Q3 Japan GDP along with the biggest increase in Australian payrolls in 10 months, which signals strength in the global economy that may boost energy demand, and (3) strength in gasoline after Hovensa LLC shut its 150,000 barrel-a-day fluid catalytic cracker at its St. Croix refinery for repairs, which may reduce gasoline supplies available to the US East Coast.

                Bearish factors included (1) a stronger dollar, and (2) concern that the European credit crisis may worsen after Fitch Ratings cut Ireland's credit rating 3 levels, citing "the recent intensification of the financial crisis."

Monday, December 13, 2010...

•   January crude oil prices this morning are trading up +$1.26 a barrel and January gasoline is +3.82 cents per gallon. Crude oil and gasoline prices slipped last Friday as the dollar strengthened: CLF11 -$0.58, RBF11 -3.12.

                Bearish factors included (1) a rally in the dollar, which reduces investment demand in commodities, (2) the action by the PBOC to raise banks' reserve requirements for the third time in the last five weeks, which may slow China's economy and energy demand, and (3) the prediction from tanker-tracker Oil Movements that OPEC will boost its crude shipments by 2.6% to 23.76 million barrels a day in the four weeks to Dec 25.

                Bullish factors included (1) the +26% m/m increase in Nov China crude imports to 20.3 MMT as refiners ramped up crude processing rates to ease a diesel shortage, and (2) the action by the IEA to raise its 2011 global crude oil demand forecast for the third straight month to 88.8 million barrels a day, up +260,000 barrels from their pre vious forecast and that global oil demand in Q3 of this year grew 3.3 million barrels a day y/y.

Tuesday, December 14, 2010...

•   January crude oil prices this morning are trading +4 cents a barrel and January gasoline is -0.67 of a cent per gallon. Crude oil and gasoline prices moved higher yesterday as the dollar weakened and after China's refiners boosted crude processing to a record in November: CLF11 +$0.82, RBF11 +0.91.

                Bullish factors included (1) the weaker dollar, which boosts investment demand in commodities, (2) the action by China's refineries to process a record 36.65 MMT of crude oil in Nov, or 8.96 million barrels a day, a sign of strong demand, and (3) the statement from Goldman Sachs that global oil demand has exceeded supply by more than 900,000 barrels a day on a seasonally adjusted basis since May, along with their prediction that the world oil market will remain in deficit in the first half of next year with prices averaging $100 a barrel in 2011 an $110 a barrel in 2012.

                Bearish factors included (1) the prediction from Merrill Lynch that Saudi Arabia will lead OPEC to incre ase crude production "early next year" to avoid a surge in prices that could put the global economic recovery at risk, and (2) the quarterly report from Germany's Bundesbank that said 2011 German GDP growth may weaken to 2.0% from 3.6% this year as the German economy shows a "considerable slowdown" in Q1 of 2011, which may lead to reduced energy demand.

Wednesday, December 15, 2010...

•   January crude oil prices this morning are trading down -76 cents a barrel and January gasoline is -1.14 cents per gallon. Crude oil and gasoline prices yesterday settled lower as the dollar rebounded from a 3-week low and on expectations for an increase in weekly gasoline inventories: CLF11 -$0.33, RBF11 -2.20.

                Bearish factors included (1) the rebound in the dollar index which recovered from a 3-week low to settle little changed, which reduces investment demand in commodities, and (2) weakness in gasoline prices on the outlook for an increase in weekly gasoline supplies when the DOE reports weekly gasoline inventories on Wed.

                Bullish factors included (1) a possible increase in heating fuel demand after the National Weather Service's Climate Prediction Center predicted that temperatures in the eastern half of the US will be below normal from Dec 19 to Dec 27, (2) the prediction from Goldman Sachs that a drop in OPEC spare production capacity will signal a "second stage" in the oil market's recovery that will lift crude prices above $100 a barrel by the second half of 2011, and (3) the prediction from Banque Saudi Fransi that "in order for Saudi Arabia to push other OPEC members to increase oil production, prices have to remain at or above $100 a barrel for a long period and not only for some weeks or a month." Expectations for Wednesday's DOE weekly inventory report are for crude oil stockpiles to drop -2.5 million bbl, gasoline inventories to increase +2.0 million bbl, distillate supplies to remain unchanged, and the refinery capacity rate to remain unchanged at 87.5%.

Thursday, December 16, 2010...

•   January crude oil prices this morning are trading down -41 cents a barrel and January gasoline is -0.23 of a cent per gallon. Crude oil and gasoline prices yesterday recovered from early weakness and settled higher after weekly crude inventories dropped by the most in 8 years: CLF11 +$0.34, RBF11 +1.28. Jan crude closed higher after posting a 1-week low and Jan gasoline finished higher after rebounding from a 2-week low.

                Bullish factors included (1) stronger-than-expected US economic data after the Dec Empire manufacturing index expanded more than expected while Nov industrial production rose more than forecast and Nov capacity utilization climbed to a 25-month high, (2) the plunge in weekly crude oil inventories by the most in 8 years (-9.85 million bbl versus expectations of -2.5 million bbl), (3) the smaller-than-expected increase in weekly gasoline inventories (+809,000 bbl versus expectations of +2.0 million bbl), and (4) an increase in US gasoline demand after t he Energy Department reported that US gasoline demand as measured by what refiners and blenders provide to wholesalers in the week ended Dec 10 rose 1.9% to a 7-week high of 9.35 million barrels a day.

                Bearish factors included (1) the stronger dollar, and (2) the unexpected increase in weekly distillate inventories, which are now +16% above their 5-year average for the period (+1.09 million bbl versus expectations of no change).

Friday, December 17, 2010...

•   January crude oil prices this morning are trading -18 cents a barrel and January gasoline is +0.37 of a cent per gallon. Crude oil and gasoline prices yesterday traded on the defensive most of the day due to strength in the dollar: CLF11 -$0.92, RBF11 -0.49.

                Bearish factors included (1) stronger-than-expected US economic data that boosted the dollar, and (2) the weaker than expected Dec Euro-Zone PMI composite which signals a decrease in energy consumption.

                Bullish factors included (1) the unexpected decline in US weekly unemployment claims along with the unexpected increase in the Dec Philadelphia Fed manufacturing index to its best level in 5-1/2 years, which signals an economic recovery that has legs and may boost fuel demand, and (2) the action by Barclays Plc to hike its crude oil forecast for next year to $91 a barrel from $85, saying that OPEC won't consider increasing oil production until crude prices reach $100 a barrel, rather than raising crude output befor e prices rise that far.

Monday, December 20, 2010...

•   January crude oil prices this morning are trading up +67 cents a barrel and January gasoline is +2.50 cents per gallon. Crude oil and gasoline prices last Friday closed slightly higher as an increase in US leading economic indicators offset a rally in the dollar: CLF11 +$0.32, RBF11 +1.35.

                Bullish factors included (1) the +1.1% m/m increase in Nov US leading indicators, the biggest increase in 8 months and a sign that fuel demand may improve as the economic recovery continues into next year, (2) the unexpected increase in the Dec German IFO business confidence to a record high, which improves the outlook for the European economy and energy demand, and (3) the report from the API that said Nov US fuel consumption jumped +6.5% y/y to 20 million barrels a day and that total US fuel consumption from Jan-Nov is up +2.4% y/y to 19.2 million barrels a day.

                Bearish factors included (1) the surge in the dollar index to a 2-week high, which reduces investment demand for commodi ties, and (2) the prediction from tanker-tracker Oil Movements that OPEC crude oil shipments will increase +0.3% to 23.46 million barrels a day in the four weeks to Jan 1.

Tuesday, December 21, 2010...

•   February crude oil prices this morning are trading up +3 cents a barrel and February gasoline is +0.54 of a cent per gallon. Crude oil and gasoline prices yesterday finished stronger as optimism over US growth prospects offset a stronger dollar: CLG11 +$0.77, RBG11 +4.95.

                Bullish factors included (1) speculation that fuel demand will improve heading into the Christmas holidays, (2) data from the US Department of Transportation that showed US drivers increased their mileage driven by +0.6% in the first 10 months of this year compared with last year, which signals increased gasoline demand, (3) speculation that the abnormally cold weather in Europe and the US will increase demand for heating fuels, and (4) comments from St. Louis Fed President Bullard who said that recent US economic data "bodes well" for 2011, which could also improve US energy demand.

                Bearish factors included (1) the rally in the dollar index to a 2-week high, which reduces investment demand for commodities, and (2) speculation that the ongoing European debt crisis will reduce economic growth and energy demand.

Wednesday, December 22, 2010...

•   February crude oil prices this morning are trading up +36 cents a barrel and February gasoline is +1.59 cents per gallon. Crude oil and gasoline prices yesterday moved higher on optimism that the global economic recovery can be sustained: CLG11 +$0.45, RBG11 +1.96. Feb crude posted a 1-week high and nearest-futures (Jan) gasoline jumped to a 7-1/2 month high.

                Bullish factors included (1) the weaker dollar, which encourages demand for commodities, (2) the +15% y/y increase in Nov China oil-product consumption with an overall +11% increase in overall Chinese oil product demand in the first 11 months of this year, and (3) the outlook for weekly US crude inventories to decline for a third week when the DOE releases its inventory figures on Wed.

                Bearish factors included (1) adverse weather in Europe which has forced airport closures and flight cancellations for a fourth day, which signals reduced fuel demand, and (2) the statement from Moody's Investors Service that it ma y cut Portugal's bond rating "by a notch or two" because of concerns over "sluggish" economic growth, which signals the European debt crisis may worsen and reduce economic growth and energy demand. Expectations for Wednesday's weekly inventory report from the DOE are for crude oil supplies to fall -3.5 million bbl, gasoline inventories to increase +1.5 million bbl, distillate stockpiles to decline -500,000 bbl and the refinery capacity rate to remain unchanged at 88.0%.

Thursday, December 23, 2010...

•   February crude oil prices this morning are trading up +2 cents a barrel and February gasoline is -0.33 of a cent per gallon. Crude oil and gasoline prices yesterday moved higher after weekly US crude inventories slipped to a 10-month low: CLG11 +$0.66, RBG11 +2.53. Feb crude soared to a 2-year high and nearest-futures (Jan) gasoline climbed to a 7-1/2 month high.

                Bullish factors included (1) the larger-than-expected drawdown of weekly crude inventories to their lowest level since Feb (-5.33 million bbl to 340.7 million bbl versus expectations of -3.5 million bbl), and (2) the upward revision to Q3 US GDP, which indicates stronger fuel consumption.

                Bearish factors included (1) the larger-than-expected increase in weekly gasoline inventories (+2.40 million bbl versus expectations of +1.5 million bbl), (2) reduced demand after US gasoline demand fell -1.5% w/w to 9.21 million bpd, and (3) the action by China to increase its domestic gasoline and diesel prices for the th ird time this year, which may reduce its fuel demand.

Gas prices top $3 a gallon...

On Thursday December 23, 2010, 11:29 am EST
Gas prices crossed the milestone $3 mark Thursday for the first time since Oct. 17, 2008, as the national average compiled by motorist group AAA reached $3.013 a gallon.

Prices have risen more than 4% from $2.872 a month ago and are nearly 16% higher than the $2.585 average a year ago, according to the AAA figures.

The cost of gasoline has been climbing steadily since bottoming out at $1.616 in December 2008. However, the average price is down $1.101 -- or 26.7% -- from the record high of $4.114 reported on July 17, 2008.

"On a national average, we've never had Christmas Day with gasoline at three dollars or higher," said Tom Kloza, chief oil analyst with Oil Price Information Service, an energy trade publication based in Wall, N.J.

The rise in gas prices mirrors a rise in crude oil, which passed the $90 a barrel mark on Wednesday. Oil prices haven't settled above $90 a barrel since October of 2008.

The spike in crude has been helped along by a weak dollar, and according to some critics, the Fed's quantitative easing program.

But higher gas prices aren't going to keep motorists off the road this holiday season, according to Troy Green, a national spokesman for AAA.

He said AAA is sticking with its projection that 85.7 million people will travel by car to their holiday destinations, a 3.2% increase over last year.

Prices in Hawaii are the highest in the nation, with a gallon of gas costing $3.636. But this state is an outlier.

Californians pay the most in the lower 48, shelling out $3.275. New York follows, with an average gallon costing $3.262.

Twenty-six states and the District of Columbia are already paying more than $3 a gallon.

But some states pay far less. Residents of Colorado enjoy the lowest price at $2.755 per gallon.

On its Web site, AAA says the information is gathered by Oil Price Information Service and based on up to 100,000 stations nationwide.

According to a separate report issued by the Oil Price Information Service, drivers are estimated to spend $305 on gasoline in December.

Monday, December 27, 2010...

•   February crude oil prices this morning are trading down -40 cents a barrel and February gasoline is -1.14 cents per gallon. Crude oil and gasoline prices last Thursday moved higher for the fourth consecutive session on a weaker dollar and an increase in US consumer confidence: CLG11 +$1.03, RBG11 +1.93. Feb crude posted a 26-month high and nearest-futures (Jan) gasoline climbed to a 7-1/2 month high.

                Bullish factors included (1) the weaker dollar, which boosts investment demand for commodities, and (2) strong US economic data that showed Nov US consumer spending climbing for the fifth straight month and Dec US University of Michigan consumer confidence rising to a 6-month high.

                Bearish factors included (1) concern the ongoing European sovereign-debt crisis will worsen and limit economic growth and energy demand after Fitch Ratings cut Hungary's long-term credit rating, and (2) the weaker than expected Nov US new home sales, which signals the US housing crisis may lin ger and curb economic growth and fuel demand.

Tuesday, December 28, 2010...

•   February crude oil prices this morning are trading up +34 cents a barrel and February gasoline is +0.22 of a cent per gallon. Crude oil and gasoline prices yesterday finished lower on speculation the action by China to raise interest rates for the second time in 2 months will slow its economic growth and energy demand: CLG11 -$0.51, RBG11 -1.94. Feb crude posted a 26-month high but shed its gains and finished lower.

                Bearish factors included (1) the action by China to raise interest rates, which may slow its economy and fuel consumption, and (2) the statement from Iraq's Oil Minister who said that Iraqi oil production will exceed 2.6 million bpd for the first time in 20 years, which should boost global oil supplies.

                Bullish factors included (1) the weaker dollar, which boosts investment demand for commodities, and (2) cold weather and snowstorms along the east coast of the US, which should increase demand for heating fuels.

Wednesday, December 29, 2010...

•   February crude oil prices this morning are trading down -68 cents a barrel and February gasoline is -1.01 cents per gallon. Crude oil and gasoline prices yesterday fluctuated on either side of unchanged and finally settled mixed as strength in retail sales offset a drop in consumer confidence: CLG11 +$0.49, RBG11 -0.90.

                Bullish factors included (1) the report from MasterCard Advisors' SpendingPulse, which measures retail sales by all payment forms, that showed US retailers' 2010 holiday sales jumped 5.5% y/y, the strongest pace of sales in 5 years and is bullish for US fuel demand, and (2) the larger-than-expected increase in the Dec Richmond Fed manufacturing index to its best level in 7 months, which signals strength in the US economy that may lead to increased energy demand.

                Bearish factors included (1) the rebound in the dollar which fell to a 1-week low but recovered to close higher, and (2) the unexpected decline in Dec US consumer confidence, which questions th e sustainability of the economic recovery and energy demand. Expectations for Thursday's weekly DOE inventory report (delayed 1 day because of the Christmas holiday) are for crude oil supplies to fall -3.0 million bbl, gasoline stockpiles to increase +1.83 million bbl, distillate inventories to fall -875,000 bbl and the refinery capacity rate to remain unchanged at 87.7%.

Thursday, December 30, 2010...

•   February crude oil prices this morning are trading down -40 cents a barrel and February gasoline is +0.85 of a cent per gallon. Crude oil and gasoline prices yesterday moved lower on speculation the US economic recovery isn't fast enough to increase energy demand: CLG11 -$0.37, RBG11 -0.93.

                Bearish factors included (1) concern that weakened US consumer confidence and still high unemployment will prevent energy demand from increasing, and (2) speculation that US crude supplies will increase once the new year begins next week as refiners delay crude deliveries until 2011 in order to reduce tax bills.

                Bullish factors included (1) the weaker dollar which encourages investment demand in commodities, and (2) the report from MasterCard that said US gasoline demand rose +4.6% last week to 9.613 million barrels a day from 9.19 million barrels a day the prior week. Expectations for Thursday's weekly DOE inventory report (delayed 1 day because of the Christmas holiday) are for crude oil supplies to fall -2.85 million bbl, gasoline stockpiles to increase +1.5 million bbl, distillate inventories to fall -625,000 bbl and the refinery capacity rate to rise +0.1 to 87.8%.

Friday, December 31, 2010...

•   February crude oil prices this morning are trading down -28 cents a barrel and February gasoline is -0.08 of a cent per gallon. Crude oil and gasoline prices yesterday fell to 1-week lows after DOE weekly crude supplies fell less than expected: CLG11 -$1.28, RBG11 -0.37.

                Bearish factors included (1) the smaller-than-expected decline in weekly crude oil inventories (-1.26 million bbl versus expectations of -2.85 million bbl), and (2) the unexpected increase in weekly distillate inventories (+243,000 bbl versus expectations of -625,000 bbl).

                Bullish factors included (1) the slump in the dollar index to a 2-week low which boosts investment demand in commodities, (2) the unexpected decline in weekly gasoline inventories (-2.32 million bbl versus expectations of +1.5 million bbl, and (3) strong US economic data after weekly initial unemployment claims fell to 2-1/3 year low and the Dec Chicago purchasing managers index expanded at its fastest level in 22 years, which signa ls strength in the economy and energy consumption.

Monday, January 3, 2011...

•   February crude oil prices this morning are trading +45 cents a barrel and February gasoline is 1.77 cents per gallon on this morning's overseas stock rallies and on expectations for strong US economic data this week. Crude oil and gasoline prices last Friday rebounded from early losses and closed higher as the dollar slumped: CLG11 +$1.54, RBG11 +4.55. Both Feb crude and Feb gasoline posted 26-month highs.

                Bullish factors included (1) the slump in the dollar index to a 5-week low which boosts investment demand in commodities, and (2) a halt to oil tanker travel in the Houston ship channel for a second day due to fog, which may cause supply disruptions to Gulf refiners and lead to gasoline shortages.

                Bearish factors included (1) year-end liquidation by commodity funds, and (2) increased supplies with OPEC crude production climbing +150,000 barrels in Dec to 29.185 million barrels a day, a 4-month high and about 2 million barrels above OPEC quotas.

Tuesday, January 4, 2011...

•   February crude oil prices this morning are trading +29 cents a barrel and February gasoline is up 1.34 cents per gallon on support from the slightly lower dollar and on general economic optimism. Crude oil and gasoline on Monday closed mixed: CLG11 +$0.17, RBG11 -.030. Both Feb crude and Feb gasoline posted 26-month highs.

                Bullish factors centered on (1) continued strong US and global economic data, (2) bad weather in the Gulf of Mexico that caused Pemex to close its export terminals in the Gulf, and (3) the forecasts for cold weather in the U.S. for the next two weeks, which is bullish for heating oil.

                Bearish factors for oil prices was the mild rally in the dollar index.

Wednesday, January 5, 2011...

•   February crude oil prices this morning are trading down -86 cents a barrel and February gasoline is -3.30 cents per gallon. Crude oil and gasoline prices on Tuesday sold off sharply: CLG11 -2.17, RBG11 -1.33.

                Bearish factors included the mild rally in the dollar and heavy long liquidation pressure after the sharp rally seen in December. The market is also expecting a rise in petroleum inventories in January after the drawdown seen in December in an effort to minimize taxes. The market consensus for today's weekly DOE report is for a 2 million decline in crude oil inventories, a 500,00 bbl rise in gasoline inventories, a 750,000 rise in distillate inventories, and an unchanged refinery operating rate of 87.8% of capacity.

Friday, January 7, 2011...

•   February crude oil prices this morning are trading up +65 cents a barrel and February gasoline is +0.33 of a cent per gallon. Crude oil and gasoline prices on Thursday sold off sharply and finished with large losses: CLG11 -1.92, RBG11 -0.21. Feb crude slid to a 2-week low and Feb gasoline rallied to a 27-month high but relinquished its gains and settled lower.

                Bearish factors included (1) the rally in the dollar index to a 1-month high, which reduces investment demand in commodities, and (2) concern that a slower recovery in some European nations will prolong the region's debt crisis and reduce its energy demand.

                Bullish factors included (2) early strength in gasoline which climbed to a 27-month high on optimism about the economic recovery and the potential for increased fuel demand, and (2) comments from the Kuwaiti Oil Minister who said a price of $75 a barrel for crude oil "is over now" and a higher price range of $80 to $100 a barrel is acceptable.

Monday, January 10, 2011...

•   February crude oil prices this morning are trading up +69 cents a barrel and February gasoline is +0.96 of a cent per gallon. Crude prices rallied in overnight trading after an Alaskan pipeline carrying about 15% of US crude output was shut on Saturday following a leak. Crude oil and gasoline prices last Friday erased early rallies and finished lower: CLG11 -0.35, RBG11 -2.99. Feb crude fell to a 3-week low.

                Bearish factors included (1) the rally in the dollar index to a 1-1/4 month high, which discourages investment demand in commodities, (2) the smaller-than-expected increase in Dec US nonfarm payrolls, which signals a struggling labor market that may crimp fuel demand, and (3) the slide in stock prices which decreases confidence in the economic outlook and energy demand.

                Bullish factors included (1) the larger-than-expected drop in the Dec US unemployment rate to a 19-month low of 9.4%, and (2) the action by Canadian Natural Resources to shut its 100,000 bpd Hori zon oil-sands project because of a fire, which may curtail crude supplies to the US.

Tuesday, January 11, 2011...

•   February crude oil prices this morning are trading up +43 cents a barrel and February gasoline is -0.55 of a cent per gallon. Crude oil and gasoline prices yesterday finished moderately higher: CLG11 +1.22, RBG11 +4.12.

                Bullish factors included (1) a reversal in the dollar after the dollar index closed lower after it had climbed to a 1-1/4 month high, (2) the closure of the Trans Alaska Pipeline System, which carries 15% of US crude output, after an oil leak in the pipeline prompted its closure over the weekend, and (3) the prediction from Morgan Stanley that crude will remain "high" this year and breach $100 a barrel "as OPEC spare capacity falls from elevated levels to 4.1 million barrels a day by year end."

                Bearish factors included (1) equity market weakness, which reduces optimism in the economic outlook and energy demand, and (2) concern that Europe's sovereign debt crisis may spread and slow the global economy and fuel demand.

Wednesday, January 12, 2011...

•   February crude oil prices this morning are trading unchanged and February gasoline is down -1.82 cents per gallon. Crude oil and gasoline prices yesterday closed higher for a second day: CLG11 +1.86, RBG11 +2.41. Feb gasoline posted a 27-month high.

                Bullish factors included (1) the continued shutdown of the Trans Alaska Pipeline System, which carries 15% of US crude output, after an oil leak in the pipeline prompted its closure over the weekend, (2) the report from the National Commission on the BP Deepwater Horizon Oil Spill that recommended that exploration in US deep waters be overseen by an independent agency in the Interior Department, which raises concern that it will become more difficult to drill for new crude supplies, (3) comments from the Kuwaiti Oil Minister who said that OPEC will not hold an emergency meeting if crude prices hit $100 a barrel, and (4) the action by the US Energy Department to increase its 2011 crude oil price forecast to average $93.42 a barrel, up from a Dec forecast of $86.08 and to hike its global crude consumption estimate for 2011 to 89.65 million barrels a day from 87.78 million estimated last month. Expectations for Wednesday's weekly inventory report from the DOE are for crude oil stockpiles to fall -1.2 million bbl, gasoline supplies to increase +2.13 million bbl, distillate inventories to rise +1.0 million bbl and the refinery capacity rate to remain unchanged at 88.0%.

Thursday, January 13, 2011...

•   February crude oil prices this morning are trading down -16 cents a barrel and February gasoline is +0.49 of a cent per gallon. Crude oil and gasoline prices yesterday finished mixed: CLG11 +0.75, RBG11 -1.53. Feb crude climbed to a 1-week high.

                Bullish factors included (1) the weaker dollar, which boosts investment demand in commodities, (2) the larger-than-expected decline in weekly crude inventories which dropped to their lowest level in 11 months (-2.15 million bbl to 333.1 million bbl versus expectations of -1.4 million bbl), and (3) the rally in the S&P 500 Index to a 2-1/3 year high, which boosts confidence in the economic outlook and energy demand.

                Bearish factors included (1) the restarting of the Trans Alaska pipeline, after it was closed for several days to repair a leak, (2) the larger-than-expected increases in weekly gasoline and distillate inventories (gasoline +5.08 million bbl versus expectations of +2.12 million bbl and distillate inventories +2 .65 million bbl versus expectations of +1.0 million bbl), and (3) reduced US gasoline demand after the 4-week average slipped -1.5% to 9.07 million barrels a day.

Friday, January 14, 2011...

•   February crude oil prices this morning are trading down -$1.26 a barrel and February gasoline is +0.68 of a cent per gallon. Crude oil and gasoline prices yesterday closed lower: CLG11 -0.46, RBG11 -1.72.

                Bearish factors included (1) the unexpected surge in weekly initial US unemployment claims to a 2-month high, which may limit US economic growth and energy demand, and (2) the prediction from the World Bank that China's economy will grow 8.7% in 2011, less than 10% in 2010, which may lead to a reduction in Chinese energy demand.

                Bullish factors included (1) the slide in the dollar index to a 1-week low, which boosts investment demand in commodities, and (2) the unexpected narrowing of the Nov US trade balance to a 10-month low as global demand boosted US exports to their highest level in more than 2 years, which shows strength in the global economy that may lead to an increase in fuel demand.

Crude Oil...
Brent Crude, however, appears unaffected by the stronger dollar, rising strongly off support at $88/barrel. Twiggs Momentum (21-day) holding above zero indicates a healthy up-trend.

* Target calculation: 88 + ( 88 - 68 ) = 108

Tuesday, January 18, 2011...

•   February crude oil prices this morning are trading down -17 cents a barrel and February gasoline -0.03 of a cent per gallon. Crude oil and gasoline prices last Friday settled higher on a weak dollar and on Royal Dutch Shell's action to shut a 340,000 barrel-a-day refinery in Texas for unscheduled repairs: CLG11 +0.14, RBG11 +4.87.

                Bullish factors included (1) the fall in the dollar index to a 2-week low, which boosts investment demand in commodities, (2) the bigger-than-expected increases in Dec US industrial production and capacity utilization, which signals strength in the economy that may lead to increased energy demand, and (3) strength in gasoline after Royal Dutch Shell Plc shut a 340,000 barrel-a-day refinery in Texas for unscheduled repairs, which may limit gasoline supplies.

                Bearish factors included (1) China's action to boost banks reserve ratio requirements for the fourth time in 2 months, which may slow its economy and energy demand, and (2) the weaker tha n expected Dec US retail sales along with an unexpected drop in Jan US University of Michigan consumer confidence, which signals a possible slowdown in consumer spending that may limit fuel demand.

Wednesday, January 19, 2011...

•   February crude oil prices this morning are trading up +58 cents a barrel and February gasoline is +1.75 cents per gallon. Crude oil and gasoline prices yesterday fluctuated on either side of unchanged and finally settled lower after the IEA said that global crude supplies are ample: CLG11 -0.16, RBG11 -1.54. Feb gasoline climbed to a 2-1/3 nearest-futures high but erased its gains and finished lower.

                Bearish factors included (1) comments from the IEA that global oil supplies in the most developed economies still "looks relatively comfortable," with North American inventories "well above" the 5-year average, (2) IEA data that shows OPEC compliance with its late 2008 crude oil production cuts fell to 45% in Dec from 51% in Nov as the recent rise in prices encouraged OPEC members to cheat and overproduce from their quotas.

               Bullish factors included (1) the slide in the dollar index to a 1-3/4 month low, which boosts investment demand for commodities, and (2) the action by the IEA to raise their 2011 global oil demand forecast for a fourth month after they hiked their global oil consumption estimate for 2011 to 89.1 million barrels a day, up 360,000 barrels a day from last month's forecast.

Thursday, January 20, 2011...

•   February crude oil prices this morning are trading down -66 cents a barrel and February gasoline is -2.28 cents per gallon. Crude oil and gasoline prices yesterday gyrated on both sides of unchanged throughout the day and finally settled mixed as a weaker dollar offset economic concerns from a plunge in housing starts: CLG11 -0.52, RBG11 +0.24.

                Bearish factors included (1) concerns the US economy may be slowing after Dec US housing starts fell more than expected and matched a 2-month low, and (2) the fall in equity prices, which erodes confidence in the economic outlook and energy demand.

                Bullish factors included (1) the drop in the dollar index to a 1-3/4 month low, which boosts investment demand for commodities, and (2) the outlook for weekly crude oil inventories to fall for the seventh consecutive week when the DOE inventory report is released on Thu. Expectations for the weekly DOE inventory report are for crude oil stockpiles to fall -500,000 bbl, gasoline supp lies to increase +2.5 million bbl, distillate inventories to gain +1.0 million bbl and the refinery capacity rate to fall -0.5 to 85.9%.

Friday, January 21, 2011...

•   March crude oil prices this morning are trading up +36 cents a barrel and March gasoline is +1.02 cents per gallon. Crude oil and gasoline prices yesterday both plunged to 1-1/2 week lows on a stronger dollar, an unexpected increase in weekly crude inventories, and Chinese rate hike concerns: CLH11 -2.22, RBH11 -5.42.

                Bearish factors included (1) concerns that China may raise interest rates further after its Q4 GDP was stronger-than-expected, (2) the rally in the dollar, and (3) the unexpected increase in weekly DOE crude oil inventories which rose for the first time in seven weeks (+2.62 million bbl versus expectations of -500,000 bbl), and the larger-than-expected build in weekly gasoline inventories (+4.44 million bbl versus expectations of +2.5 million bbl).

                Bullish factors included (1) the rise in Dec China crude oil processing by +2.2% m/m to a record 9.16 million barrels a day, and (2) the larger-than-expected decline in the refinery capacity rate which tumbled to a 2-month low (-3.4 to 83.0% versus expectations of -0.5 to 85.9%) and indicates reduced amounts of gasoline and distillate products in the weeks ahead.

Crude Oil & Commodities...
Brent Crude is rising strongly, indicating an accelerating up-trend. There is no sign of any slowing on Twiggs Momentum (21-day), holding well above zero to indicate a healthy up-trend; but expect some resistance at the psychological barrier of 100.

* Target calculation: 88 + ( 88 - 68 ) = 108

Monday, January 24, 2011...

•   March crude oil prices this morning are trading down -71 cents a barrel and March gasoline is +0.12 of a cent per gallon. Crude oil prices fell in overnight electronic trade after Saudi Arabian Oil Minister Ali al-Naimi said OPEC might boost oil supply this year to meet growing demand in China and India. Crude oil and gasoline prices last Friday fluctuated on either side of unchanged and settled mixed as concern over further Chinese interest rate hikes outweighed a jump in German business confidence: CLH11 -0.48, RBH11 +3.64.

                Bearish factors included (1) concerns that China may raise interest rates further to curb inflation, which may slow its economy and demand for fuel, and (2) the recommendation from JPMorgan Chase for investors to "pare risk and take some profits" in crude oil on the prospects that OPEC may increase production.

                Bullish factors included (1) the slump in the dollar index to a 2-month low, which boosts investment demand for commodities, (2 ) the unexpected increase in the Jan German IFO business climate to its highest level since records for a reunified Germany began in 1991, which may lead to further economic expansion and increased energy demand, and (3) data from the API that showed US fuel consumption in 2010 climbed +2.3% y/y to 19.2 million barrels a day, a 6-year high.

Tuesday, January 25, 2011...

•   March crude oil prices this morning are trading down -$1.30 a barrel at a 1-3/4 month low and March gasoline is -3.20 cents per gallon as a stronger dollar and the unexpected contraction in the UK economy uncercuts commodity prices. Crude oil and gasoline prices slipped yesterday after Saudi Arabia's Oil Minister hinted at OPEC increasing crude output: CLH11 -1.24, RBH11 -4.06. Mar crude fell to a 3-week low.

                Bearish factors included (1) comments from Saudi Arabian Oil Minister Ali al-Naimi who said OPEC might boost oil supply this year to meet growing demand in China and India, and (2) weakness in gasoline as forecasts for a cold snap in the US Northeast signal less driving and reduced gasoline demand.

                Bullish factors included (1) the fall in the dollar index to a 2-1/4 month low, which boosts investment demand for commodities, (2) the unexpected increase in the Jan Euro-Zone PMI composite index which expanded at its fastest level in 6 months and signals increased e nergy consumption in Europe, and (3) the prediction from Saudi Arabian Oil Minister Ali al-Naimi that global oil demand may increase in 2011 by as much as 1.8 million barrels a day, or 2%.

Wednesday, January 26, 2011...

•   March crude oil prices this morning are trading up +69 cents a barrel and March gasoline is +2.74 cents per gallon. Crude oil and gasoline prices weakened yesterday after England's Q4 GDP unexpectedly contracted: CLH11 -1.68, RBH11 -6.73. Mar crude sank to a 1-3/4 month low and Mar gasoline fell to a 3-week low.

                Bearish factors included (1) the unexpected decline in Q4 UK GDP, which signals a weak economy and energy demand, and (2) the outlook for increases in weekly crude oil and gasoline supplies when the DOE reports weekly inventories on Wed.

                Bullish factors included (1) the larger-than-expected increase in Jan US consumer confidence to its best level in 8 months, which may lead to improved consumer spending and fuel demand, and (2) the unexpected increase in the Feb German GfK consumer confidence survey to a 3-year high, which may also lead to increased fuel demand. Expectations for Wednesday's weekly inventory report from the DOE are for crude oil stockpiles to increase +1.35 million bbl, gasoline supplies to rise 2.5 million bbl, distillate inventories to fall -500,000 bbl and the refinery capacity rate to remain unchanged at 83.0%.

Thursday, January 27, 2011...

•   March crude oil prices this morning are trading down -51 cents a barrel and March gasoline is -0.98 of a cent per gallon. Crude oil and gasoline prices closed higher after the dollar weakened and after Dec US new home sales surged: CLH11 +1.14, RBH11 +8.60. Mar crude rebounded from a 1-3/4 month low and closed higher.

                Bullish factors included (1) the slump in the dollar index to a 2-1/2 month low, which boosts investment demand for commodities, (2) the prediction from the China Petroleum and Chemical Industry Association that China's crude-processing volume may rise +7.5% this year, a sign of strong demand, (3) comments from OPEC Secretary-General El-Badri who said that oil prices are in a "comfortable zone," which suggests OPEC has no intention of boosting crude output anytime soon, and (4) the larger-than-expected increase in Dec US new home sales to an 8-month high, which bolstered optimism in the economy and energy demand.

                Bearish factors included (1) t he larger-than-expected increase in weekly crude oil inventories (+4.84 million bbl versus expectations of +1.35 million bbl), and (2) the larger-than-expected increase in weekly gasoline inventories, which climbed to an 11-month high (+2.40 million bbl to 230.1 million bbl versus expectations of +2.3 million bbl).

January 28, 2011...

•   March crude oil prices this morning are trading up +23 cents a barrel and March gasoline is +1.44 cents per gallon. Crude oil and gasoline prices moved lower yesterday after US weekly unemployment claims rose to a 2-3/4 month high and bolstered concern that the US economy and energy demand may be slow to recover: CLH11 -1.69, RBH11 -4.34. Mar crude tumbled to a 1-3/4 month low.

                Bearish factors included (1) the weaker than expected Dec durable goods orders along with the larger-than-expected increase in weekly US unemployment claims to a 2-3/4 month high, which indicates an uneven recovery that may limit fuel demand, and (2) carry-over weakness from a drop in demand after total US fuel demand last week fell -1.6% w/w to a 2-month low of 18.9 million barrels a day.

                Bullish factors included (1) the fall in the dollar index to a 2-1/2 month low, which boosts investment demand in commodities, (2) carry-over support from a jump in heating oil prices to a 2-1/4 year high af ter the National Weather Service predicted below-normal temperatures in the US Northeast from Feb 1 through Feb 9, and (3) the larger-than-expected increase in Dec US pending home sales, which boosts confidence in the economic outlook and energy demand.

Crude Oil...

Brent Crude broke its rising trendline, suggesting a correction to test support at $90/barrel. Twiggs Momentum (21-day) holding well above zero indicates a healthy primary up-trend.

* Target calculation: 88 + ( 88 - 68 ) = 108

Monday, January 31, 2011...

•   March crude oil prices this morning are trading down -3 cents a barrel and March gasoline is -1.85 cents per gallon. Crude oil and gasoline prices last Friday recovered from early losses and settled sharply higher on concern that civil unrest in Egypt might spread to major oil-producing parts of the Middle East: CLH11 +3.70, RBH11 +7.27. Mar crude fell to a 1-3/4 month low early in the session but rebounded and finished the day sharply higher.

                Bullish factors included (1) concerns that civil unrest in the Middle East will spread to oil-producing areas of the region or force a closure of the Suez Canal, which would disrupt global crude supplies, and (2) the +4.4% increase in Q4 US personal consumption, a 4-1/2 year high which shows strong consumer spending that may lead to increased fuel demand.

                Bearish factors included (1) the rally in the dollar, which discourages investment in commodities, (2) the weaker than expected US Q4 GDP, and (3) Bloomberg data that shows OP EC crude output in Jan climbed 210,000 barrels to a 2-year high of 29.395 million barrels a day.

Tuesday, February 1, 2011...

                 March crude oil prices this morning are trading down -70 cents a barrel and March gasoline is -0.69 of a cent per gallon. Crude oil fell in overnight trade on an easing of Egyptian concens after Suez Canal officials said traffic is moving normally through the canal and the Egyptian military said it won't fire on protestors. Crude oil and gasoline prices yesterday settled sharply higher for a second day due to a weak dollar and concern that unrest in Egypt may disrupt crude supplies: CLH11 +2.85, RBH11 +1.42. Mar crude posted a 2-1/4 year nearest-futures high and Mar gasoline climbed to a 1-week high.

                Bullish factors included (1) concern that the civil protests in Egypt will spread to major oil-producing parts of the Middle East or lead to a closure of the Suez Canal, (2) the slump in the dollar index to a 2-1/2 month low, which boosts investment demand for commodities, and (3) strong US economic data as Dec personal spending was stronger than expected and the Jan Chicago purchasing managers index unexpectedly expanded at its fastest pace in 22-1/4 years, which signals strong fuel consumption.

                Bearish factors included (1) speculation that forecasted winter storms for the central and eastern US will reduce gasoline demand, and (2) comments from OPEC Secretary-General Abdalla el-Badri who said that OPEC would increase its crude output if current unrest in Egypt disrupts oil supplies from the Middle East.

Wednesday, February 2, 2011...

•   March crude oil prices this morning are trading up +4 cents a barrel and March gasoline is -0.97 of a cent per gallon. Crude oil and gasoline prices yesterday fluctuated on either side of unchanged and settled mixed as strong global economic data was offset by reduced concerns from the Egyptian crisis: CLH11 -1.42, RBH11 +1.90.

                Bearish factors included (1) reduced concern that the civil unrest in Egypt will disrupt global oil supplies after Suez Canal officials said traffic is moving normally through the canal and the Egyptian military said it won't fire on protesters, and (2) the outlook that US crude inventories increased for a third week when the DOE releases its weekly figures on Wed.

                Bullish factors included (1) the slump in the dollar index to a 2-1/2 month low, which boosts investment demand in commodities, (2) the unexpected increase in the Jan ISM manufacturing index which expanded at its best level in 6-1/2 years and indicates strong energy consumption, and (3) strong European economic data that points to strong fuel consumption after German unemployment fell to an 18-year low in Jan and the Jan UK PMI manufacturing index unexpectedly expanded at its best level since data began in 1992. Expectations for Wednesday's weekly inventory report from the DOE are for crude oil supplies to increase +2.5 million bbl, gasoline stockpiles to gain +2.0 million bbl, distillate inventories to slip -1.0 million bbl and the refinery utilization rate to fall -0.3 to 81.5%.

Thursday, February 3, 2011...

•   March crude oil prices this morning are trading up +73 cents a barrel and March gasoline is +1,62 cents per gallon. Crude oil and gasoline prices yesterday traded on both sides of unchanged and settled mixed as soaring gasoline supplies undercut gasoline prices and riots in Egypt lifted crude: CLH11 +0.09, RBH11 -0.82.

                Bullish factors included (1) concern that protests in Egypt will spread throughout the Middle East and disrupt global oil supplies after riots broke out between anti-government protesters and people loyal to President Mubarak, and (2) optimism that expanding global economic growth will boost energy demand.

                Bearish factors included (1) the rebound in the dollar after the dollar index recovered from a 2-3/4 month low and closed higher, which may reduce investment demand in commodities, (2) weakness in gasoline after the larger-than-expected increase in weekly gasoline inventories which surged to their highest level in 17-3/4 years (+6.15 million bbl to 2 36.2 million bbl versus expectations of a +2.0 million bbl build), and (3) a severe winter storm that shut down much of the central US, which reduces jet fuel and gasoline consumption and demand.

Friday, February 4, 2011...

•   March crude oil prices this morning are trading up +29 cents a barrel and March gasoline is +0.69 of a cent per gallon. Crude oil and gasoline prices yesterday fluctuated on either sides of unchanged and settled mixed as a strong dollar offset violent political protests in Egypt: CLH11 -0.32, RBH11 +0.17. Mar gasoline posted a contract high.

                Bearish factors included (1) dollar strength, which may curtail investment demand for commodities, and (2) the prediction from tanker tracker Oil Movements that OPEC crude oil shipments will rise +1.7% to 24.16 million barrels a day in the four weeks to Feb 19.

                Bullish factors included (1) concern that violent political protests in Egypt will escalate throughout the Middle East and disrupt fuel supplies, and (2) the larger-than-expected increase in the Jan ISM non-manufacturing index to its best level in 5-1/3 years, which indicates strong fuel demand and consumption.

Monday, February 7, 2011...

•   March crude oil prices this morning are trading up +28 cents a barrel and March gasoline is +2.97 cents per gallon. Crude oil and gasoline prices last Friday spiked higher early but then sold-off and finished lower on concern the US economy is not producing enough jobs to increase energy demand: CLH11 -1.51, RBH11 -6.77.

                Bearish factors included (1) dollar strength, which may curtail investment demand for commodities, and (2) the weaker-than-expected Jan US payrolls report, which questions the sustainability of the US economic recovery and fuel demand.

                Bullish factors included (1) a temporary spike higher in gasoline prices after the US unemployment rate in Jan unexpectedly fell to a 1-3/4 year low, and (2) concerns that the civil unrest in Egypt will spill over into the major oil-producing regions of the Middle East or force the closure of the Suez Canal.

Crude Oil & Commodities...

Brent Crude broke psychological resistance at $100/barrel as the up-trend accelerates.

Steep price rises are evident across a broad range of commodities — as with copper on the above chart. This is already causing an upsurge of inflation in emerging economies, and will flow through to developed economies as they start to recover. The bad news is: the longer the lag, the more persistent inflation will be when it does take hold.

Tuesday, February 8, 2011...

•   March crude oil prices this morning are trading down -$1.14 a barrel and March gasoline is -1.25 cents per gallon as China's interst rate hike undercuts commodities. Crude oil and gasoline prices yesterday traded sideways to lower and settled mixed as the dollar strengthened and tensions eased in Egypt: CLH11 -1.55, RBH11 +1.52. Mar crude slipped to a 1-week low.

                Bearish factors included (1) the rally in the dollar index to a 2-week high, which may curb investment demand for commodities, and (2) reduced tensions in Egypt after Egyptian Vice President Suleiman promised within a month to draft a list of constitutional changes needed for free elections.

                Bullish factors included (1) strength in gasoline on concerns that several refinery closures by ConocoPhillips in Texas, Exxon-Mobile in Louisiana and Valero Energy in Aruba may limit US gasoline supplies, and (2) the rally in the S&P 500 Index to a 2-1/2 year high, which bolsters confidence in the economic outlook a nd energy demand.

Wednesday, February 9, 2011...

•   March crude oil prices this morning are trading up +40 cents a barrel and March gasoline is +1.32 cents per gallon. Crude oil and gasoline prices yesterday fluctuated on either side of unchanged as the action by China to raise interest rates was offset by refinery shutdowns that may limit gasoline supplies: CLH11 -0.54, RBH11 +0.95. Mar crude and Mar gasoline fell to 1-week lows.

                Bearish factors included (1) the action by China to raise interest rates for the third time since mid-Oct, which may slow China's economy and its fuel demand, (2) an easing of the political tension in Egypt, which reduces chances of civil unrest spreading throughout the Middle East that may disrupt global oil supplies, (3) carry-over weakness from a fall in natural gas prices to a 1-1/2 month low after the DOE raised its forecast for 2011 US natural gas production to 62.43 billion cubic feet a day from last month's forecast of 61.38 billion cubic feet a day, and (4) the outlook for US crude s upplies to increase for a fourth week when the DOE releases its weekly inventory figures on Wed.

                Bullish factors included (1) the weaker dollar, which boosts investment demand for commodities, and (2) strength in gasoline on concerns that several refinery closures by ConocoPhillips in Texas, Exxon-Mobile in Louisiana and Valero Energy in Aruba may limit US gasoline supplies. Expectations for Wednesday's weekly DOE inventory report are for crude oil stockpiles to increase by +2.0 million bbl, gasoline supplies to rise +2.7 million bbl, distillate inventories to fall -1.0 million bbl and the refinery utilization rate to fall -0.2 to 84.7%

Thursday, February 10, 2011...

•   March crude oil prices this morning are trading down -44 cents a barrel and March gasoline is -0.57 of a cent per gallon. Crude oil and gasoline prices yesterday gyrated on both sides of unchanged and settled mixed as a weaker dollar offset the rise in US gasoline supplies to a nearly 21-year high: CLH11 -0.23, RBH11 +3.18.

                Bullish factors included (1) the weaker dollar, which boosts investment demand for commodities, and (2) the action by pirates to hijack a US bound supertanker of Kuwaiti oil off the coast of Oman, which may increase the costs of shipping oil as insurance rates rise and shippers take longer routes to avoid pirate filled waters.

                Bearish factors included (1) comments from Fed Chairman Bernanke who said the US unemployment rate is likely to remain high "for some time," which may keep US economic growth and energy demand stagnant, (2) the larger-than-expected increase in US gasoline inventories (+4.66 million bbl to 240.9 million bbl, the high est since March 1990 and more than expectations of +2.7 million bbl), (3) slack gasoline demand, as measured by deliveries to wholesalers, which fell -0.3% to 8.52 million barrels a day, the lowest level in a year, and (4) the unexpected increase in distillate supplies (+288,000 bbl versus expectations of a -1.0 million bbl decline).

Friday, February 11, 2011...

•   March crude oil prices this morning are trading up +22 cents a barrel and March gasoline is +0.92 cents per gallon. Crude oil and gasoline prices yesterday fluctuated on either side of unchanged and settled mixed as a stronger dollar and the IEA's action to raise its global crude demand forecast gyrated prices: CLH11 +0.02, RBH11 -5.62. Mar gasoline rallied to a 2-1/3 nearest-futures high but erased its gains and settled lower.

                Bullish factors included (1) the action by the IEA to raise its 2011 global oil demand forecast for a fifth month by +140,000 barrels a day from its Jan forecast to 89.3 million bpd and say that oil supplies in the OECD countries fell by 55.6 million bbl to a 2-year low of 2.67 billion bbl in Dec, and (2) the larger-than-expected decline in weekly US initial unemployment claims to their lowest level in 2-1/2 years, which signals improvement in the labor market that may lead to increased fuel demand.

                Bearish factors included (1) dollar strength , which reduces investment demand for commodities, and (2) updated weather forecasts that call for above-normal temperatures for the US Northeast from Feb 15-23, which may reduce demand for heating fuels.

Crude Oil & Commodities...

Brent Crude is in an accelerating up-trend. Twiggs Momentum (21-day) oscillating above zero confirms a strong trend. The target is $110/barrel*.

* Target calculation: 90 + ( 90 - 70 ) = 110

Monday, February 14, 2011...

•   March crude oil prices this morning are trading down 3 cents a barrel and March gasoline up +2.28 cents per gallon. Crude oil and gasoline prices last Friday settle lower due to a stronger dollar and after Egyptian President Mubarak stepped down: CLH11 -$1.15, RBH11 -0.46. Mar crude fell to a 2-1/2 month low.

                Bearish factors included (1) the rally in the dollar index to a 3-week high, which reduces investment demand for commodities, (2) the action by Egyptian President Mubarak to step down and hand power to the Egyptian military, which reduces concern that crude shipments from the Middle East will be disrupted, and (3) carry-over weakness from the plunge in natural gas prices to a 2-3/4 month low on speculation that demand for heating fuels will weaken after the Commodity Weather Group predicted warmer-than-normal temperatures in the eastern two-thirds of the US from Feb 16-20.

                Bullish factors included (1) the prediction from Deutsche Bank that China may increase its crude oil imports this year by 530,000 barrels a day or 11% to 5.4 million barrels as additional emergency storage tanks come into operation as it continues its stockpiling of commodities, and (2) the increase in Feb US University of Michigan consumer confidence to an 8-month high, which may portend to increased consumer spending and demand for fuel.

Tuesday, February 15, 2011...

•   March crude oil prices this morning are trading up +41 cents a barrel and March gasoline is up +0.31 of a cent per gallon. Crude oil and gasoline prices yesterday fluctuated and settled mixed as the dollar strengthened and undercut crude but a fire at a St. Croix refinery lifted gasoline as it threatens to limit US gasoline supplies: CLH11 -$0.77, RBH11 +5.22. Mar crude fell to a 2-1/2 month low and Mar gasoline climbed to a 2-1/3 nearest futures high.

                Bearish factors included (1) the rally in the dollar index to a 3-week high, which reduces investment demand for commodities, (2) reduced concern that civil unrest in the Middle East will disrupt crude supplies after Egypt's ruling army council said it aims to transfer power within 6 months to a democratically elected government, and (3) comments from the UAE oil minister who said the oil market is "well supplied" and that OPEC is ready to provide more crude to consumers as demand grows.

                Bullish factors inclu ded (1) strength in gasoline prices as a fire in the 525,000 barrel a day Hovensa LLC refinery in St. Croix threatens to limit US gasoline supplies, (2) the +27% y/y increase in Jan China crude oil imports to a 4-month high of 21.5 MMT, which signals strong demand, (3) the larger-than-expected increase in Jan China exports and imports, which suggests growing demand in the world's largest energy-consuming country, and (4) the warning from JPMorgan Chase that the departure of Egyptian President Mubarak "inspires" protesters in the Middle East and that "the prospect of regional contagion impacting a key oil supplier appears elevated.

Oil drops on demand and inventory concerns.

NEW YORK | Tue Feb 15, 2011 5:06pm EST

NEW YORK (Reuters) - Brent oil fell more than 1 percent on Tuesday in volatile trading as disappointing U.S. retail sales growth and China's battle against rising inflation boosted worries about demand from the world's two largest energy consumers.

U.S. crude prices pulled back ahead of weekly oil inventory reports expected to show U.S. crude oil stocks rose last week.

While protests in Iran and other Middle East countries remained a concern, analysts looked for some unwinding of the geopolitical fear premium put in during Egypt's protests.

"There may be some unwinding of the fear premium on overall risk reduction as the Middle East hasn't gotten out of control yet and traders also are getting ready for another expected rise in U.S. oil supplies," said Phil Flynn, analyst at PFGBest Research in Chicago.

Brent's more pronounced retreat had some traders and analysts expecting the wide gap between the two benchmarks to come under pressure.

Brent crude for April delivery fell $1.44 to settle at $101.64 a barrel. Prices hit a 28-month peak at $104.30 on Monday.

U.S. crude for March delivery fell 49 cents to settle at $84.32 a barrel.

Brent's premium to U.S. crude seesawed between $13.24 and $14.90 on Tuesday. Brent's premium to U.S. crude surged to a record above $16 a barrel on Friday, still measuring the two March contracts before the March Brent's expiration.

"That Brent/WTI spread may be getting a little heavy," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.

U.S. crude has been dogged by high crude oil inventories, especially at the landlocked Cushing, Oklahoma, contract delivery point for the benchmark West Texas Intermediate.

U.S. crude stocks fell 354,000 barrels in the week to February 11, against expectations supplies would be up, according to the industry group the American Petroleum Institute's weekly report released late on Tuesday.

But Cushing stockpiles rose 250,000 barrels, the API said.

Distillate stocks fell 1.2 million barrels and gasoline stocks rose 1.2 million barrels, according to the API.

U.S. crude prices held losses in post-settlement trading after the release of the report.

Analysts surveyed by Reuters ahead of the API report expected U.S. crude inventories to be up 2.2 million barrels last week.

Distillate stocks were forecast down 800,000 barrels while gasoline stocks were expected to be up 1.7 million barrels.

The U.S. Energy Information Administration's report is set for release at 10:30 a.m. EST on Wednesday.

CHINESE INFLATION

China's consumer price inflation came in lower than expected for January at 4.9 percent.

But core inflation, stripped of volatile food prices, jumped to 2.6 percent year on year, the highest since at least 2002 and up from 2.1 percent a month earlier.

Concern that China may continue monetary tightening and curb demand growth pulled copper prices off record highs.

MIXED U.S. ECONOMIC DATA

U.S. stocks slid as energy shares pulled back, and after initially slipping on the smaller-than-expected rise in retail sales that fueled doubts about consumer spending. .N

U.S. retail sales growth slowed in January, but at least some oil traders and analysts saw the data as supportive or neutral considering the extreme weather that curbed shopping traffic.

U.S. retail gasoline demand fell for a second consecutive week, affected by rising retail prices, a report from MasterCard showed. Demand was up and gasoline prices were up 19.5 percent from the year-ago period.

Early on Tuesday, some brokers and analysts pointed to supportive data such as the New York Federal Reserve's gauge of manufacturing in New York State which climbed in February to its best mark since June.

Wednesday, February 16, 2011...

•   March crude oil prices this morning are trading up +24 cents a barrel and March gasoline is +1.57 cents per gallon. Crude oil and gasoline prices yesterday fluctuated on both sides of unchanged and finally settled lower as concerns over increasing crude supplies offset fears of escalating civil unrest in the Middle East: CLH11 -$0.49, RBH11 -2.86. Mar crude sank to a 2-1/2 month low.

                Bearish factors included (1) the weaker-than-expected Q4 Euro-Zone GDP, which signals slower than expected energy consumption in Europe, (2) weaker than expected US Jan retail sales, signaling reduced fuel demand, and (3) the outlook for US crude supplies to increase for a fifth straight week when the DOE reports weekly crude inventories on Wed.

                Bullish factors included (1) the weaker dollar, which boosts investment demand for commodities, (2) concerns that crude supplies may be disrupted after civil unrest spread to Bahrain, Yemen and Iran, the second-largest OPEC producer, and (3) the larger-than-expected increase in the Feb Empire manufacturing index to an 8-month high, which indicates economic expansion and increased fuel consumption. Expectations for Wednesday's weekly DOE inventory report are for crude supplies to increase +2.0 million bbl, gasoline stockpiles to climb +1.65 million bbl, distillate inventories to fall -400,000 bbl and the refinery utilization rate to slip -0.1 to 84.6%.

Thursday, February 17, 2011...

•   March crude oil prices this morning are trading down -28 cents a barrel and March gasoline is -0.72 of a cent per gallon. Crude oil and gasoline prices yesterday moved higher on rising Middle East tensions and on lower than expected increases in weekly crude supplies: CLH11 +$0.67, RBH11 +5.59.

                Bullish factors included (1) the weaker dollar, which boosts investment demand for commodities, (2) the lower-than-expected increases in weekly crude and gasoline supplies (crude +860,000 bbl versus expectations of +2.0 million bbl and gasoline +205,000 bbl versus expectations of +1.65 million bbl, (3) the larger-than-expected draw in weekly distillate supplies (-3.10 million bbl versus expectations of -400,000 bbl) and (4) rising tensions in the Middle East after civil unrest spread to Libya, the holder of Africa's largest oil reserves and after Israeli Foreign Minister Lieberman said 2 Iranian gunboats are planning to move through the Suez Canal to Syria, which spurred concern that oil shipments may be disrupted.

                Bearish factors included (1) the prediction from energy researcher JBC Energy GmbH that the narrowing spread between premium fuels such as naphtha and cheaper heavy fuel oil may signal a slowdown in the world economy, and (2) despite the smaller-than-expected increase in weekly gasoline supplies, US gasoline supplies now stand at 241.1 million bbl, a nearly 21-year high and a sign of slack demand.

Crude Oil & Commodities...
Brent Crude continues in an accelerating up-trend. Twiggs Momentum (21-day) oscillating above zero confirms a strong trend. The target is $110/barrel*.

* Target calculation: 90 + ( 90 - 70 ) = 110

The CRB Commodities Index continues in a strong upward trend channel, bearish divergence on Twiggs Momentum (21-day) continues to warn of a correction. Reversal below the lower channel would strengthen the signal.

Friday, February 18, 2011...

•   March crude oil prices this morning are trading down -10 cents a barrel and March gasoline is +0.66 of a cent per gallon. Crude oil and gasoline prices yesterday fluctuated on both sides of unchanged and settle mixed as rising Middle East tensions offset a larger-than-expected increase in US jobless claims: CLH11 +$1.37, RBH11 -1.70. Mar gasoline climbed to a 2-1/3 year high but erased its gains and closed lower.

                Bullish factors included (1) the weaker dollar, which boosts investment demand for commodities, (2) escalating tensions in the Middle East as demonstrators clashed with police in Bahrain and Libya, the holder of Africa's largest oil reserves, and after Iran said it plans to send 2 warships through the Suez Canal, which raised concern about a possible confrontation with Israel, and (3) the increase in the Feb Philadelphia Fed manufacturing index to its best level in 7 years, which indicates strength in the economy and increased fuel consumption and demand.

                Bearish factors included (1) the larger-than-expected increase in weekly US jobless claims, which indicates a weak labor market that may hinder fuel demand, and (2) the forecast from the National Weather Service's Climate Prediction Center for normal temperatures for the US Northeast from Feb 22 through Mar 2, which may lead to reduced demand for heating fuels.

Oil prices hit $100 per barrel
Libya revolt pushes oil past $100 per barrel for the first time since Oct. 2008

NEW YORK (AP) -- Oil prices hit $100 per barrel for the first time since 2008, driven by growing concerns about global supplies, as Libya's Moammar Gadhafi continued to lose his grip on the oil-rich country.

Similar uprisings in Tunisia and Egypt earlier this month already had markets on edge before protests escalated in Libya, which has the biggest oil reserves in Africa. The rebellion widened Wednesday as protesters overwhelmed government buildings and advanced around Tripoli, the capital.

West Texas Intermediate crude for April delivery jumped $2.68, or 2.8 percent, to settle at $98.10 per barrel on the New York Mercantile Exchange. Earlier in the day, prices hit triple digits for the first time since Oct. 2, 2008. WTI has soared 18 percent since Valentine's Day.

In London, Brent crude added $5.47, or 5 percent, at $111.25 per barrel on the ICE Futures exchange.

French oil giant Total said it started to wind down its oil production in Libya, which produced an average of 55,000 barrels per day last year. That follows similar moves by other oil companies working in the country.

Libya's biggest oil producer, Eni, idled operations that produce 244,000 barrels of oil and gas per day. Spain's Repsol-YPF and Austrian oil company OMV also suspended operations. Germany's Wintershall said it suspended operations that produced up to 100,000 barrels of oil per day. Evacuations of oil company employees and their families continue.

Barclays Capital estimates that as much as 1 million barrels per day of production has been shut down so far. In January, Libya produced almost 1.7 million barrels per day of oil and natural gas liquids, according to the International Energy Agency.

The production losses will be felt mostly in Europe. Ireland relies on Libya for 23 percent of its oil imports and 22 percent of Italy's oil imports are from Libya. The U.S. imported only about 51,000 barrels per day from Libya, less than 1 percent of its total crude imports.

The International Energy Agency and Saudi Arabia have both pledged to make additional oil available to cover any shortfall in world supplies, but that hasn't eased tensions in oil markets.

Larry Goldstein, a director at the Energy Policy Research Foundation in Washington, said Libya's oil is a high-quality variety that produces valuable petroleum products like gasoline, jet fuel and diesel. Some refineries won't be able to run on Saudi Arabia's lower-grade crude, so a sustained shut down in Libya could start a bidding war for comparable kinds of crude.

"That would raise product prices immediately," Goldstein said.

Analysts say concerns about violence in North Africa and the Middle East have added a "fear premium" of about $10 per barrel of oil.

The rise has pushed retail gasoline prices higher in the U.S. despite ample supplies in most parts of the country.

Gasoline prices jumped 8.2 cents per gallon in the last month and $1.28 per gallon in the last year. The national average for a gallon of regular on Wednesday rose another 2.3 cents to $3.194, according to AAA, Wright Express and Oil Price Information Service.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said he expects gasoline prices will continue to rise in the next few months to a spring peak of between $3.25 and $3.75 per gallon. And energy analyst Jim Ritterbusch said he doubts the national average will climb to $4 a gallon or higher, but he added that prices are difficult to predict because of the rapidly changing Middle East situation.

Looking beyond the unrest in Libya, analysts are watching similar protests in Bahrain, a tiny country about 15 miles from Saudi Arabia. Barclays analyst Helima Croft said the uprising in Bahrain could spill over to the eastern provinces of Saudi Arabia. While it probably won't hurt the Saudi's huge oil-production operations, "it's going to make a lot of people nervous," Croft said.

Shares of major oil companies rose in Wednesday trading. Exxon Mobil gained $1.89, or 2.2 percent, at $87.33. ConocoPhillips added $2.07, or 2.7 percent, at $78.68. Chevron rose $2.29, or 2.3 percent, to $102.61. Occidental Petroleum rose $1.28 to $103.42.

In other Nymex trading in March contracts, heating oil added 11.3 cents to settle at $2.9166 per gallon and gasoline gained 12.1 cents to settle at $2.8677 per gallon. Natural gas picked up 2.9 cents to settle at $3.936 per 1,000 cubic feet.

Tuesday, February 22, 2011...


•   March crude oil prices this morning are trading sharly higher by $6.85 a barrel and March gasoline +8.77 cents per gallon. Crude and gasoline prices surged to 2-1/3 year highs in overnight trade as violence escalates in Libya, owner of Africa's biigest oil reserves. Crude oil and gasoline prices last Friday settled mixed after China's action to raise banks' reserve requirements was offset by continued unrest in the Middle East: CLH11 -$0.16, RBH11 +2.36.

               Bullish factors included (1) the drop in the dollar index to a 1-week low, which boosts investment demand for commodities, (2) heightened tensions in the Middle East as escalating protests in Bahrain and Libya fueled concern that supplies from oil-producing countries in the Middle East will be disrupted, and (3) the rally in the S&P 500 to a 2-1/2 year high, which boosts confidence in the economic outlook and energy demand.

               Bearish factors included (1) the action by China to raise banks' reserve ratios for the se cond time this year, which may slow is economy and fuel demand, and (2) the action by Deutsche Bank AG to cut its price forecast for WTI crude this year to $91 a barrel from a previous forecast of $96 and to cut ni goldits 2012 WTI crude price forecast to $95 a barrel from an earlier forecast of $98 a barrel.

Wednesday, February 23, 2011...

•   April crude oil prices this morning are trading up +50 cents a barrel and April gasoline is +3.21 cents per gallon. Crude oil and gasoline prices yesterday surged to 2-1/3 year highs and closed sharply higher on concern that violent unrest in Libya may disrupt crude supplies: CLJ11 +$5.71, RBJ11 +5.63.

                Bullish factors included (1) an escalation of violent civil unrest in Libya, owner of Africa's biggest oil reserves, which fueled concern that crude supplies from Libya may be disrupted, (2) Iran's action to sail 2 warships through the Suez Canal, which Israel considers "a provocation," and (3) concern that the ongoing civil unrest in North Africa and the Middle East will spread to the oil-producing areas of the region and disrupt global crude supplies.

                Bearish factors included (1) strength in the dollar, which may limit investment demand for commodities, and (2) comments from Saudi Arabian Oil Minister Ali al-Naimi who said OPEC is ready to step in to meet an y shortage in oil supply resulting from a disruption in crude shipments from Libya and that global oil markets have sufficient supply and prices at $70 to $80 a barrel would be "fair" for producers and consumers alike.

Late rebound on oil drop shows bulls still kicking...

By Ryan Vlastelica Ryan Vlastelica – 19 mins ago
NEW YORK (Reuters) – Bruised but not bowed, bulls staged a rebound on Thursday and helped stocks stabilize in a volatile session suggesting investors aren't ready to give up on the market's rally.

The S&P 500 recovered off early lows triggered by deepening concerns that higher oil could stifle economic activity. Stocks hit their worst levels when Brent crude neared $120 a barrel on Libya's turmoil.

The S&P inversely tracked oil prices and a late-day drop in crude resulted in a corresponding recovery in equities. The index is down 2.7 percent for the week so far, but investors believe the market could regain its footing at this level.

The rebound "suggests that there is still some buying support," said David Joy, chief market strategist at the Boston-based Columbia Management, which oversees $347 billion. "Libya was a good reason to trigger a pullback, but I don't think anyone has changed their mind on the recovery because of this."

Trading volume has risen in the past few sessions, following a period of anemic action that saw stocks hit 30-month highs. The S&P is up 24 percent since the start of September. About 8.90 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above last year's daily average of 8.47 billion.

Kenneth Fisher, a billionaire investor who oversees $41 billion at the Woodside, California-based Fisher Investments Inc, agreed that there was a base of support for equities.

"People keep underestimating how strong the economy is right now," he said. "The potential short-term hiccups are the kind of disruption that the economy can easily absorb."

Oil has risen about 12 percent over the past three sessions. The sharp rise has fueled worries about the impact of energy costs on economic activity.

Oil futures were at their highest since late August 2008 as the escalating problems in Libya disrupted supply. Brent rose near $120 in intraday trading though it later pulled back to $111.12 in a sell-off sparked by rumors that Libyan leader Muammar Gaddafi had been shot.

"If oil or Brent go up to $120 per barrel and stay there, that would be cause for revisiting our expectations for how robust the recovery will be," Joy said. "That seems to be the level where you have to start thinking about how to change your position."

The Dow Jones industrial average (.DJI) fell 37.28 points, or 0.31 percent, to 12,068.50. The Standard & Poor's 500 Index (.SPX) slipped 1.30 points, or 0.10 percent, to 1,306.10. The Nasdaq Composite Index (.IXIC) rose 14.91 points, or 0.55 percent, to 2,737.90.

The S&P broke through a trendline dating back to August that connected lows in late August with lows reached in late November. Selling accelerated after this line was broken, and the Dow momentarily dropped below 12,000 for the first time since February 3, though both rebounded.

Options activity suggested that some investors were still cautiously bullish in the long term. Investors have been selling high-flying stocks, but then using long-term call options (which profit if the stock rises).

"There is now a newfound respect for risk, thanks to $100 oil, which has strategists repositioning, potentially raising some cash and using longer expiration options on stocks or indexes to participate on the upside," said Joe Cusick, senior market analyst at online brokerage optionsXpress.

Priceline.com Inc (PCLN.O) jumped 8.5 percent to $462.34 and kept the Nasdaq in positive territory after a number of brokerages raised their price targets on the stock. The online travel agency reported a larger-than-expected profit late Wednesday.

General Motors Co's (GM.N) earnings topped estimates, but the stock slid 4.5 percent to $33.02 on concerns about the pressure from rising oil.

In economic news, new U.S. claims for jobless aid fell last week, hinting at an improvement in the labor market, but declines in new home sales and orders for a range of factory goods in January showed the economy still faced headwinds.

About eight stocks rose for every seven that fell on the New York Stock Exchange while on the Nasdaq, almost eight rose for every five that fell.

(Reporting by Ryan Vlastelica; Additional reporting by Doris Frankel; Editing by Jan Paschal)

Thursday, February 24, 2011...

•   April crude oil prices this morning are trading up +$2.53 a barrel and April gasoline is +7.23 cents per gallon. Crude prices surged to a 2-1/3 year high of $103.41 a barrel in overnight trade on speculation the unrest in Libya has caused it to lose as much as two-thirds of its oil output. Crude oil and gasoline prices yesterday rallied sharply for a second day to 2-1/3 year highs and closed higher on a weak dollar and on concern that violent unrest in Libya may disrupt crude supplies: CLJ11 +$2.68, RBJ11 +12.13.

                Bullish factors included (1) concern that civil unrest in North Africa and the Middle East will spill over into major oil-producing countries in the region, (2) the report from Al Arabiya that operations at Libyan oil ports are suspended and the report from Reuters that said Libya, owner of Africa's biggest oil reserves, declared force majeure on all oil-product exports, (3) the drop in the dollar index to a 2-1/2 week low, which bolsters investment demand fo r commodities, and (4) the prediction from Nomura Holdings that oil prices may surge to $220 a barrel if the spread of civil unrest halts crude production in Libya and Algeria as OPEC spare capacity would be reduced to 2.1 million barrels a day.

                Bearish factors include (1) a report that said Saudi Arabia, the UAE, Kuwait, Angola and Nigeria would be willing to boost their oil production if buyers demand it even if no OPEC emergency meeting is held, and (2) the outlook that weekly US crude oil inventories expanded for a sixth week when the DOE reports weekly inventories on Thu (one day later due to the President's Day holiday on Mon). Expectations for the weekly DOE inventory report are for crude supplies to climb +1.13 million bbl, gasoline stockpiles to gain +850,000 bbl, distillate inventories to fall -1.35 million bbl and the refinery utilization rate to rise +0.5 to 81.7%.

Friday, February 25, 2011...

•   April crude oil prices this morning are trading up +22 cents barrel and April gasoline is +0.54 of a cent per gallon. Crude oil and gasoline prices yesterday rallied sharply for a third day to 2-1/3 year highs on a reduction in Libyan oil output but shed their gains and finished mixed after the IEA said it is ready to release emergency stockpiles if needed: CLJ11 -$0.82, RBJ11 +0.72.

                Bullish factors included (1) the estimation from Goldman Sachs that the civil unrest in Libya has caused it to lose 1 million bbl of its 1.6 million bbl of daily crude output, (2) concern that civil unrest in North Africa and the Middle East will spill over into major oil-producing countries in the region, (3) the fall in the dollar index to a 3-week low, which bolsters investment demand for commodities, and (4) the unexpected decline in weekly gasoline inventories which fell for the first time this year (-2.80 million bbl versus expectations of +850,000 bbl).

                Bearish factors include (1) the statement from the IEA that it will release its emergency stockpiles of crude into the market if needed, (2) Saudi Arabia's pledge to make up for any lost Libyan crude production if the need arises, and (3) the larger-than-expected decline in Jan US new home sales, which indicates that housing may continue to be a drag on the US economy and fuel demand

Crude Oil...
Chaos in Libya is fueling an accelerating up-trend in crude prices. Twiggs Momentum (21-day) rising above its existing band confirms. The target of $110/barrel* has now been reached

* Target calculation: 90 + ( 90 - 70 ) = 110

10 Ways Rising Oil Prices Will Endanger the U.S. Recovery...

Generally, more democracy has a positive effect on the global economy. Freer people have the ability to buy, sell, and innovate as they please. But the political unrest in the Middle East is having a negative effect on the markets thus far. What makes those revolutions different? The Middle East is a major source of the world's oil. Political uncertainty in the region leads to oil supply uncertainty. For that reason the recent events in nations like Egypt and Libya have been worrying investors and businesses: if less oil flows out of the region to the rest of the world, fuel prices will rise.

In fact, we're already seeing oil prices hit highs this week not seen in two-and-a-half years. These increases come after oil prices already began to rise moderately throughout much of 2010, as the global economy strengthened. High fuel costs could dampen global economic growth, since firms and consumers would be forced to spend more on energy. This effect could also thwart the recently strengthening U.S. economy. Here are 10 ways rising oil prices endanger the recovery:

1. Consumer Spending Weakens

The most obvious casualty of rising oil prices is consumer spending. If Americans are forced to pay more for the gasoline they need to get to and from work, the grocery store, and wherever else, then they'll have less money to spend on discretionary items. Without this extra money going to retailers and other firms, the economy won't grow as rapidly. This possibility is of particular concern to the U.S., where around 70% of economic activity is said to result from consumer spending.

2. Hiring Maintains Snail's Pace or Slows Further

As companies have more money to spend due to better sales and more profits, they can hire additional workers. But higher energy costs could soak up some of the money that would have been used to bring on more employees. Since energy has some impact on most firms' costs, the higher oil prices go, the harder hiring will be for firms.

3. Home Buying Demand Remains Very Anemic

"Drastic increases in oil prices can slow the housing market because many consumers are forced to make spending trade-offs," says George Mason University Mercatus Center Scholar and real estate finance professor Anthony Sanders. If Americans are even slower to re-enter the housing market, then its recovery will be even more difficult. Home prices have begun falling again, and more buyers are needed to stabilize the market.

4. European Contagion Spreads

Several nations in the European Union are in a very fragile state as they try to recover from sovereign debt crises. These same nations produce little oil, so shortages and higher prices could thrust them back into recession. Some of these nations also have significant manufacturing sectors, which often incur fuel-driven input costs. If Europe has more problems, its pain could be felt across the Atlantic as well. The U.S. has significant economic ties to the E.U., so when one goes down, the other also struggles.

5. Tourism Takes a Hit

As oil prices rise, so will the cost of traveling. Higher fuel prices translate into higher costs for plane tickets and automobile trips. Consequently, the U.S. will see tourism decline. This would harm a major segment of the U.S. economy. However, some states where the housing bubble was the most severe, like Florida and Nevada, will suffer disproportionally, as their economies depend on tourism. Their very high unemployment rates would then have even more trouble declining.

6. Exports Decline

Exports have been one of the factors helping along the U.S. recovery. From 2009 to 2010, exports grew by $261 billion, or 17%. This increase has helped to boost GDP. As fuel costs rise, however, global trade will suffer. More expensive shipping costs may weaken the demand for U.S. products. The silver lining, however, is that rising fuel costs could make imports less attractive to Americans, boosting domestic sales of U.S. goods.

7. Consumer Sentiment Falls

It's very hard not to notice when the price at the pump increases. As a result, Americans are well aware of rising gas prices. If consumers worry that more expensive gas will result in their disposable income declining, then this will harm how they view their economic situation. If the steady rise in confidence we've seen over the past several months has been noted by firms, then they may hire more aggressively. But if sentiment hiccups, then jobs will continue to grow very slowly.

8. Investors Look Past Stocks to Gold

We have already begun to see the unrest in the Middle East wreaking havoc on stock markets. If oil prices appear to be rising rapidly, then more investor dollars could flee to safety. This would happen both because the market fears a slower recovery and higher inflation. This might be good news for ultra-safe, inflation-protected assets like gold, but it will be very bad news for investment in businesses that could provide higher growth.

9. The Federal Reserve Is Stifled

At some periods throughout the recession, the Federal Reserve was about the only thing holding the economy together. Its aggressive policies have kept credit flowing. It has also made credit very cheap by keeping interest rates extremely low, which helped some businesses survive and encouraged investment. But as oil prices rise, broader inflation could increase as well. Once that begins, the Fed will be forced to allow interest rates to rise, making credit more expensive and the recovery even harder.

10. Deficits Stay High and U.S. Borrowing Costs Rise

As the economy improves, the U.S. government can finally begin cutting its giant deficits. But rising energy prices will make it more difficult for the government to curb its borrowing for two reasons. First, the slower economy will result in lower tax receipts as economic activity is stifled. Second, falling disposable incomes will dash any hopes for raising taxes, as the government won't want to squeeze lower- and middle-class Americans. Higher U.S. borrowing costs could result if investors don't see smaller deficits soon. Forced aggressive austerity would cut economic growth potential.

First, it's important to note that none of these 10 factors are mutually exclusive. Indeed, many are complementary. It's not likely we would see consumer sentiment fall without the residential real estate market taking a hit, for example. That's why prolonged high oil prices are so dangerous -- they could create a domino effect that would poison many different aspects of the U.S. economy.

Of all these factors, a decline in consumer spending is arguably the most significant. As mentioned above, a huge portion of the U.S. economy depends on Americans' willingness to spend. Consequently, spending is intrinsically connected to a number of the factors noted above. The potential harm to spending is hard to overemphasize if oil prices remain elevated or climb further.

"Oil averaged around $80 [per barrel] in 2010. If it were to average $92 in 2011, that would wipe out a fourth of the $120 billion in payroll tax reduction that we got in the tax compromise in December. If oil were to average $103 in 2011, that would wipe out half of the tax break we got."

He went on to say that a $92 average sounds reasonable. On Friday, the Nymex Crude Future priced a barrel of oil above $97.

While all of these possibilities are serious, it's not time to panic just yet. The problem with political uncertainty is that you don't know how things will ultimately turn out. If the democracies that rise in the Middle East continue to export oil much like the regimes they replace did before, then oil prices shouldn't increase more rapidly than they would have simply due additional demand from the global recovery.

If oil prices are only temporarily elevated due to unrest, then the U.S. recovery should escape relatively unscathed. But if the revolutions in the Middle East push oil prices much higher permanently, then the economic recovery would have a significant obstacle in its path.

Monday, February 28, 2011...

•   April crude oil prices this morning are trading up +9 cents a barrel and April gasoline is down -0.86 of a cent per gallon. Crude oil and gasoline prices last Friday finished higher on concern that turmoil that has cut Libya's crude output may spread to other parts of the Middle East: CLJ11 +$0.60, RBJ11 +3.37. Crude oil prices in overnight trade gave up a $2.00 a barrel gain after the WSJ reported that some Libyan oil exports may bave resumed.

                Bullish factors included (1) concern that the unrest in Libya may blow up into a full civil war and knock out the rest of Libya's crude production, which was estimated by Goldman Sachs to be already cut to only 600,000 barrels day from its normal 1.6 million barrels a day, and (2) concern that the political unrest in Libya will spread to other oil-producing countries in the region and reduce global oil supplies further.

                Bearish factors include (1) the stronger dollar, which reduces investment demand for commodities, (2) the la rger-than-expected downward revision to US Q4 GDP, which indicates reduced energy demand and consumption, and (3) the action by NYMEX to raise its margin requirements on crude oil futures for the first time in nearly 2 years, which may prompt speculators to reduce their crude oil positions to balance their margin accounts.

Tuesday, March 1, 2011...

•   April crude oil prices this morning are trading up +46 cents a barrel and April gasoline is +0.81 of a cent per gallon. Crude oil and gasoline prices yesterday fluctuated on either side of unchanged and moved lower late as a pledge by Saudi Arabia to make up for any lost Libyan crude production offset a weaker dollar: CLJ11 -$0.91, RBJ11 -1.59.

                Bearish factors include (1) the statement from the CEO of Saudi Arabian Oil that they are ready to compensate for any shortfall in the global oil supply from the reduction of output in Libya, (2) a report from the WSJ that oil shipments from Libya's rebel-controlled eastern territory may have resumed, and (3) the threat of long liquidation pressures after the CFTC reported that hedge funds and large speculators increased their long crude oil positions in NYMEX futures by 30% in the week ended Feb 22 to 240,572 contracts, a 4-1/2 year high.

                Bullish factors included (1) the slump in the dollar index to a 3-1/2 month low, which boosts investment demand for commodities, and (2) the spread of civil unrest to Oman, which produced 885,600 barrels of oil a day in Jan and raises concern that Middle Eastern oil production may be disrupted further.

Crude Oil...

Nymex WTI crude is testing the psychological barrier of $100/barrel and, with the ongoing turmoil in Libya, is likely to shortly reach its target of $105.

* Target calculation: 85 + ( 85 - 65 ) = 105

Wednesday, March 2, 2011...

•   April crude oil prices this morning are trading up +43 cents a barrel and April gasoline is +1.68 cents per gallon. Crude oil and gasoline prices yesterday moved sharply higher on concern the civil unrest in North Africa and the Middle East was spreading to Iran: CLJ11 +$2.66, RBJ11 +8.71.

                Bullish factors included (1) the fall in the dollar index to a 3-1/2 month low, which boosts investment demand for commodities, (2) concern that the political upheaval in North Africa and the Middle East may spread to Iran, OPEC's second-largest oil producer, after Iranian authorities arrested opposition leaders in an attempt to stop planned protests, and (3) strong global manufacturing growth that may increase fuel demand after Feb US manufacturing activity expanded at its best level in 27 years, while Europe's manufacturing activity in Feb rose to a 10-1/3 year high and Feb Chinese manufacturing activity expanded for the 24th consecutive month.

                Bearish factors include (1) data fro m Bloomberg that shows Nigeria plans to increase its daily crude exports to 2.01 million barrels a day in April, up +9.3% from 1.84 million barrels in March, and (2) the outlook for weekly crude supplies to increase for a seventh straight week when the DOE releases its weekly crude inventory data on Wed. Expectations for the weekly inventory report from the DOE are for crude oil stockpiles to rise +875,000 bbl, gasoline supplies to remain unchanged, distillate inventories to fall -1.3 million bbl and the refinery utilization rate to increase +0.4 to 79.8%.

Thursday, March 3, 2011...

•   April crude oil prices this morning are trading down -56 cents a barrel and April gasoline -2.77 cents per gallon. Crude oil and gasoline prices yesterday rallied sharply for a second day on concern the civil unrest in Libya will spread to other oil producing countries in the region: CLJ11 +$2.60, RBJ11 +4.20. April gasoline rose to a contract high and nearest-futures Mar gasoline soared to a 2-1/2 year high.

                Bullish factors included (1) the decline in the dollar index to a 3-3/4 month low, which boosts investment demand for commodities, (2) concern that the civil unrest that is curbing oil exports from Libya will spread to other oil-producing countries in the region, and (3) the unexpected declines in weekly DOE inventories of crude oil and gasoline (crude -364,000 bbl versus expectations of +875,000 bbl and gasoline -3.59 million bbl versus expectations of no change).

                Bearish factors include (1) the +1.13 million bbl increase in crude oil inventories at Cushing, Ok lahoma, the delivery point for NYMEX WTI crude contracts, to 38.6 million barrels, the highest level since at least 2004 when the DOE began tracking stockpiles at the hub, and (2) the prediction from Petomatrix GmbH that oil markets are showing signs of "demand destruction" as high prices erode consumption.

Friday, March 4, 2011...

•   April crude oil prices this morning are trading up +83 cents a barrel at a 1-week high and April gasoline is +1.09 cents per gallon. Crude oil and gasoline prices yesterday retreated after the Arab League said it may mediate discussions to end the conflict in Libya: CLJ11 -$0.32, RBJ11 -0.53.

                Bearish factors included (1) the actions by Venezuela and the Arab League to send mediators to Libya in an attempt to end the conflict there, and (2) long liquidation pressures after crude prices surged over $16 a barrel in the past 2 weeks (+19%).

                Bullish factors include (1) the slump in the dollar index to a 3-3/4 month low, which boosts investment demand for commodities, and (2) stronger than expected US economic data on weekly jobless claims and Feb ISM non-manufacturing activity, which signals economic growth that may boost fuel demand.

Monday, March 7, 2011...

•   April crude oil prices this morning are trading up +$2.01 a barrel and April gasoline is +3.76 cents per gallon, both at fresh 2-1/2 year highs. Crude oil and gasoline prices last Friday rallied to 2-1/2 year highs on concern unrest in Libya will spread to other North African and Middle Eastern energy producers: CLJ11 +$2.51, RBJ11 +2.02.

                Bullish factors included (1) concerns the unrest in Libya may spread to other oil producing nations in the region and curb global oil supplies further, (2) the slump in the dollar index to a 4-month low, which boosts investment demand for commodities, and (3) signs that US economic growth is accelerating which may boost energy demand after the Feb US unemployment rate unexpectedly declined to its lowest level in 1-3/4 years and Jan US factory orders posted their biggest increase in 4-1/4 years.

                Bearish factors include (1) the decline in the stock market which erodes confidence in the economic outlook and energy demand, and (2) the ac tion by the CME to raise margins on NYMEX crude and petroleum contracts, which may reduce speculation and prompt long liquidation as traders raise funds to cover margins.

Tuesday, March 8, 2011...

•   April crude oil prices this morning are trading down -20 cents a barrel and April gasoline is -0.23 of a cent per gallon. Crude oil and gasoline prices yesterday rallied to 2-1/2 year highs and closed mixed on concern that oil supply disruptions may spread through the Middle East: CLJ11 +$1.02, RBJ11 -4.25.

                Bullish factors included (1) escalating violence in Libya and concern that unrest in North Africa and the Middle East may spread to other oil producing nations in the region after websites in Saudi Arabia called for a nationwide "Day of Rage" on Mar 11 and Mar 20, which may further intensify unrest in the region and lead to decreased crude oil output, (2) the early decline in the dollar index to a 4-month low, which boosts investment demand for commodities, and (3) the action by Commerzbank AG to raise its crude oil price forecast for Q2 to $107 per barrel form a previous estimate of $91 a barrel citing a "fear premium" because of the potential f or further production disruptions in the Middle East.

                Bearish factors include (1) the fall in stock prices which erodes confidence in the economic outlook and energy demand, (2) weakness in gasoline prices on increased speculation that consumer demand for gasoline will drop after prices reached a 2-1/2 year high, and (3) comments from the Obama administration that it will consider using the Strategic Petroleum Reserve if rising oil prices threaten the US economy.

Wednesday, March 9, 2011...

•   April crude oil prices this morning are trading down -13 cents a barrel and April gasoline is up +1.80 cents per gallon. Crude oil and gasoline prices yesterday weakened as the dollar rallied and after Kuwait's oil minister said OPEC members are discussing holding an emergency meeting: CLJ11 -$0.42, RBJ11 -5.72.

                Bearish factors included (1) a rally in the dollar, which discourages investment demand in commodities, (2) the statement from Kuwait's oil minister who said OPEC members are holding "consultations" about whether to hold an "urgent meeting" related to an increase in OPEC oil production, and (3) the action by Merrill Lynch to cut its estimate for global oil demand growth to 1.1 million barrels a day this year from an earlier estimate of 1.5 million, saying higher crude prices will negatively impact demand going forward this year.

                Bullish factors include (1) an escalation of fighting in Libya after pro-Qaddafi forces launched an assault on re bel held territories, and (2) concerns over the spread of civil unrest to Saudi Arabia with protestors calling for a "Day of Rage" protest there on Friday. Expectations for Wednesday's weekly inventory report from the DOE are for crude oil stockpiles to increase +1.13 million bbl, gasoline supplies to fall -1.5 million bbl, distillate inventories to drop -500,000 bbl and the refinery utilization rate to remain unchanged at 80.9%.

Thursday, March 10, 2011...


•   April crude oil prices this morning are trading down -$1.04 a barrel and April gasoline is -3.30 cents per gallon. Crude oil and gasoline prices yesterday traded mixed as weekly US gasoline supplies plunged but crude supplies in Cushing Oklahoma rose to a record: CLJ11 -$0.64, RBJ11 +8.05.

                Bullish factors include (1) the weaker dollar, (2) an escalation of fighting in Libya after pro-Qaddafi troops stepped up attacks on rebel forces, stoking concern the conflict will persist and continue to disrupt oil shipments, (3) the larger-than-expected decline in weekly DOE gasoline and distillate inventories (gasoline -5.49 million bbl versus expectations of -1.5 million bbl and distillates -3.98 million bbl versus expectations of -500,000 bbl), and (4) concerns over the spread of civil unrest to Saudi Arabia with protestors calling for a "Day of Rage" protest there on Friday.

                Bearish factors included (1) the larger-than-expected increase in weekly DOE crude oil inven tories (+2.52 million bbl versus expectations of +1.13 million bbl), and (2) the +1.69 million bbl increase in crude inventories at Cushing, Oklahoma, the delivery point for NYMEX WTI crude contracts, to 40.3 million barrels, the highest level since the DOE began tracking supplies in 2004.

Friday, March 11, 2011...

•   April crude oil prices this morning are trading down -$2.77 a barrel and April gasoline is -5.88 cents per gallon. Crude oil and gasoline prices yesterday tumbled as the dollar strengthened and the European sovereign-debt crisis worsened although prices recovered some of their losses after the AP reported that Saudi police fired on protestors: CLJ11 -$1.68, RBJ11 -0.76.

                Bearish factors include (1) the rally in the dollar index to a 1-1/2 week high, which discourages investment demand in commodities, (2) the action by Moody's Investors Service to cut Spain's credit rating, which suggests a worsening of the European debt crisis, and (3) the slowest pace of growth in Feb China exports in 15 months along with the unexpected decline in Jan German exports, which bolsters concern that the global economic recovery and fuel-demand growth will slow.

                Bullish factors included (1) stepped up attacks by Libyan leader Qaddafi who sent warplanes to bomb rebel held oil refineries, whi ch may further reduce Libya's crude production, and (2) concerns over the spread of civil unrest to Saudi Arabia with protestors calling for a "Day of Rage" protest there on Friday along with AP reports that Saudi police had opened fire on a rally in the kingdom's east.

Monday, March 14, 2011...

•April crude oil prices this morning are trading down -$1.81 a barrel and April gasoline is -5.16 cents per gallon, both at 1-1/2 week lows on concern energy demand may be limited in Japan, the world's third-largest economy. Crude oil and gasoline prices last Friday settled lower but well above their worst levels after the strongest earthquake on record to hit Japan, the world's third-largest oil-consuming country, forced it to shut refineries: CLJ11 -$1.54, RBJ11 -3.19. Apr crude fell to a 1-week low.

                Bearish factors include (1) the action by Japan to close many of its refineries because of earthquake damage, which will temporarily reduce its crude demand, (2) the larger-than-expected decline in Mar US University of Michigan consumer confidence to a 5-month low, which may lead to reduced fuel demand as the economy struggles to recover, and (3) a lack of violence in Saudi Arabia after Saudi police set up checkpoints to discourage protesters from their "Day of Rage" protests.

                Bullish factors included (1) the weaker dollar, and (2) the statement from the IEA that crude exports from Libya fell "well below" 500,000 barrels a day as fighting intensified.

Hawaii becomes first state with $4 gas average
JAYMES SONG - AP - Mon Mar 14, 8:51PM CDT

HONOLULU (AP) — Americans are feeling the pain at the pump. In Hawaii, the sting just got a little worse.

The state reached the dubious milestone Monday of being the first in recent years where the average price for a gallon of regular unleaded gasoline has reached $4, according to AAA's Daily Fuel Report.

The Aloha State's average of $4 per gallon is the highest in the nation, beating California's average of $3.96. Alaska has the third highest average price at $3.90.

"Of course I'm not happy about it at all, but no one is," said Irma Lai, who was filling up her small SUV at a Big Island gas station that was charging $4.22 a gallon. "What the hell can I do? I have to drive. I can't walk everywhere. I use a cane."

Lai isn't the only one upset, and some are beginning to worry that consumers' increased spending on gasoline won't leave enough for other spending to fuel the nation's economic recovery.

"$4 is definitely a psychological mark," said Marie Montgomery, spokeswoman for the Automobile Club of Southern California, which covers Hawaii.

She said many stations have avoided changing their price signs, hanging onto the 3s as long as possible.

"I'm seeing in California, a lot of gas stations are almost like they're afraid to put that 4 on there," she said. "Nobody wants to be the first."

Some cities have already hit a $4 average, including San Francisco, but Hawaii is the first state to reach the mark since 2008. The area tracked by AAA in Hawaii with the highest average was the Wailuku area of Maui, where the average Monday was $4.24.

Jordan Kaneshiro, who pumps gas at Shige's Service Station in the rural Hawi area of the Big Island, said customers aren't happy about the high prices.

"I pumped $100 today for one guy," Kaneshiro said. "The guy wanted a discount."

The national average for regular unleaded was $3.56 a gallon, up a nickel from a week ago and 43 cents higher than a month ago. Wyoming had the cheapest gas in the nation, averaging $3.27.

Oil prices have been surging in recent weeks because of the unrest in Libya that has forced that country to shut down its oil fields, which had been producing about 1.6 million barrels of crude per day. The squeeze on world supplies and concern that uprisings could spread across the Middle East helped push oil prices about 24 percent higher in the past few weeks.

Gasoline pump prices in the U.S. followed oil sharply higher and are still the most expensive ever for this time of year.

According to AAA, $4 gas prices haven't been seen since 2008, when oil prices skyrocketed well above $100 a barrel. Hawaii hit $4 for the first time on May 23, 2008, and stayed above that mark until Oct. 12, 2008. During that summer, the 50th state hit its high of $4.50.

Alaska holds the record for an average high of $4.69 reached July 24, 2008, according to the auto club.

Montgomery said in 2008, gas prices "barely passed for a breath and just kept on going," after breaking the $4 mark. However, this time, the increase has been more steady, with prices going up about a penny a day.

She said $4 gas could affect demand.

According to a recent AAA poll in several states, many members reported that $4 is the price point where they would drastically reduce their driving.

___

Online:

AAA Daily Fuel Gauge Report: http://fuelgaugereport.com

Tuesday, March 15, 2011...

•April crude oil prices this morning are trading down -$2.84 a barrel and April gasoline is -10.51 cents per gallon, both at fresh 2-week lows. Crude oil and gasoline prices yesterday fell to 2-week lows on speculation energy demand from Japan, the world's third-biggest economy, may decline after the strongest earthquake on record devastated its economy, but crude prices recovered their losses and finished mixed after Saudi Arabian troops entered Bahrain: CLJ11 +$0.03, RBJ11 -2.74.

                Bearish factors include (1) calculations from Japan's Petroleum Association that said last Friday's earthquake shut 29% of the country's domestic refining capacity, which signals reduced crude demand, (2) speculation that Japanese crude oil imports will drop as ports damaged by the quake and tsunami must be fixed before they can accept crude supplies, and (3) the tumble in global equity markets, which undercuts confidence in the global recovery and energy demand.

                Bullish factors included (1) the weaker dollar, and (2) the action by the Gulf Cooperation Council to send troops to Bahrain to protect "vital" oil installations, which fuels concern those violent protests in North Africa and the Middle East may be spreading to other oil-producing countries in the region.

IEA says Libyan oil exports halted
TAREK EL-TABLAWY - AP - 2 hrs 14 mins ago
Tuesday, March 15, 2011...

CAIRO (AP) — Libya's oil exports have "ground to a halt" because of the fighting between rebels and pro-government forces, and it could be months before the country's crude resurfaces on world markets, the International Energy Agency said Tuesday.

The Paris-based group, whose members are mainly oil-consuming industrial nations such as the United States, also said that production from the North African nation appeared to have "slowed to a trickle" as the fighting and mounting unrest prompted an exodus of foreign oil workers and led international companies to halt their operations in the country.

The IEA said that while the rebellion against Libyan leader Moammar Gadhafi continues, "what is becoming clearer is the country's oil production and exports could be off the market for many months due to both war-inflicted damage on oil infrastructure and international sanctions."

The fighting in Libya, which has served as the stage for the most violent of the anti-regime protests sweeping the Middle East, drove oil prices as high as almost $107 per barrel last week on the New York Mercantile Exchange before they quickly cooled after the massive earthquake that ravaged Japan. The U.S. benchmark crude futures contract was around $99 per barrel in electronic trading on the Merc on Tuesday.

The assessment, presented in the IEA's latest month oil market report, reaffirms the belief of many in the market that Libya's vital oil industry was all-but-shuttered amid the fighting. The country sits atop Africa's largest proven reserves of conventional crude, and had produced about 1.6 million barrels per day. Most of its exports went to Europe.

At least three of the major ports in the east are no longer exporting, and an official with the Arabian Gulf Oil Co. in the east said Monday that they were not expecting another tanker until mid-April from the terminal in Tobruk, near the Egyptian border.

Other ports have been shut down, with the Ras Lanouf facility suffering a fire at a kerosene storage facility. Even if they are open, tankers have steered clear because of the shelling by pro-Gadhafi forces.

Similarly, analysts believe that what little production remains is likely to have been shut in, or will be shut down, given that the net outcome of shipping oil through pipelines during a military campaign could easily be a major explosion.

Gadhafi's forces have been pushing to recapture the eastern ports, which represent at least 65 percent of the country's export capacity. The country's oil minister has said output is down by about two-thirds of its normal level, but the fighting, communication cuts and other challenges have made it impossible to independently verify the figures put forward both by the government or the rebels.

Many analysts believe that they may try to restart the fields with what limited oil labor force available to the state-run National Oil Co., but that such a step would be essentially irrelevant given that there appear to be few willing buyers of Libyan oil because of the mounting international sanctions on the country.

"While approximately half the country's output was halted in the first few weeks of the rebellion, by 11 March it appeared that production had slowed to a trickle, not least because of the fighting," the IEA said. "Indeed, it is understood that most oil field operations have been shut-in or sharply curtailed, with transport routes choked off."

Other members of the 12-nation Organization of the Petroleum Exporting Countries — most notably Saudi Arabia — have ramped up production to offset the loss of Libyan oil. Several minister have said there are informal discussions about whether there was a need to meet ahead of their June gathering to determine whether their output quotas needed to be revised to cool surging prices.

The IEA said OPEC crude oil output was down slightly less than 100,000 barrels per day in February, with increases from other members of the producer bloc largely offsetting the drop in Libya's production.

Wednesday, March 16, 2011...

•April crude oil prices this morning are trading up +$1.41 a barrel and April gasoline is +2.78 cents per gallon. Crude oil and gasoline prices yesterday sold-off to 2-week lows and settled sharply lower as concern the damage from Japan's earthquake may reduce crude demand outweighed speculation of supply disruptions in the Middle East: CLJ11 -$4.01, RBJ11 -15.74.

                Bearish factors include (1) strength in the dollar, which discourages investment demand in commodities, and (2) speculation that crude oil demand in Japan, the world's third-biggest economy, will be reduced indefinitely as the country recovers from the worst earthquake in its recorded history.

                Bullish factors included (1) the action by Bahrain to declare a 3-month state of emergency and allow a second contingent of troops from the Gulf Cooperation Council into its country to support the government after a month of anti-government protests intensified, and (2) the statement from the IEA that Libya's oil exports may be halted for "many months" because of damage to facilities and trade sanctions against Libya's leader Muammar Qaddafi. Expectations for Wednesday's weekly inventory report from the DOE are for crude oil supplies to rise +1.75 million bbl, gasoline stockpiles to drop -2.0 million bbl, distillate inventories to fall -1.5 million bbl and the refinery utilization rate to remain unchanged at 82.0%.

Thursday, March 17, 2011...

•April crude oil prices this morning are trading up +$1.78 a barrel and April gasoline is +4.03 cents per gallon. Crude oil and gasoline prices yesterday recovered from early weakness on concern that escalating violence in Bahrain will spill over into Saudi Arabia: CLJ11 +$0.80, RBJ11 +4.08.

                Bullish factors included (1) concern the escalation of violence in Bahrain will spread to Saudi Arabia, the world's biggest crude-exporting country, after Bahrain declared a 3-month state of emergency as a month of anti-government protests intensified, and (2) the larger-than-expected declines in weekly DOE gasoline and distillate inventories (gasoline -4.17 million bbl versus expectations of -2.0 million bbl and distillates -2.60 million bbl versus expectations of -1.5 million bbl).

                Bearish factors include (1) strength in the dollar, which discourages investment demand in commodities, and (2) comments from the EU Energy Commissioner who said that Japan's crippled nuclear power pla nt risks provoking a "major disaster," which sent the prices of most commodities tumbling.

Friday, March 18, 2011...

•               April crude oil prices this morning are trading up +66 cents a barrel and April gasoline is +1.98 cents per gallon. Crude oil surged over $2.00 a barrel in overnight trade on news the UN had passed a resolution for a no-fly zone over Libya, but prices fell back after China raised banks' reserve requirements. Crude oil and gasoline prices yesterday moved sharply higher on concern the civil unrest in North Africa and the Middle East will spread and reduce crude shipments from the region: CLJ11 +$3.44, RBJ11 +10.69.

                Bullish factors included (1) concern the escalation of violence in Bahrain will spread to Saudi Arabia, the world's biggest crude-exporting country, (2) the plunge in the dollar index to a 4-1/4 month low, which encourages investment demand in commodities, and (3) stronger-than-expected US economic data on weekly jobless claims and the Mar Philadelphia Fed manufacturing index, which signals economic strength that may support increased energy demand and consumption.

                Bearish factors include (1) the unexpected declines in Feb US industrial production and capacity utilization which signals reduced energy consumption, and (2) heightened concern that Japan's quake crisis may push its economy into recession which would slash global economic growth and energy demand.

Monday, March 21, 2011...

•               April crude oil prices this morning are trading up $1.88 a barrel and April gasoline is +5.34 cents per gallon as allied air strikes in Libya threaten to prolong a supply outage in Africa's third biggest oil producer. Crude oil and gasoline prices last Friday fluctuated between gains and losses and settled slightly lower when Libya said it will halt all military action against rebel forces after the UN approved a no-fly zone over Libya: CLJ11 -$0.35, RBJ11 -0.12. Apr crude rose to a 1-week high but fell back and closed lower.

               Bearish factors include (1) the action by Libya to announce a halt to all of its military action against rebel forces and that it will start talks with the opposition, and (2) comments from the director of the Bureau of Ocean Energy Management, Regulation and Enforcement who said the Obama administration may cut the duration of US oil leases to accelerate development and production and cut the royalty rate of companies that step up crude production on federal lands, which may increase US oil supplies.

               Bullish factors included (1) the slump in the dollar index to a 4-1/2 month low, which boosts investment demand in commodities, (2) the action by the United Nations Security Council to approve a no-fly zone over Libya, which bolstered speculation of UN air attacks on Libyan forces, and (3) data from the API that showed US Feb fuel demand rose 4.4% y/y to 19.7 million barrels a day, the highest Feb total in 3 years.

Tuesday, March 22, 2011...

•               April crude oil prices this morning are trading down -34 cents a barrel and April gasoline is -1.37 cents per gallon. Crude oil and gasoline prices yesterday climbed after allied forces launched air attacks on Libya along with continued weakness in the dollar: CLJ11 +$1.26, RBJ11 +4.80. Apr gasoline posted a 1-week high.

                 Bullish factors included (1) allied air strikes in Libya that threaten to prolong a supply outage in Africa's third biggest oil producer, (2) the slump in the dollar index to a 1-1/4 year low, which boosts investment demand in commodities, and (3) concern the civil unrest in North Africa and the Middle East is worsening and may spread to other oil producing countries in he region after Yemen declared a state of emergency.

                Bearish factors include (1) estimates from JPMorgan Chase that about half of Japan's refineries remain shut due to its quake crisis, which indicates reduced crude demand, and (2) the weaker-than-expected Feb US existing home sales, which signals the weak housing market may keep pressure on the economy and energy demand.

tops $105 per barrel
Oil rising again; gasoline prices flat, but experts say they should keep climbing this spring

In this Feb. 16, 2011 photo, David Castro-Diephouse returns the nozzle to the pump after filling his car's tank with gas in Philadelphia. Oil prices rose above $104 per barrel Tuesday, March 22, 2011, as traders continued to focus on a series of international crises that will drive world supply and demand this year.(AP Photo/Matt Rourke)
Chris Kahn, AP Energy Writer, On Tuesday March 22, 2011, 3:03 pm EDT
NEW YORK (AP) -- Oil prices pushed above $105 per barrel Tuesday, as traders focused on a series of international crises that could tighten global supplies at a time when consumption is expected to increase.

Benchmark West Texas Intermediate for May delivery rose $1.88 to settle at $104.97 per barrel on the New York Mercantile Exchange. At one point it was as high as $105.18. In London, Brent crude gained 73 cents to settle at $115.64 per barrel.

Energy economists continued to gauge how recent unrest in Libya, Bahrain, Yemen and Syria will affect exports from a region that produces 27 percent of the world's oil. Libya, which sits on the largest oil reserves in Africa, has almost totally stopped petroleum shipments as rebels battle pro-Gadhafi troops. The addition of international forces, including the U.S., could mean that the country will be embroiled in a protracted conflict that will keep oil fields offline much longer than previously expected, energy experts said.

In Yemen, embattled President Ali Abdullah Saleh pledged to step down more than a year early, but his refusal to leave immediately infuriated tens of thousands of demonstrators. Yemen is an important transfer point for global oil supplies.

"Tensions are still pretty high in that entire region, so prices are going to stay above $100 per barrel for a while," PFG Best analyst Phil Flynn said.

Iraq's new oil minister said Tuesday that he expects oil to reach $120 a barrel. Iraq produces about 2.4 million barrels of oil per day.

Retail gasoline prices in the U.S. held steady on Tuesday at a national average of $3.547 per gallon, according to AAA, Wright Express and Oil Price Information Service. They're still the highest ever for this time of year. A gallon of regular has jumped 37.9 cents in the last month and is 72.7 cents more expensive than a year ago.

OPIS gasoline analyst Fred Rozell said gasoline prices may continue to rise this spring to a national average of $3.75 per gallon. "With everything happening around the world, we're not going to see prices fly backward anytime soon," Rozell said.

Demand for oil and gas should rise as the U.S. and global economies continue to recover. China shows little sign of reducing its thirst for petroleum. Platts reports that China's oil demand in February rose 10.1 percent from a year ago, to the second strongest level on record. It hit an all-time high in December. China is the world's second biggest oil consumer behind the U.S.

Meanwhile, Japan continues to stabilize the Fukushima Dai-ichi nuclear complex that was damaged and leaking radiation following this month's earthquake and tsunami. The government will release more than 56 million barrels of oil from the country's reserves -- enough to cover 22 days of demand, analyst Addison Armstrong said. Japan previously released three days' supply of oil from its reserves.

Bank of America analyst Sabine Schels said Japan will rely on other power generators that run on liquefied natural gas and oil to make up for the loss of its nuclear facilities.

Schels estimated that Japan will increase imports of liquefied natural gas by 706 million to 848 million cubic feet per day to partially replace power lost from damaged nuclear reactors. Royal Dutch Shell is among oil companies shipping more crude and LNG to Japan to help offset power shortages.

Japan's increased imports are expected to push world natural gas prices higher, though large global supplies should prevent them from spiking above $13 per 1,000 cubic feet as they did in 2008. Schels expects natural gas prices to average around $4.48 per 1,000 cubic feet this year. Natural gas for April delivery gained 9.3 cents to settle at $4.254 per 1,000 cubic feet.

In other Nymex trading for April contracts, heating oil added 2.37 cents to settle at $3.0762 per gallon and gasoline gained almost a penny to settle at $3.0045 per gallon.

The April contract for West Texas Intermediate crude climbed $1.67 to settle at $104 per barrel on its final day of trading.

Wednesday, March 23, 2011...

•               May crude oil prices this morning are trading up +41 cents a barrel and May gasoline is +1.60 cents per gallon. Crude oil and gasoline prices yesterday finished higher on concern that civil unrest will spread to other oil-producing nations in the Middle East and North Africa: CLK11 +$1.88, RBK11 +0.76.

                Bullish factors included (1) the slump in the dollar index to a 1-1/4 year low, which boosts investment demand in commodities, (2) increased optimism that Japan's nuclear crisis will be contained, and (3) concern that the civil unrest in the Middle East and North Africa will spread to other oil-producing nations in the region.

                Bearish factors include (1) decreased oil demand from Japan, the world's third-largest crude consumer, after JX Nippon Oil & Energy, Japan's biggest refiner, sold 2 million bbl of crude to South Korea because the oil was not needed due to the closure of Nippon's refineries from quake damage, (2) early weakness in gasoline on speculation that US refiners that had been shut for seasonal maintenance were coming back online and producing more gasoline, and (3) the outlook for weekly US crude supplies to increase for a third week when the DOE reports inventories on Wed. Expectations for Wednesday's weekly DOE inventory figures are for crude oil supplies to increase 1.45 million bbl, gasoline stockpiles to fall -2.0 million bbl, distillate inventories to drop -1.5 million bbl and the refinery utilization rate to rise +0.4 to 83.8%.

Thursday, March 24, 2011...

•               May crude oil prices this morning are trading up +61 cents a barrel and May gasoline is -0.46 of a cent per gallon. Crude oil and gasoline prices yesterday rallied to 1-1/2 week highs as the US and its allies prepare to attack Libyan leader Qaddafi's ground troops and after protesters clashed with government troops in Syria: CLK11 +$0.78, RBK11 +1.50.

                Bullish factors included (1) concern that Libyan oil output will remain reduced after US Admiral Locklear said that more air strikes will be launched against Libya in the "coming hours and days," (2) the spread of civil unrest to Syria, which bolsters concern that civil unrest may spread to other oil-producing areas in the region and further cut global oil supplies, (3) the larger than expected decline in weekly gasoline inventories which fell to their lowest level this year (-5.32 million bbl to 219.7 million bbl versus expectations of -2.0 million bbl), and (4) increased demand after total US fuel demand for the week ending Mar 18 rose +1% to 19.3 million barrels a day.

                Bearish factors include (1) strength in the dollar, which reduces investment demand in commodities, (2) the larger-than expected increase in weekly crude oil inventories (+2.13 million bbl versus expectations of +1.45 million bbl), and (3) the action by Britain's OBR to cut its 2011 GDP forecast to 1.7% from a Nov estimate of 2.1%, which signals reduced energy demand and consumption.

Friday, March 25, 2011...

•               May crude oil prices this morning are trading up +13 cents barrel and May gasoline is +0.18 of a cent per gallon. Crude oil and gasoline prices yesterday closed mixed as allied air attacks on Libya supported prices while the lingering European debt crisis and an unexpected decline in US durable goods orders limited gains: CLK11 -$0.15, RBK11 +2.22. May crude posted a 2-week high but shed its gains and closed lower.

                Bearish factors include (1) concern the European debt crisis may worsen and slow the global economy and energy demand after European officials said a bailout of Portugal may total as much as 70 billion euros ($99 billion), (2) the unexpected decline in Feb US durable goods orders, which hints at economic weakness that may curtail fuel demand, and (3) the prediction from PFC Energy that OPEC may agree to an increase in production when it meets in Jun because of a "sustained" supply disruption from Libya.

                Bullish factors included (1) the weaker dollar, which boosts investment demand for commodities, (2) sustained allied attacks in Libya, which may further reduce Libyan crude output, and (3) an escalation of anti-government protests in Syria and Yemen, which may spread further civil unrest to oil-producing nations in the Middle East and North Africa.

With the passage of UN Resolution 1973, France, Britain, the United States, and several Arab countries intervened militarily in Libya to prevent attacks on civilians. This may very well avoid a Libyan civil war, and could save innumerable lives.

The effect of the UN action on ongoing and future Libyan oil production is difficult to say at this point. In order to help investors, I have examined some of the largest publicly traded oil companies to determine their exposure to Libya. I did this largely because when I tried to look up this information I couldn't find the information compiled in one place. Simply understanding who conducts business in Libya – and how much – I hope this to be useful to investors. Table 1 shows 9 of the largest oil companies and what percentage of their oil production occurs in Libya. I have also examined the what companies produce the most oil in Libya, and calculated what percentage of their annual oil production this represents. This information is summarized in Table 2. In all cases I used current production in Libya expressed as a percentage of total 2010 oil production. This information should help investors determine the extent to which their investments may be affected by events in Libya.

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=50300)

Several of the largest oil companies above have significant investments and exploration underway in Libya, but have no current production. Many had production facilities in the 1980s, but exited the country when the United States imposed sanctions on Libya in 1986. Following Kaddafi's agreement to give up his weapons of mass destruction in December 2003, sanctions were eased and by 2004 ExxonMobil (XOM) had restarted exploration in Libya and was subsequently awarded offshore drilling contracts in 2005, 2007, and 2008. BP (BP) signed an onshore exploration deal with Libya in 2007 for $900 million, and this deal apparently represents BP's single largest commitment. However, a BP spokesperson has said that they "are years away from any production." PetroChina (PTR) has some exploration offshore of India that has required evacuating a portion of its personnel in Libya, but no current production. Petrobras (PBR) also operates an exploratory unit offshore, and has pulled out a small number of staff.

(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=50301)

The oil companies with the largest percentage of oil production in Libya are ENI (E) at 12% of production, Marathon Oil (MRO) at 12% of production, OMV Group (WBAG: OMV) at 10% of production, Gazprom (OGZPY.PK) at 7.4% of production. The large U.S. companies with significant Libya exposure are Hess (HES) at about 5% of production, and Conoco-Phillips (COP) at 3.3% of production. I couldn't find any other publicly traded companies with more than 3% exposure, although Total (TOT), Occidental (OXY), and Statoil (STO) all have some production in Libya.

However the current situation is sorted out in the near term, uncertainty is likely to be the hallmark of oil politics in Libya going forward. Even if the opposition prevails — and that is still unknowable — it is unclear who will eventually come to power and what policies the future leadership will pursue. While any future government will need the hard currency that Libya's oil reserves represent, the path to full production remains murky. Prudence would suggest that oil companies with exposure to Libya need careful attention.

These figures are compiled from a variety of sources. While some were from the annual reports of the companies involved, others were from secondary sources and I cannot completely vouch for their accuracy. I did try to use only the most reputable sources, but any investors intending to act on any of this information should conduct their own due diligence.

Crude Oil...
Nymex WTI recovered sharply. The fast up-trend is likely to eventually end in a blow-off, but will increase inflation fears and boost gold in the short/medium-term.

* Target calculation: 105 + ( 105 - 97 ) = 113

Monday, March 28, 2011...

•   May crude oil prices this morning are trading down -58 cents a barrel and May gasoline is -1.90 cents per gallon. Crude oil and gasoline prices last Friday settled slightly lower as European debt concerns offset a stronger US economy: CLK11 -$0.20, RBK11 -0.13. May gasoline posted a 2-week high but shed its gains and closed lower.

                Bearish factors included (1) strength in the dollar, which discourages investment demand for commodities, (2) concern that Japan's rebuilding process may be delayed after a spokesman for Japan's Nuclear and Industrial Safety Agency said one reactor core at the quake-damaged Fukushima Dai-Ichi power plant might be cracked and leaking radiation, (3) concern that the European debt crisis will worsen and slow the economy and energy demand, and (4) the larger-than-expected drop in Mar U.S. University of Michigan consumer confidence which tumbled to a 16-month low and may lead to decreased consumer spending and fuel demand.

                Bullish factors includ e (1) the larger-than-expected upward revision to US Q4 GDP, which indicates stronger-than-expected fuel consumption, and (2) the ongoing civil unrest in North Africa and the Middle East that threatens to spread to major oil-producers in the region.

Tuesday, March 29, 2011...

•   May crude oil prices this morning are trading down -$1.15 a barrel and May gasoline is -1.79 cents per gallon. Crude oil and gasoline prices yesterday closed lower on speculation that recent victories by Libyan rebels may speed up a resolution to the country's armed conflict and put Libyan oil back on the market: CLK11 -$1.42, RBK11 -2.19.

                Bearish factors included (1) the action by Qatar to agree to market crude from east Libyan oil fields that are now controlled by rebel forces, which eases concern that Libyan oil exports will be disrupted for an extended period, and (2) concern that a recovery in Japan will be delayed after Japan's chief government spokesman said a partial meltdown of fuel rods in the No. 2 reactor probably caused a jump in radioactive readings that will further complicate containment of Japan's nuclear crisis.

                Bullish factors include (1) the reversal in the dollar after the dollar index fell back from a 1-week high and closed lower, which boosts in vestment demand for commodities, (2) comments from Algeria's Oil Minister that the oil market is "well supplied" and there is no need to compensate for a decline in Libya's output, and (3) the stronger-than-expected Feb US personal spending, which shows strength in the economy that may bolster fuel demand.

Wednesday, March 30, 2011...

•   May crude oil prices this morning are trading down -40 cents a barrel and May gasoline is -0.76 of a cent per gallon. Crude oil and gasoline prices yesterday recovered from early losses and followed the equity market higher: CLK11 +$0.81, RBK11 +1.60.

                Bullish factors include (1) the rally in the stock market, which boosts confidence in the economic outlook and energy demand, and (2) strength in gasoline on speculation that US gasoline inventories will decline for a sixth straight week when the DOE releases inventory figures on Wed.

                Bearish factors included (1) the stronger dollar, (2) the advance of Libyan rebels against Mummar Qaddafi's troops, which spurs hope the conflict in Africa's third-largest oil producer may end soon and start Libyan crude exports flowing again, and (3) the weaker-than-expected Mar US consumer confidence, which may lead to reduced consumer spending and fuel demand. Expectations for Wednesday's weekly inventory report from the DOE are for cru de oil stockpiles to rise +1.5 million bbl, gasoline supplies to fall -1.8 million bbl, distillate inventories to drop -1.0 million bbl and the refinery capacity rate to increase +0.3 to 84.4%.

Thursday, March 31, 2011...

•   May crude oil prices this morning are trading up +$1.10 a barrel and May gasoline is +2.08 cents per gallon. Crude oil and gasoline prices yesterday settled mixed as a larger-than-expected increase in weekly DOE crude supplies undercut crude while a larger-than-expected drop in gasoline inventories lifted gasoline: CLK11 -$0.52, RBK11 +1.37.

                Bearish factors included (1) the stronger dollar, which erodes investment demand for commodities, (2) the larger-than-expected increase in weekly crude inventories (+2.94 million bbl to a 3-1/2 month high of 356 million bbl versus expectations of +1.5 million bbl), and (3) reduced fuel demand after US gasoline demand dropped -2.3% w/w and -2.1% y/y to 8.87 million barrels a day in the week ended Mar 25, as higher prices have cut gasoline demand to lower than it was a year ago.

                Bullish factors include (1) strength in the stock market, which boosts confidence in the economic outlook and energy demand, and (2) strength in gasoline af ter weekly gasoline supplies fell more than expected (-2.68 million bbl to a 3-month low of 217 million bbl versus expectations of -1.8 million bbl).

Crude Oil...
Nymex WTI crude is consolidating below resistance at $106/barrel. Narrow consolidation would be a bullish sign. Reversal below $97 is unlikely at present, but would warn of a correction back to the long-term trend line. Upward breakout would boost gold in the short/medium-term.

* Target calculation: 105 + ( 105 - 97 ) = 113

Oil climbs to highest since 2008 on Libya conflict
Oil rises above $106 a barrel as pro-Gadhafi forces push back rebels

On Thursday March 31, 2011, 1:53 pm
NEW YORK (AP) -- The price of oil rose to a 30-month high on Thursday as fighters loyal to Moammar Gadhafi pushed back rebels from key areas in eastern Libya.

Benchmark West Texas Intermediate crude rose $$1.96 to $106.23 a barrel in afternoon trading on the New York Mercantile Exchange. At one point it hit $106.77, the highest it's been since September, 2008. In London, Brent crude rose $2.10 to $117.05 per barrel.

Battles between Gadhafi's troops and rebels have seesawed back and forth in Libyan ports and towns since mid-February, with the price of oil rising more than $20 a barrel since then. Energy consultants Cameron Hanover said traders are beginning to view the Libya uprising as a standoff for now. 'Without control of the air, Gadhafi's troops have been unable to hammer home their gains. And, without strong and well-trained ground forces, the rebels seem incapable of holding onto their gains. Optimism that Libyan oil might return to the market, seen earlier this week, was dashed."

Libya's oil exports, which went mainly to Europe, are shut down. The rebels have said they plan to start shipping oil again, although how soon that could happen is unclear. Libya exported only about 1.6 million barrels of oil a day, or 2 percent of global consumption, but energy traders worry that unrest will spread across the region to disrupt shipments from OPEC countries like Saudi Arabia and Iran. The Saudis are the biggest oil producers in the world, supplying about 8.4 million barrels a day. Iran produces more than 4 million barrels a day. Anti-government protests in those countries so far have been limited, although unrest continues in Syria, Bahrain and Yemen.

Meanwhile the Saudis are making good on a promise to make up for the deficit of Libyan oil. "Saudi Arabia is beginning to supply European oil companies with crude oil to help alleviate the shortfall from Libya," said Addison Armstrong, senior director of market research at Tradition Energy. "Saudi Arabian Oil Co. has sold three shipments of light, sweet crude for March and April delivery: two to Austrian oil company OMV AG and one to BP."

The Energy Department's Energy Information Administration released its weekly report on natural gas supplies on Thursday. It showed that the United States' abundant reserves grew by 12 billion cubic feet from the week before, to 1.624 trillion cubic feet. That is 4.4 percent above the five-year average.

"Shale plays have fundamentally altered the amount of domestic supply available, leading to large weekly injections," said energy analyst Stephen Schork, who writes the daily Schork Report newsletter. The Energy Department estimates that natural gas in the nation's shale deposits amounts to a 110-year supply.

Natural gas contracts rose 6 cents to $4.415 per 1,000 cubic feet. In other Nymex trading, heating oil added 5 cents to $3.1056 per gallon, and gasoline futures gained 4 cents at $3.0973 per gallon.

Friday, April 1, 2011...

•   May crude oil prices this morning are trading yp +49 cents a barrel and May gasoline is +1.18 cents per gallon. May crude rose to a 2-1/2 year high of $107.65 a barrel in overnight trade after manufacturing data in China accelerated for the first time in 4 months. Crude oil and gasoline prices yesterday finished higher as the dollar weakened and after Libyan leader Mummar Qaddafi's troops forced rebels to retreat: CLK11 +$2.45, RBK11 +5.04. May crude rose to a 3-week high and May gasoline climbed to a contract high, while nearest-futures Apr gasoline posted a 2-1/2 year high.

                Bullish factors included (1) the weaker dollar, which bolsters investment demand for commodities, and (2) the action by Mummar Qaddafi's troops to repel the advances of rebel forces, which may prolong the Libyan conflict and further curtail Libyan oil production.

                Bearish factors include (1) the unexpected decline in US Feb factory orders, and (2) the statement from the IEA that crude oil prices are entering a "dangerous zone" for the global economy, which may already be seeing demand destruction due to high prices.

Monday, April 4, 2011...

•   May crude oil prices this morning are trading up +43 cents a barrel and May gasoline is +0.86 of a cent per gallon, both at fresh 2-1/2 year highs. Crude oil and gasoline prices last Friday rallied to 2-1/2 year highs and settled higher on signs of increased global demand along with intensified fighting in Libya: CLK11 +$1.22, RBK11 +3.84.

                Bullish factors included (1) the increase in Mar China PMI manufacturing for the first time in 4 months, which signals increased energy demand, (2) stronger than expected US economic data on Mar payrolls and Mar ISM manufacturing, which points to economic strength that may boost fuel demand, and (3) the action by Mummar Qaddafi's troops to repel the advances of rebel forces, which may prolong the Libyan conflict and further curtail Libyan oil production.

                Bearish factors include (1) weakness in European economic data after the Mar Euro-Zone PMI manufacturing index was unexpectedly revised down and Mar UK PMI manufacturing fell to a 5 -month low, which indicates decreased energy consumption, and (2) comments from New York Fed President Dudley who said not to be "overly optimistic about the growth outlook."

Tuesday, April 5, 2011...

•   May crude oil prices this morning are trading down -58 cents a barrel and May gasoline is -1.59 cents per gallon. Crude oil and gasoline prices yesterday climbed to 2-1/2 year highs and settled higher on concern that global oil supplies will be hindered as the civil war in Libya is prolonged: CLK11 +$0.53, RBK11 +2.10.

                Bullish factors included (1) increased fighting between rebels and troops loyal to Mummar Qaddafi in Libya, which fuels speculation that a protracted conflict in Libya will curtail global oil supplies, and (2) the rally in global stock markets which bolsters confidence in the economic outlook and energy demand.

                Bearish factors include (1) the stronger dollar, which reduces investment demand in commodities, (2) comments from IEA Director Tanaka that the "burden" that crude at more than $100 a barrel puts on the world economy is "worrisome" and may be as bad as in 2008, and (3) the prediction from the US Climate Prediction Center for a bove-average temperatures for much of the US from Apr 9 to Apr 13, which could reduce demand for heating fuels.

Wednesday, April 6, 2011...

•   May crude oil prices this morning are trading down -18 cents a barrel and May gasoline is -1.49 cents per gallon. Crude oil and gasoline prices yesterday settled mixed as crude fell after China raised interest rates and the May ISM non-manufacturing index fell more than expected, while gasoline closed higher on expectations that weekly US gasoline stockpiles fell for the seventh consecutive week: CLK11 -$0.13, RBK11 +3.25. May gasoline posted a 2-1/2 year high.

                Bearish factors include (1) the action by China to raise interest rates, which may slow its economy and energy demand, (2) the weaker-than-expected Mar ISM non-manufacturing index, which signals reduced fuel demand, and (3) the outlook for weekly US crude supplies to increase when the DOE releases its inventory figures on Wed.

                Bullish factors included (1) the statement from Iran's OPEC governor who said OPEC has no plans for an emergency meeting on higher oil prices, which reflect political and social situatio ns rather than supply and demand, and (2) strength in gasoline prices on the outlook for weekly DOE gasoline inventories to fall for a seventh consecutive week on Wed. Expectations for the weekly inventory report from the DOE are for crude oil supplies to climb +2.0 million bbl, gasoline stockpiles to decline -1.9 million bbl, distillate inventories to remain unchanged and the refinery utilization rate to increase +0.5 to 84.6%.

Thursday, April 7, 2011...

•   May crude oil prices this morning are trading up +9 cents a barrel and May gasoline is -0.41 of a cent per gallon. Crude oil and gasoline prices yesterday rallied to 2-1/2 year highs but finished mixed as gasoline closed lower on the smaller-than-expected drop in weekly inventories and crude settled higher after German factory orders surged: CLK11 +$0.49, RBK11 -0.84.

                Bullish factors included (1) the slide in the dollar index to a 1-1/2 week low, which boosts investment demand in commodities, and (2) the surge in Feb German factory orders by nearly 5 times estimates, which signals economic strength that may lead to increased energy demand.

                Bearish factors include (1) weakness in gasoline after weekly DOE gasoline inventories fell less than expected (-357,000 bbl versus expectations of -1.9 million bbl), and (2) comments from the UAE Energy Minister who said that world oil markets are "adequately supplied" and "the surge in prices is a reflection of geop olitics and natural disaster but not the fundamentals."

Friday, April 8, 2011...

•   May crude oil prices this morning are trading +$1.54 a barrel and May gasoline is +3.90 cents per gallon, both at fresh 2-1/2 year highs. Crude oil and gasoline prices yesterday settled mixed as a strong dollar and an ECB rate hike undercut gasoline but strong economic data along with an oil field fire in Libya lifted crude: CLK11 +$1.47, RBK11 -0.64. May crude posted a 2-1/2 year high.

                Bullish factors included (1) a fire at the al-Sarir oil field in Libya caused by Qadaffi's forces, and (2) stronger than expected economic data on weekly US jobless claims and Feb German industrial production, which signals economic strength that may boost energy demand.

                Bearish factors include (1) the stronger dollar, which reduces investment demand in commodities, and (2) the action by the ECB to raise interest rates, which bolsters concern that economic growth and energy demand will slow.

Oil price tumbles on supplies and Goldman pullback
Oil price lowest in weeks, OPEC and IEA say high prices dented demand

NEW YORK (AP) -- Oil dropped to the lowest level this month on Tuesday as energy forecasters said the world's supply of oil will remain ample, and a prominent investment bank said prices are too high.

Forecasters also said they're seeing signs that high oil prices are hurting demand for fuel in the U.S. and elsewhere.

Goldman Sachs warned investors that the price of oil has already topped its second-quarter forecast and is due for a "substantial pullback" in the near term. Goldman is considered a big player in oil markets, and is best known for bullish price forecasts.

Benchmark West Texas Intermediate crude for May delivery gave up $3.67, or 3 percent, to settle at $106.25 per barrel on the New York Mercantile Exchange. Oil dropped as low as $105.47 earlier in the day.

Oil's 33 percent rally since the middle of February has been built largely on concerns about disruptions to supplies from North Africa and the Middle East. On Tuesday, Goldman analyst David Greely backed off an earlier warning that the loss of Libya's daily oil production of 1.6 million barrels would create a squeeze on supplies similar to that seen in 2008, when oil spiked to $147 per barrel.

Geely now calls global supplies "adequate." That, and his forecast that the price of Brent crude, the benchmark for oil trading in Asia and Europe, would retreat from around $125 to his forecast of $105, helped spark a selloff.

In London, Brent crude lost $2.99, or 2.4 percent, to settle at $120.43 per barrel on the ICE Futures exchange.

WTI, the U.S. benchmark, followed. Its price has dropped about 6 percent in two days after settling above $112 on Friday.

Analyst and trader Stephen Schork pointed out that anyone who bought WTI futures last week paid between $107.58 and $112.94 per barrel. If oil stays below that level, it could trigger a wider sell-off.

"If they panic, we could be at $100 (per barrel) in no time," Schork said.

On Tuesday, some of the industry's primary data-collecting agencies suggested that refineries should remain well supplied with oil despite growing demand from China and other emerging economies.

The International Energy Agency said a supply crisis has been averted, in the short term at least, as Saudi Arabia, Kuwait and the United Arab Emirates boost production to offset Libya's lost output.

Both OPEC and IEA warned that high energy prices are starting to force people to conserve on fuel. "High prices are already starting to dent demand growth," IEA said in its monthly report.

Economists have been looking for signs that consumers are starting to balk at higher energy prices. Industry surveys of gasoline purchases suggest that motorists have started to drive less, though some analysts, including those at Barclays Capital, say they haven't seen a "considerable impact" yet.

Analysts say it's unclear whether oil is headed for a correction and lower prices. They note that the price of oil fell about 5 percent in the days after Japan was rocked by a devastating earthquake and tsunami. That decline was reversed in days, as were smaller ones since.

"The trend is still up" for oil prices, said Tom Bentz, director of BNP Paribas Commodity Futures. But he added, "I don't know how long we can keep seeing increases in inflation across the board -- food inflation, energy inflation -- and how long we can see that go on without having some kind of pullback in demand."

U.S., gasoline demand has dropped for six straight weeks, according to MasterCard SpendingPulse. SpendingPulse said Americans bought 3 percent less gas last week than at the same time last year. The consumer research group tracks gasoline purchases at 140,000 service stations around the country.

The Energy Department said Tuesday that gasoline prices should be higher when vacationers hit the highways this summer. The agency now expects Americans will pay an average $3.86 per gallon during the summer driving season, which traditionally begins with Memorial Day weekend.

The national average for a gallon of regular is already at $3.79 after rising 2 cents overnight, according to AAA, Wright Express and Oil Price Information Service. Illinois has joined California, Hawaii and Alaska with average prices above $4 per gallon.

In other Nymex trading for May contracts, heating oil lost 7.99 cents to settle at $3.1726 per gallon and gasoline futures gave up 3.64 cents to settle at $3.1641 per gallon. Natural gas fell a penny to settle at $4.098 per 1,000 cubic feet.

Monday, April 11, 2011...

•   May crude oil prices this morning are trading down -97 cents a barrel and May gasoline is -3.30 cents per gallon. Crude oil and gasoline prices last Friday rallied sharply as the dollar plunged and fighting intensified in Libya: CLK11 +$2.49, RBK11 +7.42. May crude posted a 2-1/2 year high and May gasoline soared to a 2-3/4 year high.

                Bullish factors included (1) the plunge in the dollar index to a 16-month low, which bolsters investment demand for commodities, (2) the ongoing strife in Libya with the prediction from Barclays Capital that damage to oilfields in Libya by forces loyal to Mummar Qaddafi are the "ultimate blow" to hopes for a prompt resumption of exports, and will help send oil prices towards $130 a barrel, and (3) the larger-than-expected increase in Feb German exports which boosts confidence in the global economic outlook and energy demand.

                Bearish factors was the report from JBC Energy GmbH that a jump in oil prices to an average of $125 a barrel this year may erode the economic recovery and reduce crude demand by 700,000 barrels a day.

Tuesday, April 12, 2011...

•   May crude oil prices this morning are trading down -24 cents a barrel and May gasoline is +2.45 cents per gallon. Crude oil and gasoline prices yesterday pulled back after the IMF cut its GDP growth estimates for the US and after Libyan leader Qaddafi agreed to a cease fire: CLK11 -$2.87, RBK11 -6.02. May crude posted a 2-1/2 year high but erased its gains and closed lower.

                Bearish factors included (1) a stronger dollar, which discourages investment demand in commodities, (2) the action by the IMF to cut its GDP estimate for the US this year to 2.8% from a Jan estimate of 3.0% and to cut its GDP forecast for Japan this year to 1.4% from 1.6%, which signals reduced fuel consumption, and (3) the report from the African Union that said Libyan leader Qaddafi agreed to a cease-fire plan, which bolstered speculation that Libyan oil exports may recover.

                Bullish factors included (1) the statement from Libyan rebels that they will not agree to a cease-fire deal if Libyan lead er Qaddafi or his sons are allowed to stay in power, and (2) the larger-than-expected increase in Mar China exports, which indicates economic strength that may lead to increased energy demand.

Wednesday, April 13, 2011...

•   May crude oil prices this morning are trading up +18 cents a barrel and May gasoline is +2.07 cents per gallon. Crude oil and gasoline prices yesterday sold-off for a second day after the IEA said that prices above $100 a barrel are starting to hurt the global economy: CLK11 -$3.67, RBK11 -3.64. May crude posted a 1-1/2 week low and May gasoline slid to a 1-week low.

                Bearish factors included (1) the monthly report from the IEA that stated there are signs of an oil-demand "slowdown" due to current oil prices above $100 a barrel, (2) the statement from investment bank Rajhi Capital that Saudi Arabia plans to expand its oil rig count by about 28% in order to ensure adequate spare production capacity, and (3) expectations for weekly crude supplies to increase for the sixth straight week when the DOE releases its weekly inventory figures on Wed.

                Bullish factors included (1) the slump in the dollar index to a 16-1/4 month low, which encourages investment demand i n commodities, (2) the action by the US Energy Department to raise its crude oil price forecast for 2011 to $106.38 a barrel from an earlier forecast of $101.77 a barrel, and (3) the outlook for US gasoline supplies to fall for the eighth consecutive week when the DOE releases its weekly inventory figures on Wed. Expectations for Wednesday's weekly DOE inventories are for crude oil to climb +1.0 million bbl, gasoline stockpiles to fall -850,000 bbl, distillate supplies to climb +500,000 bbl and the refinery utilization rate to rise +0.5 to 84.9%.

Thursday, April 14, 2011...

•   May crude oil prices this morning are trading down -99 cents a barrel and May gasoline is -3.09 cents per gallon. Crude oil and gasoline prices yesterday moved higher on a weak dollar and a plunge in US gasoline inventories to a 5-month low: CLK11 +$0.86, RBK11 +7.83. May crude posted a 1-1/2 week low but recovered its losses and finished higher.

                Bullish factors included (1) the weaker dollar, which encourages investment demand in commodities, (2) the larger-than-expected drop in weekly gasoline inventories which fell to a 5-month low (-7.0 million bbl to 209.7 million bbl versus expectations of -850,000 bbl), (3) increased demand after US gasoline demand rose +3.7% w/w in the week ended Apr 8 to 9.18 million barrels a day, and (4) the unexpected plunge in the refinery utilization rate to a 2-month low, which indicates reduced output of gasoline and distillate products in the weeks ahead (-3.0 to 81.4% versus an expected increase of +0.5 to 84.9%).

                Bearish factors in cluded (1) the larger-than-expected increase in weekly crude oil inventories which rose for the sixth consecutive week to a 3-1/2 month high of 359.3 million bbl (+1.63 million bbl versus expectations of +1.0 million bbl), and (2) the +26,000 bbl increase in weekly crude inventories in Cushing, OK, delivery point for WTI crude, to 41.9 million bbl, the highest since the DOE began tracking stockpiles at the hub in 2004.

Friday, April 15, 2011...

•   May crude oil prices this morning are trading down -2 cents a barrel and May gasoline is +1.20 cents per gallon. Crude oil and gasoline prices yesterday settled mixed as a report that Saudi Arabia cut crude production boosted crude while an unexpected increase in jobless claims undercut gasoline: CLK11 +$1.00, RBK11 -0.77.

                Bullish factors included (1) the report from Banque Saudi Fransi that said Saudi Arabia cut its crude output by 300,000 barrels a day because it couldn't find buyers for the lighter blend of crude it was producing after Libya's crude output was halted, (2) the fall in the dollar index to a 1-1/3 year low, which boots investment demand in commodities, and (3) early strength in gasoline after Sunoco FCC was forced to close a processing unit at its Philadelphia refinery, which may tighten gasoline supplies on the east coast.

               Bearish factors included (1) the unexpected jump in weekly US initial unemployment claims, which signals labor market weakness th at may reduce fuel demand, and (2) the report from the China Securities Journal that said China is likely to raise the reserve requirements for banks in the "near future," which may slow its economy and demand for fuel.

Monday, April 18, 2011...

•   May crude oil prices this morning are trading down -$1.30 a barrel and May gasoline is -2.07 cents per gallon. Crude oil and gasoline prices last Friday moved higher after US consumer sentiment and industrial output increased more than expected: CLK11 +$1.55, RBK11 +5.45. May gasoline rose to a 2-3/4 year high.

                Bullish factors included (1) the stronger-than-expected Apr US University of Michigan consumer confidence and Mar industrial production, which signals increased energy consumption, and (2) stronger-than-expected Q1 China GDP, which signals higher fuel demand.

                Bearish factors included (1) the stronger dollar, and (2) the larger-than-expected increases in Mar Euro-Zone and Mar China consumer prices, which may lead to additional interest rate hikes from the ECB and PBOC that may slow global economic growth and energy demand.

Tuesday, April 19, 2011...

•   May crude oil prices this morning are trading dowm -87 cents a barrel and May gasoline is -3.35 cents per gallon. Crude oil and gasoline prices yesterday weakened and finished sharply lower after Saudi Arabia said the global oil market has enough crude and after China raised banks' reserve requirements: CLK11 -$2.54, RBK11 -3.64.

                Bearish factors included (1) the rally in the dollar index to a 1-week high, which undercuts investment demand for commodities, (2) comment from Saudi Arabian Oil Minister Ali al-Naimi who said the global "market is oversupplied" with crude, and (3) the action by China to raise banks' reserve requirements for the fourth time this year, which may slow economic growth and energy demand.

                Bullish factors included (1) ongoing fighting in Libya between rebel forces and troops loyal to Mummar Qadaffi, which may prolong the lack of Libyan crude exports, and (2) the prediction from JPMorgan Chase that oil prices may surge past $130 a barrel if OPEC doesn't increase its crude output by Q3.

Wednesday, April 20, 2011...

•   June crude oil prices this morning are trading up +$1.34 a barrel and June gasoline is +3.19 cents per gallon. Crude oil and gasoline prices yesterday settled mixed as crude oil gained on comments from OPEC's Secretary General while gasoline fell on concern high prices will slow the economy and fuel demand: CLM11 +$0.59, RBM11 -1.91.

                Bullish factors included (1) the weak dollar, which encourages investment demand in commodities, (2) comments from OPEC Secretary General El-Badri who said he expects crude prices to stay above $100 a barrel until at least next year, and (3) the outlook for weekly US gasoline inventories to decline for the ninth consecutive week when the DOE releases its weekly inventory numbers on Wed.

                Bearish factors included (1) heightened concern that fuel prices at 2-3/4 year highs will slow the US economic recovery and fuel demand, and (2) the outlook for US crude inventories to increase for the seventh straight week when the DOE releases its weekly inventory figures on Wed. Expectations for Wednesday's DOE inventories are for crude oil supplies to rise +1.35 million bbl, gasoline stockpiles to fall -1.75 million bbl, distillate inventories to increase +400,000 bbl and the refinery utilization rate to rise +0.9 to 82.3%.

Thursday, April 21, 2011...

•   June crude oil prices this morning are trading up +78 cents a barrel and June gasoline is +2.02 cents per gallon. Crude oil and gasoline prices yesterday rallied sharply on a slump in the dollar and the unexpected decline in weekly crude inventories: CLM11 +$3.17, RBM11 +4.91. June crude posted a 1-week high.

                Bullish factors included (1) the slide in the dollar index to a 16-1/2 month low, which encourages investment demand in commodities, (2) the unexpected decline in weekly crude oil inventories (-2.32 million bbl versus expectations of +1.35 million bbl), (3) the -1.58 million bbl decline in weekly gasoline inventories which fell for the ninth consecutive week to a 5-month low of 308.1 million bbl, and (4) the rally in the S&P 500 to a 1-week high, which bolsters confidence in the economic outlook and energy demand.

                Bearish factors included (1) weakened demand for gasoline after US gasoline demand in the week ended Apr 15 fell -1.2% w/w to 9.06 million barrels a day, and (2) the larger-than expected increase in the weekly refinery utilization rate, which bodes well for increased output of gasoline and distillate products in the weeks ahead (+1.1 to 82.5% versus expectations of +0.9 to 82.3%).

Monday, April 25, 2011...

•   June crude oil prices this morning are trading up +45 cents a barrel and June gasoline is +1.53 cents per gallon. Crude oil and gasoline prices last Thursday fluctuated on either side of unchanged and finished higher as the weak dollar offset the larger-than-expected decline in the Apr Philadelphia Fed manufacturing index: CLM11 +$0.84, RBM11 +2.39. June crude rallied to a 1-1/2 week high and Jun gasoline posted a contract high and nearest-futures May gasoline climbed to a 2-3/4 year high.

                Bullish factors included (1) the plunge in the dollar index to a 2-2/3 year low, which encourages investment demand in commodities, and (2) the rally in the S&P 500 to a 1-1/2 week high, which bolsters confidence in the economic outlook and energy demand.

                Bearish factors included (1) the larger-than-expected decline in the Apr Philadelphia Fed manufacturing index which fell to a 5-month low and suggests weakened energy demand, and (2) the smaller-than-expected drop in weekly US jobless claims, which indicates labor market weakness that may limit fuel demand.

Oil settles a penny lower, gas pump prices up
Oil slips as dollar gains, gasoline up for 34th straight day to $3.86 per gallon
Monday April 25, 2011, 3:35 pm EDT

NEW YORK (AP) -- Oil was flat Monday, as the dollar pulled back from lows set earlier in the day and investors awaited this week's Fed meeting.

Oil is priced in dollars, so it tends to fall as the dollar strengthens and makes crude more expensive for investors holding foreign money. While the dollar was down slightly versus other major currencies, it bounced back from earlier lows.

The dollar has been weak because investors think the Federal Reserve will continue to keep interest rates near zero when it meets Tuesday and Wednesday. Other central banks have been raising interest rates out of concerns about inflation. Rock-bottom U.S. interest rates make the dollar less attractive to investors.

Benchmark crude for June delivery lost a penny to settle at $112.28 per barrel on the New York Mercantile Exchange. In London, Brent crude lost 33 cents to settle at $123.66 per barrel on the ICE Futures exchange.

Gas pump prices continued to climb for the 34th straight day, to a national average of more than $3.86 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has increased 32 cents since March 22. The average price is now a dollar more per gallon than a year ago.

In other Nymex trading, heating oil lost 1.73 cents to settle at $3.1989 per gallon and gasoline futures added less than a penny to settle at $3.2785 per gallon. Natural gas dropped 2.3 cents to $4.389 per 1,000 cubic feet.

Gas Prices and the Blame Game: Opinion

NEW YORK (TheStreet) -- When gas prices spike, owing to Middle East turmoil or hurricanes, conspiracy theories abound about profiteering speculators. The truth is Americans are suffering from bad energy policies with politicians eager to sell pet projects and hoist blame onto others.

In such a fit, President Obama offers fanciful alternative energy technologies as a solution to rising pump prices and a task force to ferret out fraud in energy markets.

Even before disturbances in Egypt, Libya and elsewhere, economists expected oil prices to increase from their September lows of $75 a barrel to more than $100 a barrel by this summer.

Economic recovery is pushing up gasoline demand and jet travel; President Obama's restrictions on offshore drilling are curtailing U.S. oil supplies; electric vehicles and hybrids won't appreciably dent U.S. gasoline consumption before the end of this decade; and Chinese oil imports are growing 10% a year. All Middle East strife did was accelerate the price surge.

When political unrest or natural events make future oil prices uncertain, big consumers, like refineries and airlines, limit their risks by purchasing contracts for future deliveries, and the cost of reasonably insuring those contracts adds to prices.

For example, Egypt and Libya alone had the potential to disrupt delivery of 5% of the global crude oil supply. However, the short-term flexibility of global consumers to curtail consumption is very low -- the immediate price effect of such a loss in supply could be more than 25%. Measured against the September or October prices, that would be about a $20 dollar jump.

When refiners, airlines and others purchase contracts for future delivery, if the expected jump in prices is in the range of $20, traders on the other side of those contracts bear the risks of even higher prices and need a buffer to offset potential losses. Hence a $30 jump on a 90- or 180-day contract is hardly unreasonable.

Between the effects of increased demand and tightening global supplies, expected before the Egyptian rebellion, and continued concern that the democracy movement could spread to autocratic and mildly repressive regimes like Saudi Arabia, a price increase from $75 in September to $105 in April is quite reasonable.
Also, profiteering in the gasoline market appears equally remote. Prices have increased about $1.10 gallon since September to $3.86 in April, while the cost of crude oil has increased a bit more than $33 a barrel or 80 cents a gallon. When market conditions improve, such as during the summer driving season, refiners' margins generally improve. Another 30 cents seems well within what could be expected, and there appears to be little room for speculators in the gasoline market to be taking an outsized slice.

Before readers pounce on refiners remember that refining, historically, isn't a high-profit business. If margins don't increase when prices are strong, those folks can't stay in business. It's like hotel rates, seasonal fluctuations and unusual events are built into the business model.

All this has a profound effect on U.S. growth. Economists expected that the economic recovery could withstand a gradual increase in gas prices to more than $3.50 by summer, but the sudden jump this winter and spring caused most forecasters, this one included, to scale back first-quarter growth estimates from 3.3% to something in the range of 2.8%.

Add other festering problems such as the debt crisis in Europe, state governments accelerating layoffs, uncertainty imposed by the budget and debt ceiling melodramas in Congress, and business fears about the Obama administration's penchant to scapegoat and regulate, most forecasters are expecting the Commerce Department to report Friday first-quarter growth was closer to 2%. Already, new unemployment claims are on the rise again, and the recent improvement in the monthly jobs creation numbers may be short-lived.

Americans could have it another way. U.S. oil consumption is about 15.3 million barrels a day, with imports supplying 9.5 million barrels a day and domestic production at 5.8 million barrels a day. Prudent emphasis on more fuel-efficient vehicles -- not just wiz bang electrics -- could cut domestic fuel consumption by 2.5 million barrels a day, renewed development of economically viable oil reserves could increase domestic production by about 4 million barrels a day, and imports could be cut by one-half to two-thirds.
While gas prices might still be high, the money Americans spend at the pump and on better vehicles would stay at home to create high paying jobs, and boost growth and living standards for all Americans.

More domestically produced oil would not add to environmental problems --those have to be managed whether oil is produced in the United States or imported. Indeed, greater reliance on domestic oil would be kinder to the environment because U.S. policymakers are better able to require safe production methods at home than abroad.

Instead, seizing on public anger about rising gas prices, President Obama fails to take responsibility for his policies and relies on his best asset -- his fine speaking voice -- to troll for votes by villainizing oil companies and faceless speculators.

Such demagoguery imperils an already fragile American prosperity and debases the presidency. All politicians need to run for re-election but presidents are elected to be statesmen and put the national interest above their own.

Mr. President, we are waiting.  ???  ::)

Tuesday, April 26, 2011...

•   June crude oil prices this morning are trading down -41 cents a barrel and June gasoline is +0.28 of a cent per gallon. Crude oil and gasoline prices yesterday retreated after an early rally faded and prices finished mixed on profit taking: CLM11 -$0.01, RBM11 +0.62. June crude rallied to a 2-1/2 year high but closed lower and Jun gasoline posted a contract high and nearest-futures May gasoline climbed to a 2-3/4 year high.

                Bearish factors included (1) the decline in the equity market which erodes optimism in the economic outlook and energy demand, and (2) technical selling after the energy markets failed to hold its gains to 2+ year highs.

                Bullish factors included (1) the weak dollar which encourages investment demand in commodities, and (2) comments from a Saudi Arabian oil official who said his country's oil output will stay at 12.5 million barrels a day, squashing rumors that the country was considering hiking output to 15 million barrels a day.

Wednesday, April 27, 2011...

•   June crude oil prices this morning are trading up +39 cents a barrel and June gasoline is +1.28 cents per gallon at a contract high. Crude oil and gasoline prices yesterday finished mixed as a weak dollar, strong equities and stronger-than-expected US consumer confidence lifted gasoline while comments from Saudi Arabia's national oil company undercut crude: CLM11 -$0.07, RBM11 +2.87. Jun gasoline posted a contract high and nearest-futures May gasoline climbed to a 2-3/4 year high.

                Bullish factors included (1) the weak dollar which encourages investment demand in commodities, (2) the stronger-than-expected US Apr consumer confidence, which may lead to increased consumer spending and fuel demand, (3) strength in gasoline prices on the outlook for weekly DOE gasoline supplies to fall for the tenth consecutive week when they are reported on Wed, and (4) the rally in the S&P 500 to a 2-3/4 year high, which bolsters confidence in the economic outlook and energy demand.

                Bearish factors included (1) comments from the CEO of Saudi Arabia's state oil company who said it is "not comfortable" with the current price of oil and is concerned about its effect of global economic growth, which fueled speculation of an increase in Saudi Arabian oil production, and (2) the outlook for weekly DOE crude oil stockpiles to increase for the seventh time in eight weeks when they are released on Wed. Expectations for the DOE's weekly inventory report are for crude supplies to gain 1.7 million bbl, gasoline stockpiles to fall -1.0 million bbl, distillate inventories to rise +500,000 bbl and the refinery utilization rate to increase +0.9 to 83.4%.

Thursday, April 28, 2011...

•   June crude oil prices this morning are trading down -16 cents a barrel and June gasoline is +0.35 of a cent per gallon. Crude oil and gasoline prices yesterday fluctuated after the release of the DOE weekly inventories but finished higher as gasoline supplies plunged to a 1-2/3 year low: CLM11 +$0.55, RBM11 +5.10. Jun gasoline posted a contract high and nearest-futures May gasoline climbed to a 2-3/4 year high.

                Bullish factors included (1) the fall in the dollar index to a 2-2/3 year low, which boosts investment demand in commodities, (2) strength in gasoline prices after weekly DOE gasoline supplies fell more than expected (-2.51 million bbl to a 1-2/3 year low of 205.6 million bbl versus expectations of a -1.0 million bbl decline), (3) the unexpected decline in weekly distillate inventories (-1.80 million bbl versus expectations of a +500,000 bbl increase), (4) the smaller-than-expected increase in the refinery utilization rate, which signals reduced output of gasol ine and distillate products in the weeks ahead (+0.2 to 82.7% versus expectations of +0.9 to 83.4%), and (5) the rally in the S&P 500 to a 2-3/4 year high, which bolsters confidence in the economic outlook and energy demand.

                Bearish factors included (1) the larger-than-expected increase in weekly crude oil supplies (+6.16 million bbl versus expectations of +1.7 million bbl), and (2) the action by the Fed to cut its growth forecast for the US economy this year, which signals reduced energy demand and consumption.

Friday, April 29, 2011...

•   June crude oil prices this morning are trading down -23 cents a barrel and June gasoline is -1.21 cents per gallon. Crude oil and gasoline prices yesterday fluctuated between gains and losses and finished higher as the plunge in the dollar offset weaker-than-expected economic data: CLM11 +$0.10, RBM11 +1.14. Jun crude posted a 2-1/2 year high, while Jun gasoline posted a contract high and nearest-futures May gasoline climbed to a 2-3/4 year high.

                Bullish factors included (1) the slide in the dollar index to a 2-3/4 year low, which boosts investment demand in commodities, (2) the decline in Apr German unemployment to a 19-year low, which shows economic strength that my lead to increased fuel demand, and (3) the rally in the S&P 500 to a 2-3/4 year high, which bolsters confidence in the economic outlook and energy demand.

                Bearish factors included (1) the unexpected increase in weekly US jobless claims to a 3-month high, which shows weakness in the US labor market t hat may curtail fuel demand, (2) the weaker than expected Q1 US GDP, which shows slower-than-expected energy consumption, and (3) the action by the BOJ to cut its GDP growth forecast for Japan this year, which signals reduced energy consumption and demand.

Monday, May 2, 2011...

•   June crude oil prices this morning are trading down sharply by -$1.91 a barrel and June gasoline is -5.50 cents per gallon. Crude oil plunged in overnight trade on speculation that the death of Osama Bin Laden may ease the risk of Middle East supply disruptions. Crude oil and gasoline prices last Friday settled higher due to a weak dollar and better-than-expected US consumer spending: CLM11 +$1.07, RBM11 +2.88. Nearest-futures May gasoline posted a 2-3/4 year high.

                Bullish factors included (1) the continued slide in the dollar index to a 2-3/4 year low, which boosts investment demand in commodities, and (2) the larger-than-expected increase in Mar US personal spending, which bodes well for the sustainability of the economic expansion and energy demand.

                Bearish factors included (1) the unexpected decline in Mar German retail sales along with the slower than expected increase in South Korean Mar industrial production, which indicates a slowdown in Asian and European f uel demand, and (2) the weaker-than-expected Apr Chicago purchasing managers index, which signals reduced energy demand.

Tuesday, May 3, 2011...

•   June crude oil prices this morning are trading down -$1.09 a barrel and June gasoline is -0.52 of a cent per gallon. Crude oil and gasoline prices closed lower but well off of their worst levels as an unexpected decline in Apr Chinese manufacturing activity offset the plunge in the dollar index to a 2-3/4 year low: CLM11 -$0.41, RBM11 -5.05. Jun crude posted a 2-1/2 year high and Jun gasoline rallied to a 2-3/4 year high, but they erased all of their gains and finished lower.

                Bearish factors included (1) the unexpected decline in the Apr China PMI manufacturing index, which indicates a slowdown in the Chinese economy that is negative for energy demand, and (2) the early sell-off in energy markets on speculation that the death of Osama bin Laden may lead to stability in the Middle East.

                Bullish factors included (1) incessant dollar weakness after the dollar index sank to a 2-3/4 year low, which boosts investment demand in commodities, (2) the smaller-than-expected dec rease in the Apr ISM manufacturing index, which is positive for energy demand and consumption, and (3) fears of reprisals by al-Qaeda that may disrupt crude supplies after the US killed Osama Bin Laden.

Wednesday, May 4, 2011...

•   June crude oil prices this morning are trading down -36 cents a barrel and June gasoline is -1.20 cents per gallon. Crude oil and gasoline prices yesterday closed lower on long liquidation due to equity market weakness and expectations of increased supply when the weekly DOE inventory figures are released on Wed: CLM11 -$2.47, RBM11 -1.85.

                Bearish factors included (1) long liquidation prompted by weakness in the stock market which reduces confidence in the economic outlook and energy demand, (2) the slump in UK manufacturing activity in Apr to its lowest level in 7 months, which indicates reduced energy demand and consumption, and (3) the outlook for increased crude supplies when the DOE releases its weekly inventory numbers on Wed.

                Bullish factors included (1) hedge fund buying of crude after the NYMEX reported that open interest in crude oil futures traded on the New York Mercantile Exchange rose to a record 1.63 million contracts on Monday, and (2) the stronger tha n expected Mar US factory orders and the upward revision to Feb factory orders, which signals strength in fuel consumption. Expectations for Wednesday's weekly inventories from the DOE are for crude supplies to rise +1.9 million bbl, gasoline stockpiles to remain unchanged, distillate inventories to gain +500,000 bbl and the refinery utilization rate to rise +0.5 to 83.2%.

Thursday, May 5, 2011...

•   June crude oil prices this morning are trading down -$2.40 a barrel at a 2-week low and June gasoline is -6.25 cents per gallon. Crude oil and gasoline prices yesterday retreated after US crude inventories climbed to a 6-month high and weaker-than-expected economic data raised demand concerns: CLM11 -$1.81, RBM11 -0.69. Jun crude fell to a 2-week low and Jun gasoline posted a 1-week low.

                Bearish factors included (1) weaker-than- expected US economic data on Apr ISM non-manufacturing and Apr ADP employment, which raises concern a slowdown in economic growth will also curb energy demand, (2) the larger-than-expected increase in weekly crude inventories which climbed to a 6-month high (+3.42 million bbl to 366.5 million bbl versus expectations of +1.9 million bbl), and (3) weakened fuel demand after US gasoline demand in the week ended Apr 29 fell -2.2% w/w to 8.94 million barrels a day.

                Bullish factors included (1) the fall in the dollar index to a 2-3/4 year low, whic h boosts investment demand in commodities, (2) the larger-than-expected decline in weekly gasoline inventories which fell to a 1-3/4 year low (-1.05 million bbl to 204.5 million bbl versus expectations of -500,000 bbl), and (3) the unexpected decline in weekly distillate inventories (-1.40 million bbl versus expectations of a +500,000 bbl increase).

Friday, May 6, 2011...

•   June crude oil prices this morning are trading down -$2.00 a barrel at a 2-1/4 month low and June gasoline is -2.38 cents per gallon. Crude oil and gasoline prices yesterday sold-off sharply as the dollar rebounded and an unexpected increase in weekly jobless claims bolstered demand concerns: CLM11 -$9.44, RBM11 -11.71. Jun crude fell to a 1-1/2 month low and Jun gasoline dropped to a 1-month low.

                Bearish factors included (1) the rally in the dollar index to 1-week high, which prompted long liquidation of most commodities, (2) the unexpected increase in weekly US jobless claims to an 8-1/2 month high, which fuels concern that economic growth and fuel demand will decline, and (3) the unexpected drop in Mar German factory orders, which indicates weakened energy consumption.

Monday, May 9, 2011...

•   June crude oil prices this morning are trading up $3.12 a barrel and June gasoline is +9.66 cents per gallon. Crude oil and gasoline prices last Friday fluctuated on both sides of unchanged and finally settled lower as a rally in the dollar offset the strong Apr nonfarm payrolls report: CLM11 -$2.62, RBM11 -0.53. Jun crude fell to a 2-1/4 month low and Jun gasoline dropped to a 1-1/4 month low.

                Bearish factors included (1) the rally in the dollar index to 2-1/2 week high, which erodes investment demand in commodities, (2) technical selling with the drop in prices to a 2-1/4 month low, and (3) comments from Qatari Oil Minister Saleh Al who said crude supplies are "very healthy."

                Bullish factors included (1) the stronger-than-expected Apr US nonfarm payrolls and Mar German industrial production, which is positive for energy consumption and demand, and (2) the rally in the stock market which bolsters the outlook on the economy and fuel demand.

Bin Laden may be gone...
but that does not make Obama a President ! :-[
For the best interest in this country vote him out of office.......




How the oil industry saves $4.4B a year on taxes
$4-a-gallon gasoline makes $4.4 billion in oil industry tax breaks a tempting target for Obama

Jonathan Fahey, AP Energy Writer, On Thursday May 12, 2011, 3:40 pm EDT
NEW YORK (AP) -- Motorists are paying nearly $4 for a gallon of gasoline as the oil industry reaps pre-tax profits that could hit $200 billion this year.

This makes another big number hard to take: $4.4 billion. That's how much the industry saves every year through special tax breaks intended to promote domestic drilling.

President Barack Obama is increasing pressure on Congress to eliminate these tax breaks -- including one that is nearly a century old -- at a time of record budget deficits. The President and congressional Democrats say eliminating the tax breaks will also lower gas prices by making alternative energy sources more competitive.

Oil industry advocates, a group that includes most Republicans in Congress, argue just the opposite. They say oil companies reinvest tax breaks into exploration and production, which ultimately generates more tax dollars and increases the supply of oil. They say eliminating tax breaks will raise the cost of doing business and lead to higher gas prices.

Executives from the five biggest oil companies were asked about these tax breaks at a Senate finance committee meeting Thursday. Senate Democrats accused the oil companies of not paying their share to help the country emerge from economic hard times. Republicans derided the hearing as a dog-and-pony show staged to score political points with angry drivers.

The industry executives said eliminating the tax breaks would reduce investment in the U.S. Exxon Mobil CEO Rex Tillerson said the tax proposal "Would discourage future investment in energy projects in the United States and therefore undercut job creation and economic growth." He said it would do nothing to reduce gasoline prices.

The 41 U.S. oil and gas companies that break out their federal taxes said they paid Uncle Sam $5.7 billion in 2010, according to data compiled by Compustat. That's more than any other industry. Exxon alone paid $1.3 billion. (The company's total tax bill was $21.5 billion, but most of that was paid to foreign governments and states.)

But at a time when motorists are fuming about $4 gas, Obama and Democrats sees a huge political opportunity.

"When you see profits that include the word billions, people automatically think someone is getting screwed," says Christine Tezak, Senior Energy and Environmental Policy Analyst at Robert W. Baird & Co. "The fact that the (oil industry) is getting any breaks at all has become a sore spot."

The price of oil is so high that removing these tax breaks would likely have little to no effect on domestic oil production. There are other factors that make the U.S. a highly attractive place to drill: it's politically stable, it has good roads and pipelines, and it's the world's biggest energy consumer. And the industry would remain hugely profitable even though eliminating the tax breaks would increase its U.S. tax bill by nearly 70 percent.

The tax breaks that Obama wants to eliminate will cost the U.S. Treasury $44 billion over the next decade. A Senate proposal targets many of the same rules, but would eliminate them only for the five biggest oil companies: ExxonMobil, Chevron, BP, Royal Dutch Shell and ConocoPhillips.

Here is a look at the main tax breaks:

-- The biggest is what's called the Domestic Manufacturing Deduction. It's a 2004 tax change meant to encourage companies to manufacture in the U.S.

It allows companies of almost any type to deduct from their taxable income up to 9 percent of profits from domestic manufacturing. Under the rule, oil and gas companies were classified as manufacturers, but their deduction was capped at 6 percent.

This provision alone is expected to save the oil and gas industry $18.2 billion over the next ten years, or 42 percent of the $44 billion total.

The oil industry feels unfairly singled out. "It can't be good for some and not for others or it is just a punishment," says Stephen Comstock, the tax policy manager at the American Petroleum Institute, an oil industry lobbying group.

-- Another subsidy, established in 1913 to encourage domestic drilling, allows oil companies to deduct more quickly all of the so-called intangible costs of preparing a site for drilling.

To accountants, intangible costs are costs for things that have no salvage value when the well runs dry, including clearing land and pouring concrete. Ordinarily, a business would have to deduct these costs over the life of the drilling site. Instead, small, independent drillers are allowed to deduct all of these expenses in the first year; major, so-called integrated companies like ExxonMobil can deduct 70 percent in the first year.

The break is worth $12.5 billion over the next ten years.

Comstock compares the oil industry's ability to write off the cost of preparing a well to other companies' ability to write off research and development costs. Other tax experts say this is clearly a subsidy.

-- A rule dating from 1926 that establishes how oil companies can depreciate the value of their wells allows drillers to deduct 15 percent of the well's revenue from its taxable income per year. This is instead of a more traditional depreciation scheme in which the cost of the well is depreciated over the well's life.

The tax break was created in part to simplify accounting, so companies wouldn't have to guess how long an oil or gas field would produce in order to calculate how to depreciate it. It can be a boon: The total of the deductions over the life of the well can sometimes be bigger than what the company actually spent on the well.

This provision was eliminated for major oil companies in 1975, but it continues for independent producers. The break is worth $11 billion over 10 years.

-- Royalties that companies pay foreign governments for the oil they extract are not deductible from U.S taxes. But often the industry is allowed to claim royalties as foreign taxes, which are deductible. Obama and Senate Democrats call this a loophole, and want to close it. Obama doesn't include this in his $44 billion proposal, but Whitney Stanco, an analyst at MF Global, calculates that removing this benefit could cost the industry $8.5 billion over ten years.

OBAMA'S PHONY OIL COMPANY TAX...


In a desperate effort to divert anger from his Administration over gas prices and to stop people from focusing on how his anti-drilling policies have caused us to be so vulnerable to these price fluctuations, President Obama is pushing anti-oil company rhetoric, demanding increases in oil company taxes. He is confident, in doing so, that the Republican aversion to any tax increase will lead them to shield big oil and incur populist wrath.

He's right the GOP can't approve raising oil company taxes and that their refusal to do so will raise the party's negatives among a broad swath of the population.


But he's dead wrong in believing that raising this issue will, in any way, make up for his failure to promote domestic drilling. Obama has been so outspoken in his demand that we move away from dependence on fossil fuels and so naively futuristic in depending on renewable energy to replace it, that the average motorist will still grit his teeth in anger at the president every time he gases up. People get that "drill baby drill" is the best and nearest term solution to high gasoline prices and they get that Obama is on the wrong side of the issue.

A more subtle point, lost in the debate, is that decreasing oil company tax breaks makes drilling and exploration more costly. But, in the current environment of massive oil company profits, this tax increase won't matter much. It is best that Republicans keep this idea to themselves and focus, instead, on the need for more domestic drilling.

This would be a great time to expose Obama's failure to issue oil drilling permits in the gulf, his opposition to ANWR drilling, and his refusal to allow horizontal shale drilling and fracking.

Obama is following a strictly left wing playbook as he gears up for re-election.

* He invites a rapper to the White House whose lyrics drive people up the wall

* He digs up his amnesty proposal for immigrants, an idea he failed to push when he could have passed it in 2009.

* He rails against oil companies as gas prices go up.

* He casts himself as the defender of Medicare in the face of a radical GOP and demands tax increases for the rich.

Class warfare, economic populism, and encouraging minority turnout are his re-election strategies.

Unfortunately for him — and fortunately for us — they won't work. Each tactic drives up turnout among Republican voters too, more than offsetting his gains. And each creates the impression that Obama is anti-business which fosters the idea that he is prolonging the recession by his divisive rhetoric. Finally, every time he speaks like a candidate, he undermines his own presidentiality and weakens his hold on the office. People want a leader, not an advocate, as president.

House Votes to Lift President Obama's Ban on Offshore Drilling... ;D  8)
05/12/2011

The House of Representatives voted to open more of the nation's oceans for oil and gas exploration on Thursday by a vote of 243 to 179.

The "Reversing President Obama's Offshore Moratorium Act," requires the Interior Department to set a production goal of three million barrels of oil per day for its 2012-2017 leasing plan.

In order to reach that target, the legislation requires the department to hold lease sales off the coast of Southern California, in the Arctic Ocean, off Alaska's Bristol Bay, and in the Atlantic Ocean from Maine to North Carolina.

Republicans say that the bill, along with two other drilling measures passed earlier this month, would create 1.2 million jobs and lower the price of oil. The Congressional Budget Office says that the offshore lease sales would generate $800 million in revenue over ten years.

The Obama administration  >:D  released a statement opposing the bill Wednesday. The White House argued that the proposal would undermine the current leasing process and mandate drilling leases without input from the affected states.

Tuesday, May 10, 2011...

•   June crude oil prices this morning are trading down -75 cents a barrel and June gasoline is up +9.31 cents per gallon. Jun gasoline climbed to a 1-week high in overnight trade amid concern that flooding of the Mississippi River will disrupt fuel production and distribution. Crude oil and gasoline prices yesterday closed sharply higher on signs the global economic recovery remains intact: CLM11 +$5.37, RBM11 +18.83.

                Bullish factors included (1) the increase in Mar German exports to a record, which signals economic strength and is positive for energy consumption and demand, (2) the warning from Petromatrix Gmbh that US supplies of crude and petroleum products may be curtailed by record high water levels on the Mississippi river that may also force a closure of riverside refineries, (3) comments from Qatar's Oil Minister who said the world economy isn't weak enough to justify a freefall in crude prices, and (4) the action by JPMorgan Chase to raise the WTI crude oil pric e forecast for 2011 to $109.50 a barrel from $99 because OPEC and other producers aren't matching rising demand and consumers will take time to react to higher prices.

                Bearish factors included (1) the early rally in the dollar index to 2-1/2 week high, which eroded investment demand in commodities, and (2) concern the European debt crisis may worsen and start to negatively effect fuel demand after S&P cut Greece's debt rating 2 levels to B on restructuring concerns.

Wednesday, May 11, 2011...

•   June crude oil prices this morning are trading down -72 cents a barrel and June gasoline is -5.39 cents per gallon. Crude oil and gasoline prices yesterday finished higher on strong China exports and from a rally in gasoline after Jun gasoline climbed to a 1-week high amid concern that flooding of the Mississippi River will disrupt fuel production and distribution: CLM11 +$1.33, RBM11 +10.13.

                Bullish factors included (1) the strength in Apr China exports which rose to a record and indicates economic strength that is positive for energy consumption and demand, (2) strength in gasoline on concern that the worst flooding of the Mississippi River in 75 years may shut 11 refiners between New Orleans and Baton Rouge with a combined capacity of 2.5 million barrels a day, or 13% of US output, and (3) the rally in equities, which bolsters optimism in the economic outlook and energy demand.

                Bearish factors included (1) the action by CME Group to raise trading margins on crude o il and energy futures traded on NYMEX, which may lead to liquidation of positions by investors to raise funds, and (2) the outlook for US crude supplies to increase to near a 2-year high when the DOE releases weekly inventory figures on Wed. Expectations for the weekly DOE inventories are crude oil supplies to increase +1.5 million bbl, gasoline stockpiles to fall -500,000 bbl, distillate inventories to remain unchanged and the refinery utilization rate to rise +0.4 to 83.2%.

Thursday, May 12, 2011...

•   June crude oil prices this morning are trading down -$2.17 a barrel and June gasoline is -4.68 cents per gallon after the IEA cut its 2011 global oil demand forecast. Crude oil and gasoline prices yesterday tumbled as the dollar strengthened and after US crude supplies rose to a 2-year high: CLM11 -$5.67, RBM11 -25.69.

                Bearish factors included (1) the rally in the dollar index to a 3-week high, which reduces investment demand in commodities, (2) the larger-than-expected increase in weekly DOE crude inventories to their highest level in 2 years (+3.78 million bbl to 370.3 million bbl versus expectations of +1.5 million bbl), (3) the unexpected increase in weekly gasoline supplies which rose for the first time in 12 weeks (+1.27 million bbl versus expectations of -500,000 bbl), (4) slack demand after total US fuel demand slipped -0.9% w/w to 18.2 million barrels a day, the lowest in 23 months, and (5) concern that Chinese fuel demand may slow on speculation it will furth er tighten monetary policy to cool price increases after Apr China consumer prices rose more than expected.

                Bullish factors included (1) the unexpected decrease in weekly distillate inventories (-843,000 bbl versus expectations of no change), and (2) concern that the worst flooding of the Mississippi River in 75 years might limit US gasoline supplies as it may force the closure of 11 refiners between New Orleans and Baton Rouge with a combined capacity of 2.5 million barrels a day, or 13% of US output.

Friday, May 13, 2011...

•   June crude oil prices this morning are trading up +$1.00 a barrel and June gasoline is +2.91 cents per gallon. Crude oil and gasoline prices yesterday fell early after the IEA cut its 2011 global oil demand forecast but recovered theirs losses and finished mixed after the dollar retreated from a 3-1/2 week high: CLM11 +$0.76, RBM11 -5.89.

                Bullish factors included (1) a reversal in the dollar which fell back from a 3-1/2 week high and closed lower, which boosts investment demand in commodities, and (2) concern that the worst flooding of the Mississippi River in 75 years might limit US gasoline supplies as it may force the closure of 11 refiners between New Orleans and Baton Rouge with a combined capacity of 2.5 million barrels a day, or 13% of US output.

                Bearish factors included (1) the action by the IEA to cut its 2011 global oil demand forecast by -190,000 barrels a day saying "high oil prices have finally begun to dent demand," and (2) concern that the act ion by the PBOC to raise banks' reserve requirements for the fifth time this year to a record high 21% will slow the Chinese economy and its energy demand.

Monday, May 16, 2011...

•   June crude oil prices this morning are trading down -$1.69 a barrel and June gasoline is -4.39 cents per gallon. Crude oil and gasoline prices last Friday settled higher but well off of their best levels as weak equities and a stronger dollar offset strength in demand from robust Q1 European economic growth: CLM11 +$0.68, RBM11 +1.05.

                Bullish factors included (1) the stronger than expected Q1 Euro-Zone GDP, which is positive for energy demand and consumption, (2) the prediction from Goldman Sachs that the oil market is "structurally bullish" and prices are likely to be higher in 12 months, and (3) concern that the worst flooding of the Mississippi River in 75 years may threaten US gasoline production as refiners in the Mississippi Delta region may be forced to close.

                Bearish factors included (1) the rally in the dollar index to a 1-1/4 month high, which reduces investment demand in commodities, and (2) the sell-off in stock prices, which undercuts confidence in the economic outlook and energy demand.

Tuesday, May 17, 2011...

•   June crude oil prices this morning are trading down -1 cent a barrel and June gasoline is +1.05 cents per gallon. Crude oil and gasoline prices yesterday closed lower after the opening of a Louisiana spillway reduced concerns that refiners along the Mississippi will be forced to close along with demand concerns after the release of weaker-than-expected US economic data: CLM11 -$2.28, RBM11 -14.33. Jun gasoline fell to a 2-month low.

                Bearish factors included (1) concern the European sovereign-debt crisis may worsen and slow the global economy and energy demand as European leaders and the IMF met in Brussels to discuss additional aid to Greece, (2) weaker-than-expected US economic data on May Empire manufacturing and the May NAHB housing market index, which signals a possible slowdown in the US economy that may curtail fuel demand, (3) reduced concerns that refineries along the Mississippi River delta will be forced to close after flood gates on the Morganza floodway in Louisiana were opened to reduce pressure on the Mississippi River system, and (4) the prediction from the global head of research at Bank of America-Merrill Lynch that oil prices will fall in the second half of this year as current high prices begin to cause "demand destruction."

                Bullish factors included (1) the reversal in the dollar index which retreated from a 1-1/4 month high and closed lower, and (2) concern that the worst flooding of the Mississippi River in 75 years may force refiners located near the Mississippi Delta region to close, which would disrupt US gasoline supplies.

Wednesday, May 18, 2011...

•   June crude oil prices this morning are trading up +$1.27 a barrel and June gasoline is +3.08 cents per gallon. Crude oil and gasoline prices yesterday closed lower for a second day after weaker-than-expected economic data stoked demand concerns while the opening of the Morganza floodway reduced concerns about flooding to refineries along the Mississippi River: CLM11 -$0.46, RBM11 -1.18. Jun crude slipped to a 1-1/2 week low and Jun gasoline fell to a 2-month low.

                Bearish factors included (1) the weaker-than-expected US economic data on Apr US housing starts and industrial production, which indicates the economy and fuel demand may slow, (2) reduced concerns that refineries along the Mississippi River delta will be forced to close after flood gates on the Morganza floodway in Louisiana were opened to reduce pressure on the flooded Mississippi River system, and (3) the outlook for increased supplies when the DOE releases its weekly inventory figures on Wed. Expectation s for Wednesday's weekly DOE inventory report are for crude oil supplies to advance +1.7 million bbl, gasoline stockpiles to rise +1.0 million bbl, distillate inventories to increase +500,000 bbl and the refinery utilization rate to rise +0.4 to 82.1% of capacity.

Thursday, May 19, 2011...

•   June crude oil prices this morning are trading up +34 cents a barrel and June gasoline is +0.63 of a cent per gallon. Crude oil and gasoline prices yesterday rallied sharply after an unexpected decline in weekly crude and distillate inventories and an increase in US gasoline demand: CLM11 +$3.19, RBM11 +3.62.

                Bullish factors included (1) the unexpected decline in weekly DOE crude inventories (-15,000 bbl versus expectations of +1.7 million bbl), (2) the unexpected decline in weekly DOE distillate supplies which fell to a 2-year low (-1.16 million bbl to 143.1 million bbl versus expectations of +500,000 bbl), (3) the smaller-than-expected climb in weekly gasoline inventories (+119,000 bbl versus expectations of +1.0 million bbl), (4) the +2.5% increase in weekly US gasoline demand to 9.05 million barrels a day, the first gain in 3 weeks, and (5) the prediction from Oilchem.net that China's fuel supplies may tighten as its largest refineries shut about 7% of their capaci ty in Q3 for scheduled maintenance.

                Bearish factors included (1) the stronger dollar, which reduces investment demand in commodities, and (2) the larger than expected increase in the US refinery utilization rate which climbed to its highest level in 1-1/2 months and bodes well for increased production of gasoline and distillate supplies in the weeks ahead (+1.5 to 83.2% versus expectations of +0.4 to 82.1%).

Friday, May 20, 2011...

•   June crude oil prices this morning are trading up +13 cents a barrel and June gasoline is -0.80 of a cent per gallon. Crude oil and gasoline prices yesterday settled lower as a weak dollar and a larger-than-expected drop in weekly jobless claims fueled an early rally but, a mid-morning report on weaker-than-expected manufacturing activity sent prices tumbling into the close: CLM11 -$1.66, RBM11 -2.95.

                Bearish factors included (1) the unexpected decline in the May Philadelphia Fed manufacturing index which slid to its lowest level in 7 months and signals weakened energy demand, (2) the larger-than-expected downward revision to Q1 Japan GDP, which indicates decreased fuel demand in the world's third-largest oil consumer, and (3) the prediction from the AAA that the number of Americans driving more than 50 miles over the upcoming Memorial Day holiday weekend will fall by 100,000 to 30.9 million, the first decline in 3 years as high gasoline prices deter Americans from tak ing road trips.

                Bullish factors included (1) the weaker dollar which lift investment demand for commodities, (2) the larger-than-expected decline in weekly US jobless claims, which suggest improvement in the labor market that may benefit fuel demand, and (3) the report from NOAA that said the US may experience an "above normal" Atlantic hurricane season this year with 12 to 18 named storms, which increases the chances of damage to Gulf Coast refiners that may limit US fuel output.

Savor Cheap Gas Prices While You Can...

ByDaniel Dicker, Senior Contributor to TheStreet , On Tuesday May 31, 2011, 7:10 am EDT
NEW YORK (TheStreet) -- Memorial Day has come and gone, signaling the start of the summer -- and the summer driving season. After the wild gyrations of the crude oil market this spring, what should we expect for gas prices? The outlook actually looks pretty good for the next several months.

Summer brings thoughts of vacations with the family in the car, and that means that gas prices are a big part of those plans. There's been a big run-up in gas prices over the past year, from an average price of $2.76 last Memorial day to $3.81 yesterday.

Gas prices are dependent upon crude oil prices, the stuff that is refined to make gasoline, and crude was affected by a variety of forces in the past 12 months but particularly by the supply threats of Mideast revolutions in Egypt and Tunisia and ongoing strife in Bahrain, Yemen and Syria. Gas itself staged a price resurgence, and margins for refining gasoline have seen their best year since 2006, also driving up the price.

But after Brent crude traded in London surged to close to $125 a barrel last month, bringing national average gas prices close to $4 a gallon, prices have moderated somewhat.

Demand is down here in the United States as people are responding to the high prices in the only way they can: driving less. The uprisings in the Middle East, while not in any way finished, have seemed to quiet down a bit. And big crude oil traders have taken some profits out of the temporarily overheated crude price and may be looking, with the upcoming uncertainty of the end of the Federal Reserve's QE2 program, to take a break from flooding the crude market in the next two months with churning volatility.

It takes several weeks normally for prices in the futures markets to find their way out to the streets for consumers, but crude's recent $15 fall should translate into an almost 40-cent retreat in the price of gas at the pumps. Indeed, the national average price for gas is down another 8 cents in the past week alone. If crude oil can continue to trade here, with the West Texas Intermediate price that is traded at the NYMEX in New York hovering closer to $100 a barrel or lower, the national average for gasoline should steadily drop at least another 20 to 25 cents a gallon.

That would be a great relief for summer vacationers, but the question is, will it?

After coming out of a semi-balloon type of busting of oil prices in the past few weeks, it would be more likely that markets would take that break and continue to trade sideways, if not move lower, for the next several weeks and even months. Still, both Goldman Sachs and Morgan Stanley, the two strongest and most influential oil traders in the world, have put positive, bullish research notes out on crude oil in the past two weeks.

They both call for higher prices in the next 12 months, with the proviso that, near term, there could still be more moderating that could take place. Their "doomsday" scenarios of $120, $130 and even $150 crude prices won't happen for sure until the last quarter of this year and going into 2012 and even 2013, they say.

So if they're right, this really is a summer to savor -- even with pump prices that will likely hover more than 70 cents higher than last year. Compared to what's to come in the summers ahead, according to the trading "experts," this summer's gas prices are going to look relatively cheap.

Oil settles below $101 on weak economic data
Oil falls on discouraging economic news; private employers added fewest jobs since Sept.

Chris Kahn, AP Energy Writer, On Wednesday June 1, 2011, 3:30 pm
NEW YORK (AP) -- Oil gave back the gains it made in the past few trading days on Wednesday following discouraging economic news.

Benchmark West Texas Intermediate crude for July delivery lost $2.41, or 2.4 percent, to settle at $100.29 per barrel Wednesday on the New York Mercantile Exchange. Prices slipped after economic reports showed motorists buying less fuel, private employers adding fewer jobs than expected and U.S. manufacturing growth slowing dramatically.

Oil has wavered around $100 per barrel during the past few weeks. It's come down from highs set in early May following concerns that high fuel prices were putting too much pressure on the economy.

Payroll processor ADP added to those concerns Wednesday. The group said private employers created just 38,000 jobs in May, down from 177,000 in April. That's the weakest number since September. The government unemployment report for May is due out Friday.

The Institute for Supply Management reported that U.S. manufacturing hit the brakes in March with the sharpest monthly decline in growth since 1984. The ISM index of manufacturing for May slipped to 53.5 percent from 60.4 in April.

"The manufacturing sector was one bright spot for the economy," PFGBest analyst Phil Flynn said. "It was really pushing the economy along. Now we're wondering what's going to be driving things."

MasterCard SpendingPulse also reported that retail gasoline demand in the U.S. fell for the 10th consecutive week. Its survey estimated that Americans bought 389.2 million gallons of gasoline per day, on average. That's 2 percent less than the same week last year.

Oil was pulled even lower as the dollar rose in afternoon trading. Crude is priced in dollars and becomes more expensive as the greenback strengthens relative to foreign currencies.

In addition, global crude supplies are growing as oil operations in Iraq continue to recover from the 2003 U.S.-led invasion. Iraq's State Oil Marketing Organization said the country's oil exports averaged 2.225 million barrels per day in May, up from 2.14 million barrels per day in April.

For the next few weeks at least, investors and energy economists will keep a closer eye on SpendingPulse and other reports that estimate how much Americans are driving. U.S. highways are usually filled with vacationers during the summer, but analysts think travel will be impacted this year as soaring fuel prices squeeze family budgets.

"Summer is a real boom time for energy markets," said Michael Lynch, president of Strategic Energy & Economic Research. This year though he said a lot of people may want to keep their cars at home. "And I'm not sure if gas prices dropping from $4 to $3 per gallon is going to convince them to hop back in the car," Lynch added.

Consumers also may be dealing with higher gasoline prices in other ways.

Oil analyst Stephen Schork noted that Bureau of Economic Analysis data show that sales of used cars rose in April from March while sales of new cars declined. "Consumers are likely scaling back on new cars and putting that money toward their gasoline bills," Schork said.

Carmakers released May sales figures Wednesday. Both GM and Ford reported lower sales overall. Analysts expect total U.S. auto sales to fall 4 percent compared to a year ago.

Meanwhile, gasoline prices continue to drop. The national average declined for the 20th day to $3.775 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 17.7 cents cheaper than it was a month ago, but it's still $1.05 higher than the same time last year.

In other Nymex trading for July contracts, heating oil gave up 4.43 cents to settle at $3.0087 per gallon and gasoline futures fell 7.30 cents to settle at $2.9773 per gallon. Natural gas lost 3.7 cents to settle at $4.629 per 1,000 cubic feet.

In London, Brent crude fell $2.20 to settle at $114.53 per barrel on the ICE Futures exchange.

Chris Kahn can be reached at http://www.twitter.com/ChrisKahnAP

Monday, May 23, 2011...

•   July crude oil prices this morning are trading down -$2.40 a barrel and July gasoline is -4.29 cents per gallon. Crude oil and gasoline prices last Friday fell early on the stronger dollar but then rallied and closed higher after the API reported the US fuel consumption increased in April: CLN11 +$1.17, RBN11 +1.63.

                Bullish factors included (1) data from the US Labor Department that showed payrolls grew in 42 states in Apr, while the unemployment rate fell in 39, which signals broad-based strength in the labor market that may lead to increased economic strength and fuel demand, and (2) data from the API that said US fuel consumption as measured by deliveries of petroleum products, rose in Apr by +5.2% to 19.9 million barrels a day from a year earlier.

                Bearish factors included (1) strength in the dollar, which reduces investment demand in commodities, (2) the statement from Germany's Bundesbank that growth in Germany, Europe's largest economy will probably slow because growth in Q1 was "overstated," and (3) the slump in the equity market which reduces confidence in the economic outlook and energy demand.

Tuesday, May 24, 2011...

•   July crude oil prices this morning are trading up +$1.12 a barrel and July gasoline is +3.64 cents per gallon. Crude oil and gasoline prices yesterday closed lower due to a strong dollar along with concern that global energy demand will weaken from the European sovereign-debt crisis and a slowdown in Chinese and European manufacturing activity: CLN11 -$2.40, RBN11 -1.44.

                Bearish factors included (1) a rally in the dollar index to t 1-1/2 month high, which reduces investment demand in commodities, (2) the drop in the May China HSBC manufacturing PMI to its slowest level in 10 months, which indicates reduced energy consumption, (3) the larger-than-expected decline in the May Euro-Zone PMI composite, and (4) concern that the European debt crisis may worsen and slow energy demand after the yields on Greek and Irish 10-year government bonds rose to records and Standard & Poor's warned it may downgrade Italy's debt.

Wednesday, May 25, 2011...

•   July crude oil prices this morning are trading down -11 cents a barrel and July gasoline is -1.01 cents per gallon. Crude oil and gasoline prices yesterday settled higher due to the weak dollar and after Goldman Sachs said it was turning "more bullish" on commodities: CLN11 +$1.89, RBN11 +5.21.

                Bullish factors included (1) a decline in the dollar which encourages investment demand in commodities, (2) fund buying of crude after the statement from Goldman Sachs that it's turning "more bullish" on commodities and its prediction that "It is only a matter of time until inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand, keeping it in line with available supplies," and (3) the outlook for weekly crude supplies to decline when the DOE reports weekly crude oil inventories on Wed.

                Bearish factors included (1) the unexpected decline in May Richmond Fed manufacturing index to a 2-year low , which indicates weakened energy consumption, and (2) the outlook for gasoline supplies to increase on Wednesday's weekly DOE inventory report. Expectations for weekly inventories from the DOE are for crude oil supplies to fall -1.7 million bbl, gasoline stockpiles to rise +500,000 bbl, distillate inventories to increase +50,000 bbl and the refinery utilization rate to rise +0.5 to 83.7% of capacity.

Oil ends week unchanged at around $100 per barrel
Oil floats around $100 per barrel after government says unemployment rate increased

Friday June 3, 2011, 3:47 pm
NEW YORK (AP) -- Oil seems to be stuck at $100 per barrel.

Despite more gloomy economic reports, benchmark West Texas Intermediate crude on Friday settled just about where it began the day: down 18 cents at $100.22 per barrel. Oil has hovered around the $100 mark since early May.

"It's like there's a magnet on that $100 level," independent oil analyst Jim Ritterbusch said. "As soon as we get $2, $3 away in either direction, it snaps back."

One reason for the relative stability of oil is its relationship to the dollar. Crude is priced in U.S. currency, so oil and the dollar often move in opposite directions. When the dollar rises, for example, it makes oil more expensive for investors holding foreign currency, and oil prices fall. When the U.S. Dollar Index slipped 0.8 percent Friday in afternoon trading, the weaker dollar buoyed oil futures, keeping prices from falling further.

Oil withstood a steady parade of anemic readings this week for U.S. housing, manufacturing, retail sales, consumer confidence, and petroleum demand. As the summer driving season began, the government said oil supplies grew while Americans pumped less gas.

The Labor Department's jobs report on Friday was the latest in a series of disappointing economic data. The U.S. added 54,000 jobs in May, the fewest in eight months. During the previous three months, the economy added an average of 220,000 jobs per month.

Manufacturers cut 5,000 jobs, retailers slashed 8,500 positions and leisure and hospitality businesses dropped 6,000 jobs. Lackluster hiring could mean fewer drivers on the road and gasoline consumption may continue to slide this summer.

PFGBest analyst Phil Flynn said the sluggish economy should eventually push down the price of oil, perhaps as much as $20 per barrel.

Prices could tumble next week if China raises its interest rates again to slow its economy. China is the world's second biggest oil consumer behind the U.S. And OPEC ministers may agree to increase oil production at a meeting scheduled for Wednesday. Rising global supplies would also tend to keep prices lower.

Oil got some support Friday as violence escalated in Yemen. Yemen exports only a small amount of the world's oil -- less than 2 percent -- but it sits on one of the world's most important shipping corridors for oil. The country has been embroiled in an uprising against the government for months, and on Friday its president was wounded in a rocket attack by rebels on his palace.

"It's tough to sell oil before the weekend with that going on," Flynn said. Some investors will lock in their oil positions ahead of the weekend, when markets are closed, if political instability threatens supplies.

Gasoline pump prices increased less than a penny on Friday to a national average of $3.789 per gallon, according to AAA, Wright Express and Oil Price Information Service.

Ongoing refining problems in the Midwest have pushed gasoline prices sharply higher in that part of the country. On Michigan the average retail price increased more than 8 cents overnight to $4.14 per gallon. Pump prices added nearly 7 cents at $3.94 in Ohio, and they were almost 6 cents higher in Illinois at $4.15 per gallon.

Meanwhile, the average price for a gallon of gas was only $3.50 in South Carolina, $3.61 in Missouri and $3.72 in Colorado.

In other Nymex trading for July contracts, heating oil added 1.28 cents to settle at $3.0567 per gallon and gasoline futures added 2.54 cents to settle at $2.9931 per gallon. Natural gas dropped 8.7 cents to settle at $4.707 per 1,000 cubic feet.

In London, Brent crude gained 30 cents to settle at $115.84 per barrel on the ICE Futures exchange.

What Determines Oil Prices?
Friday June 3, 2011

With each passing year, oil seems to play an even greater role in the global economy. In the early days, finding oil during a drill was considered somewhat of a nuisance as the intended treasures were normally water or salt. It wasn't until 1857 that the first commercial oil well was drilled in Romania. The U.S. petroleum industry was born two years later with an intentional drilling in Titusville, Pa.


While much of the early demand for oil was for kerosene and oil lamps, it wasn't until 1901 that the first commercial well capable of mass production was drilled at a site known as Spindletop in southeastern Texas. This site produced more than 10,000 barrels of oil per day, more than all the other oil-producing wells in the U.S. combined. Many would argue that the modern oil era was born that day in 1901, as oil was soon to replace coal as the world's primary fuel source. Oil's use in fuels continues to be the primary factor in making it a high-demand commodity around the globe, but how are prices determined?

The Determinants of Oil Prices
With oil's stature as a high-demand global commodity comes the possibility that major fluctuations in price can have a significant economic impact. The two primary factors that impact the price of oil are:


supply and demand
market sentiment
The concept of supply and demand is fairly straightforward. As demand increases (or supply decreases) the price should go up. As demand decreases (or supply increases) the price should go down. Sound simple?

Not quite. The price of oil as we know it is actually set in the oil futures market. An oil futures contract is a binding agreement that gives one the right to purchase oil by the barrel at a predefined price on a predefined date in the future. Under a futures contract, both the buyer and the seller are obligated to fulfill their side of the transaction on the specified date.

The following are two types of futures traders:


hedgers
speculators
An example of a hedger would be an airline buying oil futures to guard against potential rising prices. An example of a speculator would be someone who is just guessing the price direction and has no intention of actually buying the product. According to the Chicago Mercantile Exchange (CME), the majority of futures trading is done by speculators as less than 3% of transactions actually result in the purchaser of a futures contract taking possession of the commodity being traded.

The other key factor in determining oil prices is sentiment. The mere belief that oil demand will increase dramatically at some point in the future can result in a dramatic increase in oil prices in the present as speculators and hedgers alike snap up oil futures contracts. Of course, the opposite is also true. The mere belief that oil demand will decrease at some point in the future can result in a dramatic decrease in prices in the present as oil futures contracts are sold (possibly sold short as well).

Price Cycle
Additionally, from a historical perspective, there appears to be a possible 29-year (plus or minus one or two years) cycle that governs the behavior of commodity prices in general. Since the beginning of oil's rise as a high-demand commodity in the early 1900s, major peaks in the commodities index have occurred in 1920, 1951 and 1980. Oil peaked with the commodities index in both 1920 and 1980. (Note: there was no real peak in oil in 1951 because it had been moving in a sideways trend since 1948 and continued to do so through 1968.) It is important to note that supply, demand and sentiment take precedence over cycles because cycles are just guidelines, not rules.

If one wishes to pursue his or her education of oil beyond this brief introduction, recommended educational material on oil can be obtained directly from OPEC. Information on the oil futures market can be obtained through the CME.

Conclusion
Unlike most products, oil prices are not determined entirely by supply, demand and market sentiment toward the physical product. Rather, supply, demand and sentiment toward oil futures contracts, which are traded heavily by speculators, play a dominant role in price determination. Cyclical trends in the commodities market may also play a role. Regardless of how the price is ultimately determined, based on its use in fuels and countless consumer goods, it appears that oil will continue to be in high demand for the foreseeable future.

Thursday, May 26, 2011...

•   July crude oil prices this morning are trading down -76 cents a barrel and July gasoline is -0.88 of a cent per gallon. Crude oil and gasoline prices yesterday finished higher after US distillate supplies fell to a 2-year low and the OECD hiked its US growth estimate for this year: CLN11 +$1.73, RBN11 +2.87.

                Bullish factors included (1) the unexpected decline in weekly distillate inventories which fell to a 2-year low (-2.04 million bbl to 141.1 million bbl versus expectations of a +50,000 bbl build), and (2) the action by the OECD to raise its 2011 US GDP estimate to 2.6% from a Nov estimate of 2.2%.

                Bearish factors included (1) the unexpected increase in weekly crude oil supplies (+616,000 bbl versus expectations of -1.7 million bbl), (2) the surge in weekly gasoline supplies by the most in 3 months (+3.79 million bbl versus expectations of +500,000 bbl), and (3) the larger-than-expected increase in the refinery utilization rate to its highest level in 4-1/2 months (+3.2 points to 86.3% versus expectations of +0.5 to 83.7%), which bodes well for further increases in fuel supplies as refiners come out of maintenance programs and boost production.

Friday, May 27, 2011...

•   July crude oil prices this morning are trading up +12 cents a barrel and July gasoline is up +0.15 of a cent per gallon. Crude oil and gasoline prices yesterday settled mixed as refinery outages in the Midwest boosted gasoline but weaker-than-expected economic data undercut crude: CLN11 -$1.09, RBN11 +2.07. Jul gasoline rose to a 1-week high and Jul crude climbed to a 2-week high but crude shed its gains and closed lower.

                Bullish factors included (1) the weaker dollar, which boosts investment demand in commodities, and (2) strength in gasoline on speculation that outages at 2 Illinois refineries owned by Marathon Oil and Exxon Mobil will reduce gasoline supplies during the Memorial Day holiday weekend.

                Bearish factors included (1) the weaker-than-expected US Q1 GDP, which signals reduced fuel consumption, and (2) the unexpected increase in weekly US initial jobless claims, which suggests labor market weakness that may lead to reduced fuel demand.

Tuesday, May 31, 2011...

•   July crude oil prices this morning are trading up +$1.61 barrel and July gasoline is +2.17 cents per gallon, both at 2-week highs. Crude oil and gasoline prices last Friday finished higher as a weak dollar and a statement from the G-8 saying the global economy is strengthening offset weaker-than-expected US economic data: CLN11 +$0.36, RBN11 +2.39. Jul gasoline rallied to a 2-week high.

                Bullish factors included (1) the fall in the dollar index to a 2-week low, which boosts investment demand in commodities, (2) the statement from the G-8 leaders meeting in France that the global economy is strengthening, which may lift global energy demand, and (3) strength in gasoline after a power blackout shut 3 refineries in Texas City, Texas.

                Bearish factors included (1) the weaker-than-expected Apr US personal spending and Apr pending home sales, which signals economic weakness that may lead to reduced fuel demand, and (2) the prediction from JPMorgan Chase that OPEC will raise oil-output quotas next month as the group seeks to "assuage" pressure on consumer nations to release emergency stockpiles.

Wednesday, June 1, 2011...

•   July crude oil prices this morning are trading down -19 cents a barrel and July gasoline is -1.12 cents per gallon. Crude oil and gasoline prices yesterday rallied to 2-week highs and finished sharply higher as the dollar slumped and after TransCanada shut its 591,000 bpd crude pipeline to the US after a leak: CLN11 +$2.11, RBN11 +1.90.

                Bullish factors included (1) the slide in the dollar index to a 2-1/2 week low, which boosts investment demand in commodities, (2) the action by TransCanada to shut its 591,000 bpd Keystone crude pipeline that sends Canadian oil to the US after "an issue with a fitting" caused a leak, and (3) comments from Qatar's oil minister who said there's "no noticeable urgency" for OPEC to raise its oil quotas when it meets next week.

                Bearish factors included (1) the weaker-than-expected US economic data on May Chicago purchasing managers, May US consumer confidence and Mar S&P/CaseShiller composite-20 home prices, which i ndicates economic weakness that is negative for energy demand and consumption, and (2) weaker-than-expected European economic data on Apr French consumer spending and Apr German retail sales, which may limit economic expansion and fuel demand.

Thursday, June 2, 2011...

•   July crude oil prices this morning are trading up +8 cents a barrel and July gasoline is +0.96 of a cent per gallon. Crude oil and gasoline prices yesterday closed sharply lower as OPEC increased production in May and after weaker-than-expected global economic data hint at reduced energy demand: CLN11 -$2.41, RBN11 -6.45.

                Bearish factors included (1) weaker-than-expected US economic data that showed the smallest gain in May ADP employment in 8 months and May ISM manufacturing activity expanded at its lowest level in 20-months, (2) the unexpected downward revision to May Euro-Zone PMI manufacturing to a 7-month low, (3) the fall in May China PMI manufacturing activity to a 9-month low, and (4) Bloomberg data that shows OPEC crude production in May rose +0.6% to 28.895 million barrels a day, the highest since Feb.

                Bullish factors included (1) the fall in the dollar index to a 3-1/2 week low, which boosts investment demand in commodities, and (2) the statement from Iran' s OPEC Governor who said that maintaining current OPEC production quotas is the only way to balance the oil market. Expectations for the weekly DOE inventory report (delayed 1 day because of the Memorial Day holiday) are for crude oil supplies to drop -1.6 million bbl, gasoline stockpiles to increase +800,000 bbl, distillate inventories to remain unchanged and the refinery capacity rate to rise +0.5 to 86.8%.

Friday, June 3, 2011...

•   July crude oil prices this morning are trading down -87 cents a barrel and July gasoline -1.50 cents per gallon. Crude oil and gasoline prices yesterday fell to 1-week lows and finished mixed as an increase in fuel demand and a weak dollar offset weaker-than-expected economic data and an unexpected increase in weekly crude inventories: CLN11 +$0.11, RBN11 -0.73.

                Bearish factors included (1) weaker-than-expected US economic data that showed a smaller-than-expected decline in weekly US jobless claims along with the biggest monthly decline in Apr factory orders in 11 months, which suggests economic weakness that may curtail energy demand, (2) the unexpected increase in weekly DOE crude oil inventories for a second week (+2.88 million bbl versus expectations of -1.6 million bbl), and (3) the larger-than-expected rise in weekly DOE gasoline supplies (+2.55 million bbl versus expectations of +800,000 bbl).

                Bullish factors included (1) the drop in the dollar index to a 3-1/2 week low, which boosts investment demand in commodities, and (2) increased demand after US gasoline demand in the week ended May 27 rose +4.5% w/w to 9.43 million barrels a day, the highest in 9 months.

Monday, June 6, 2011...

•   July crude oil prices this morning are trading down -96 cents barrel and July gasoline -2.01 cents per gallon. Crude oil and gasoline prices last Friday slipped to 1-week lows and settled mixed as the weaker-than-expected US May payrolls report bolstered concern that a slower economic recovery will curb oil demand while a weaker dollar boosted gasoline: CLN11 -$0.18, RBN11 +2.54.

                Bearish factors included (1) the smaller-than-expected increase in May US nonfarm payrolls along with the unexpected increase in the May US unemployment rate, which suggests an economic slowdown that would be negative for energy demand, and (2) comments from Saudi Arabian Oil Minister Ali Al-Naimi who said that his country has 3 million to 3.5 million barrels a day of spare capacity and that OPEC "will respond" at its Jun 8 meeting if there is demand for more oil production.

                Bullish factors included (1) the decline in the dollar index to a 1-month low, which boosts investment demand in commodities, and (2) the stronger-than-expected May ISM non-manufacturing index, which signals economic expansion and is positive for energy demand and consumption.

Oil drops below $100 ahead of OPEC meeting
Oil settles under $100 per barrel, as investors await OPEC meeting and government reports

Monday June 6, 2011, 3:58 pm
NEW YORK (AP) -- Oil fell below $100 a barrel Monday as investors and economists await a key OPEC meeting this week and the government's outlook on U.S. supply and demand.

Benchmark West Texas Intermediate for July delivery lost $1.21 to settle at $99.01 per barrel on the New York Mercantile Exchange. Crude has been within a few dollars of the $100 mark for about a month.

A stronger dollar pushed oil lower Monday. Oil is priced in dollars and becomes more expensive for buyers with foreign currency as the dollar gets stronger.

TransCanada Corp. also said its Keystone Pipeline was back online after a minor oil spill at a pump station in Kansas. The pipeline delivers a half million barrels of oil per day to the U.S. from Alberta, feeding supplies to the delivery point for benchmark oil in Cushing, Okla. The 1,300-mile (2,080-kilometer) pipeline was taken offline twice in the last month as TransCanada dealt with leaks.

Analysts are looking for clues on what OPEC will do about oil production when the cartel meets Wednesday in Vienna. OPEC ministers could decide to try to push oil prices lower by increasing production. OPEC officials have said that they believe oil prices are too high and threaten global economic recovery.

"You have a lot of money sitting on the sidelines right now ahead of that meeting," analyst Stephen Schork said.

It's unclear how prices would react to more OPEC production. By pumping more oil, OPEC could make up for the loss of exports from Libya that were cut off by unrest that began there in February. That may push prices lower. But experts also point out that boosting production now could make it harder for the cartel to provide more crude later as global demand increases. That could force prices higher in the long run.

"It all depends on if you're taking a short-term or long-term view of things," independent oil analyst Jim Ritterbusch said.

Major oil investors like Goldman Sachs predict that oil prices will rise in the next 18 months as OPEC closes in on its maximum production capacity. The investment bank, which is considered a major player in oil markets, said in a research note Monday that global oil demand "continues to increase at a fast pace" with consumption rising by about 500,000 barrels per day in April.

Goldman analyst Michele della Vigna noted, however, that global demand growth appeared to slowing, particularly in Japan, where it fell by 357,000 barrels per day in April due to the earthquake and tsunami that hit the country in March. A number of manufacturing plants closed because of the damage.

Della Vigna also said there were signs of slumping demand closer to home. "May is the first month we have seen a possible reaction to demand from oil prices in the U.S."

The Energy Department will release its monthly short-term energy outlook on Tuesday and weekly petroleum inventories report on Wednesday. The recent trend has been for rising supplies and falling demand.

In other Nymex trading in July contracts, heating oil lost 3.93 cents to settle at $3.0174 per gallon and gasoline futures gave up 4.32 cents to settle at $2.9499 per gallon. Natural gas added 12 cents to settle at $4.827 per 1,000 cubic feet.

In London, Brent crude lost $1.36 to settle at $114.48 per barrel on the ICE Futures exchange.

Saudis raise oil production to curb prices...
June 6 2011 19:38

Saudi Arabia has been quietly increasing its crude oil production ahead of Wednesday's meeting of the Opec oil cartel, in a sign that Riyadh is trying to bring oil prices down to more comfortable levels for consumers in the US, Europe and China.

The kingdom boosted production in May by about 200,000 barrels a day and it is on course to increase it by another 200,000-300,000 b/d this month, taking its output above the critical 9m b/d level for the first time since mid-2008.

The rise comes as the seasonal refining maintenance seasons ends, increasing global demand for oil.

Riyadh acted unilaterally earlier this year when it moved to replace some of the production lost due to the civil war in Libya, where oil output has plummeted to 250,000 b/d, down from a pre-crisis level of around 1.6m b/d.

Bill Farren-Price, of consultants Petroleum Policy Intelligence, said Saudi output was "rising sharply" this month due to increased demand from Asian and, to a lesser extent, US refiner

Another industry official, familiar with Saudi production levels, confirmed that Riyadh was increasing its production in June.

"The Saudis are ramping up their production," said the official on condition of anonymity. "In part they need to for domestic needs as power demand increases with the arrival of the summer, but also the end of the refiners' maintenance means more demand."

Saudi oil output hit a five-year low of 8m b/d in February 2009 as Opec cut production during the global financial crisis to arrest a steep drop in oil prices.

News of the increase in Saudi output came as Opec ministers started to arrive in Vienna for what analysts said was the most politically charged meeting of the cartel in a decade.

The group, which controls about 40 per cent of global crude oil supplies, will consider on Wednesday the first increase in its production quotas – or the official output levels – in almost four years amid political tension in the Middle East.

Libya's representation at the Opec meeting was in doubt barely 48 hours before proceedings were due to begin. However, Tripoli decided on Monday to send Omran Abukraa, a former head of the national electricity authority, as head of the country's delegation, said a person familiar with the situation.

Mr Abukraa is loyal to Colonel Muammer Gaddafi's regime and his arrival will ensure that Libya's rebel movement has no opportunity to occupy the country's place at the Opec table. Shokri Ghanem, the Libyan oil minister, defected to the insurgents last month.

Two members of Opec – Qatar and the United Arab Emirates – have openly backed the rebels.

When Mr Abukraa takes Libya's place on Wednesday, he will be sitting alongside representatives of countries which are helping his opponents.

The political tension is likely to complicate what is already a difficult meeting. While Saudi Arabia and other Gulf neighbours such as Kuwait back a production rise, Opec price hawks such as Iran and Venezuela are resisting a large hike.

Oil prices retreated on Monday as traders and investors braced for an increase in the cartel's production. In London, Brent crude, the global benchmark, fell $1.57 to $114.25 a barrel. But oil prices are still within a trading range of between $105 and $125 a barrel, which has been in place over the last four months. In New York, West Texas Intermediate fell $1.32 to $98.91 a barrel.

Tuesday, June 7, 2011...

•   July crude oil prices this morning are trading down -36 cents a barrel and July gasoline -0.23 of a cent per gallon. Crude prices were undercut in overnight trade after an OPEC delegate said the cartel will raise production quotas. Crude oil and gasoline prices yesterday weakened and closed lower on speculation the global economic recovery and fuel demand are starting to falter: CLN11 -$1.21, RBN11 -4.32.

                Bearish factors included (1) the larger-than-expected drop in Jun Euro-Zone Sentix investor confidence to an 11-month low, which may portend a slowdown in European economic growth and energy demand, and (2) overall commodity weakness on concern s global economic slowdown will lead to reduced demand for commodities, including crude.

                Bullish factors included (1) the early drop in the dollar index to a 1-month low, which boosted investment demand in commodities, and (2) the statement from Venezuela's Oil Minister who said OPEC is unlikely to raise output quotas at this week's cartel meeting and that "We believe at the moment we're in balance."

Wednesday, June 8, 2011...

•   July crude oil prices this morning are trading down -94 cents a barrel and July gasoline -2.38 cents per gallon. Crude oil and gasoline prices yesterday slumped after an OPEC delegate said the cartel will raise production quotas, but recovered their losses and finished higher due to a weak dollar and strength in gasoline after Valero Energy's 310,000 bpd refinery in Port Arthur, Texas had a power disruption that curbed production: CLN11 +$0.08, RBN11 +4.20. Jul crude fell to a 2-week low but recovered its losses and closed higher.

                Bullish factors included (1) the slump in the dollar index to a 1-month low, which boosts investment demand in commodities, (2) strength in gasoline prices due to a disruption in production at Valero Energy's 310,000 bpd refinery in Port Arthur, Texas because of a power disruption, and (3) stronger than expected European economic data on Apr Euro-Zone retail sales and Apr German factory orders, which signals economic strength and is benefici al for energy demand and consumption.

                Bearish factors included (1) the statement from a Gulf delegate that OPEC will increase output targets to help replace missing supplies from Libya and meet demand growth later this year, (2) the prediction from Societe Generale SA and Morgan Stanley that OPEC is likely to raise output quotas by 1.5 million barrels a day, and (3) the outlook for increased gasoline supplies when the DOE reports weekly inventories on Wed. Expectations for Wednesday's weekly inventory report from the DOE are for crude oil supplies to fall -1.38 million bbl, gasoline stockpiles to increase +1.05 million bbl, distillate inventories to gain +125,000 bbl and the refinery capacity rate to remain unchanged at 86%.

Crude oil supplies rise by 2.3 million barrels
Energy Dept. says crude oil and gasoline supplies rose last week

Wednesday July 27, 2011, 10:47 am

NEW YORK (AP) -- The nation's crude oil and gasoline supplies grew last week, according to government data released Wednesday.

Crude supplies increased by 2.3 million barrels, or 0.7 percent, to 354 million barrels, which is 1.9 percent below year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.

Analysts expected a drop of 2.3 million barrels for the week ended July 22, according to Platts, the energy information arm of McGraw-Hill Cos.

Gasoline supplies rose by 1 million barrels, or 0.5 percent, to 213.5 million barrels. That was more than analysts expected and 3.9 percent below year-ago levels.

Demand for gasoline over the four weeks ended July 22 was 3.3 percent lower than a year ago, averaging nearly 9.1 million barrels a day.

U.S. refineries ran at 88.3 percent of total capacity on average, a drop of 2 percentage point from the prior week. Analysts expected capacity to rise to 90.5 percent.

Supplies of distillate fuel, which include diesel and heating oil, rose by 3.4 million barrels to 151.8 million barrels. Analysts expected distillate stocks to increase by 1.8 million barrels.

Crude prices fell $2.10, or 2.1 percent, to $97.49 per barrel in morning trading on the New York Mercantile Exchange.

Oil prices fall as nation's stockpiles build
Oil prices fall after government says crude, gasoline supplies and pump prices rise

On Wednesday July 27, 2011, 11:00 am

Oil prices are falling after the government said the nation's oil and gasoline supplies rose last week.

Benchmark West Texas Intermediate crude for September delivery lost $1.50 to $98.09 per barrel Wednesday morning on the New York Mercantile Exchange. In London, Brent crude fell 59.8 cents to $117.69 per barrel on the ICE Futures exchange.

The Energy Department says oil inventories rose 2.3 million barrels to 354 million barrels last week. Gasoline supplies increased by 1 million barrels to 213.5 million barrels. Gasoline demand over the last four weeks remains below year-ago levels.

Gasoline pump prices rose about half a cent on Wednesday to a national average of $3.698 a gallon. That's nearly $1 more than a year ago.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

Oil prices fell below $99 a barrel Wednesday in Europe after a report showed U.S. crude supplies unexpectedly jumped last week, suggesting demand may be weakening.

By early afternoon in Europe, benchmark oil for September delivery was down 73 cents to $98.86 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose 39 cents to settle at $99.59 on Tuesday.

In London, Brent crude fell 60 cents to $117.68 per barrel on the ICE Futures exchange.

The American Petroleum Institute said late Tuesday that crude inventories rose 4.0 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 2.3 million barrels.

Inventories of gasoline dropped 600,000 barrels last week while distillates rose 2.9 million barrels, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data -- the market benchmark -- later Wednesday.

Investors are also closely watching negotiations among U.S. leaders to raise the government's debt limit and Europe's bid to contain its own debt crisis.

"There is no doubt that U.S. recovery to date has been extremely fragile," said Richard Soultanian of NUS Consulting. "The uncertainty created by each of these challenges, at best, could derail the nascent economic recovery and, at worst, plunge us back into recession."

During the past days, the dollar has been weakening on back of a potential U.S. default. That has helped boost oil prices by making crude cheaper for investors holding other currencies.

On Wednesday, however, the euro slipped to $1.4475 from $1.4518 on Tuesday.

"Oil is no longer gaining anything from the U.S. dollar's continuing slide," said analysts at Commerzbank in Frankfurt. "These prices reflect concerns that the conflict over how to handle the U.S. debt limit and the threat of a de facto bankruptcy could hit demand in the world's biggest oil consuming country."

In other Nymex trading in September contracts, heating oil fell 1.51 cents to $3.11 a gallon while gasoline lost 0.67 cent to $3.0918 a gallon. Natural gas futures rose 3.1 cents to $4.362 per 1,000 cubic feet.

Oil settles below $98...

Wednesday July 27, 2011, 3:11 pm EDT
Oil prices fell Wednesday after the nation's oil and gasoline supplies rose last week with the release of millions of barrels from the Strategic Petroleum Reserve. Here's how energy contracts traded.

On the New York Mercantile Exchange:

Crude fell $2.19 to settle at $97.40 per barrel.

Gasoline lost 1.54 cents to settle at $3.0831 a gallon.

Heating oil gave up 3.07 cents to settle at $3.0944 a gallon.

Natural gas fell 1.3 cents to settle at $4.318 per 1,000 cubic feet.

On the ICE Futures exchange:

Brent crude dropped $1.24 to settle at $72.38 per barrel.

Aug. 9, 2011, 12:11 p.m. EDT

Oil rebounds from lows below $76 a barrel
OPEC cuts world oil demand forecast for 2011 and 2012

SAN FRANCISCO (MarketWatch) — Crude-oil prices traded modestly higher Tuesday, off session lows following tumultuous trading in Asian hours and the previous session's selloff in New York.

Oil for September delivery -3.55%  added 83 cents, or 1.1%, to $82.20 a barrel. It traded as low as $75.71 a barrel and as high as $83.05 a barrel earlier.

Oil plunged 6.4% plunge on Monday, after markets reacted to Standard & Poor's downgrade of U.S. debt late Friday and fears of a recession dominated.


To make matters harder for oil investors, the Organization of the Petroleum Exporting Countries cut its forecast for oil demand this year and in 2012.

In its monthly report released Tuesday, the cartel cited "economic worries along with high oil prices" as having affected demand in developed countries, leading to weaker-than-expected consumption during the summer driving season.

OPEC forecast world oil demand to grow 1.2 million barrels a day in 2011, 150,000 barrels less than in the previous report. And its 2012 forecast of growth world oil demand stands at 1.3 million barrels a day, after "a slight downward revision" from the previous forecast.

Brent crude oil, Europe's benchmark, also recovered some ground to add 94 cents, or 0.9%, to $104.63 a barrel on ICE Futures in London.

The September contract had dipped below $100 a barrel to trade as low as $99.61 a barrel earlier.

After Monday's mayhem, some analysts said the selloff was overdone. Also, speculation was rife that the Federal Reserve might hint at another monetary-easing program for the U.S. economy after its rate-setting policy meeting later Tuesday. Read more on what to expect at Fed meeting.

"We think the markets are getting quite oversold and likely overshooting the mark in terms of the news that triggered the selloff in the first place," said analysts at MF Global, referring to Standard & Poor's downgrade of the U.S. credit rating late Friday.

Some sense of relief after the selloff was also carrying the day for other energy products. September gasoline /quotes/zigman/2075611 RB1U -1.42%  added 3 cents, or 1.1%, to $3.72 a gallon. September natural gas /quotes/zigman/2049443 NG11U +1.93%  added 8 cents, or 2.1%, to $4.02 per million British thermal units.

Some bargain-hunting emerged in natural-gas futures, said Tim Evans, an analyst with Citigroup's Citi Futures Perspective.

Prices settled under the $4 mark on Monday, but natural gas "needs ongoing intense heat and some hurricane activity in the Gulf of Mexico in order to offset strong shale gas production rates," Evans said.

Oil Prices Rebound on Inventory Data...
08/10/11 - 10:38 AM EDT

NEW YORK (TheStreet) -- Oil prices sprung back to positive territory Wednesday morning, after a deep plunge below $80 the day before, as energy traders responded enthusiastically to an unexpected draw in weekly crude oil stocks and the Federal Reserve's latest update on reviving the economy.

West Texas Intermediate light sweet crude oil for September delivery was rising $1.32 to $80.62 a barrel, while the September Brent crude oil contract was popping $2.11 to $104.68.

The Federal Reserve said on Tuesday that it would keep the benchmark interest rate at near-zero levels until mid-2013 in its latest bid to sustain the economic recovery.
"That did not seem like enough at first ... and the DJIA sold off 150 points in the aftermath of the comments," Cameron Hanover analysts noted. "But, that was hardly the full story on Tuesday. It took traders an hour to parse the Fed's comments and, as traders mulled it over, they became more bullish over the Fed's comments."


"Ten-year bonds reacted in such a way that traders thought the Fed had achieved QE3 without buying a single bond."
The Federal Reserve news overlapped with the Internal Energy Agency's decision to trim its global oil demand forecast for 2011 on concerns of higher prices and slowing economic growth.
However, the agency raised its estimate for oil demand growth in 2012 "due to oil-fired power needs in Japan."
Meanwhile, the American Petroleum Institute said late Tuesday that there was a large, 5.2 million barrel decline in crude oil inventories in the week ended Aug. 5. Analysts were generally expecting a build of 1.8 million barrels, according to a Platts survey of analysts.
The U.S. Department of Energy's weekly update on crude oil inventories is scheduled for 10:30 am ET.
"The cup of positive sentiment overfloweth into the crude complex overnight, meaning we approach this morning's weekly U.S. inventory report with hefty gains," commented Summit Energy analyst Matt Smith.
Energy stocks were trading in mixed territory. Chevron(CVX_) was falling 3.1% to $90.50; Exxon(XOM_) was sliding 3.1% to $68.99; Marathon Oil(MRO_) was up 0.2% to $25.53; Hess(HES_) was tumbling 2.4% to $54.67; Occidental Petroleum(OXY_) was losing 3.2% to $81.75; Double Eagle Petroleum(DBLE_) was rising 1.3% to $8.46; and Anadarko Petroleum(APC_) was declining 2.8% to $66.33.

Oil falls below $85 as traders eye EU debt crisis
Oil below $85 in Asia as EU debt crisis, weak US economy trigger week of sharp market moves


Associated Press, On Friday August 12, 2011, 6:52 am EDT
SINGAPORE (AP) -- Oil prices fell below $85 a barrel Friday in Asia as investors tried to make sense of a week of sharp zigzags in the equity and commodities markets.

Benchmark oil for September delivery was down $1.08 to $84.64 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose $2.83, or 3.4 percent, to settle at $85.72 on Thursday.

In London, Brent crude was down $1.01 to $107.01 per barrel on the ICE Futures exchange.

Crude has dropped from $100 last month and near $115 in May as concerns about the European debt crisis and weakening U.S. economic growth undermined investor confidence. Oil has rebounded from as low as $75.71 earlier this week, whipped around by surges and plunges in global stock markets and quick changes in investor sentiment.

"As the interpretation of eurozone conditions ebbs and flows, risk appetite will continue to fluctuate wildly on a day to day basis," energy analyst Ritterbusch and Associates said in a report. "Growing eurozone debt problems will remain regardless of short-term fixes."

Oil is now the same price as in February, before violence in Libya shut down almost all crude production from the OPEC nation.

The Labor Department said Thursday that the number of people who applied for unemployment benefits fell last week below 400,000 for the first time in four months, a sign that the job market may be improving. Traders will be closely watching the latest data on U.S. retail sales and consumer sentiment later Friday.

"We anticipate a renewed turn back to the downside that could evolve into fresh lows as early as next week," Ritterbusch said. "Our longer term outlook remains bearish as we still see an eventual crude price decline to the $73 1/2 area."

Some analysts expect strong crude demand in emerging economies, such as China, to offset weaker growth in the U.S., Europe and Japan. National Australia Bank said it forecasts crude will average $93 in the third quarter and $100 in the fourth.

"We still expect oil prices to grow over the medium term," NAB said in a report. "The growth outlook in the developing world remains robust and should help absorb any further downward pressure on prices."

In other Nymex trading in September contracts, heating oil fell 0.7 cent to $2.89 a gallon while gasoline dropped 0.3 cent at $2.82 a gallon. Natural gas futures advanced 0.6 cents at $4.11 per 1,000 cubic feet.

Aug. 16, 2011, 3:31 p.m. EDT

Oil ends lower as global demand prospects weaken

SAN FRANCISCO (MarketWatch) — Crude-oil futures fell 1.4% Tuesday, pressured by a stronger U.S. dollar and weaker global demand prospects after the euro zone's economy grew at only a modest pace in the second quarter.

But ongoing risks to global supplies following an oil spill in the North Sea and increasing tension in the Middle East and North Africa, particularly Libya and Syria, offered some support for oil prices.

Crude for September delivery /quotes/zigman/2075827 CL1U -1.05%  shed $1.23 to close at $86.65 a barrel on the New York Mercantile Exchange. Prices gave back most of the $2.50 it gained on Monday, when it logged its highest finish since Aug. 3.

"The oil story is and will remain first and foremost a growth story," said Jason Schenker, president and chief economist at Prestige Economics. "Any hint, suspicion, or confirmation of weaker growth could engender some price weakness."

Data released Tuesday showed that the euro zone's gross domestic product grew 0.2% in the second quarter compared with the preceding three months. The figure was below expectations of 0.3% growth and marks a slowdown from the 0.8% rise seen in the first quarter.

Germany's GDP growth was also at a paltry 0.1% in the April-through-June quarter compared to the preceding quarter. German GDP had expanded 1.3% in the first quarter. Read about Germany's GDP.

German Chancellor Angela Merkel and French President Nicolas Sarkozy met in Paris Tuesday to discuss euro-zone debts. At the meeting, they announced proposals to boost the governance of the euro zone and proposed a new council as part of their commitment to defend the shared currency, according to media reports. Read about the proposals from the meeting.

Partially offsetting the pressure from the grim economic data was a 0.9% rise in U.S. industrial production for July. Read more about U.S. industrial output.

"Growth and demographics are fundamental drivers behind the trend moves higher in price" for oil, said Schenker in emailed comments, "and are not poised to dissipate."

So "the medium- and long-term prospects for crude oil and all commodities remain higher," he said.

The greenback strengthened Tuesday, which tends to discourage investment in dollar-priced commodities such as oil.

The dollar index /quotes/zigman/1652083 DXY +0.09% , which measures the performance of the greenback against a basket of six currencies, stood at 73.998, up from 73.836 late Monday. Read more about currencies.

Finding some support
Oil had posted a 2.9% gain on Monday encouraged by a rise in U.S. stocks and a weaker dollar.

Supply risks are also a growing concern following further actions by opponents of Col. Moammar Gadhafi against his regime in Libya. "It is unlikely we shall see Libya's output restored to at least 1 [million barrels per day] by year end," said Andrey Kryuchenkov, analyst with VTB Capital in London, in a note to clients.

"Markets are also watching the situation in Syria, where the U.S. wants Europe and China to impose sanctions on Syria's oil industry, imperilling about 400,000 barrels of oil a day," according to analysts at MF Global.

Later Tuesday the American Petroleum Institute will deliver its weekly inventories report, followed by the more closely watched U.S. Energy Information Administration report on Wednesday.

Analysts polled by Platts forecast a drop of about 500,000 barrels in U.S. commercial crude stocks for the week ended Aug. 12.

Gasoline inventories are projected to fall by 2.3 million barrels, while middle distillate stocks will show a buildup of 700,000 barrels, according to Platts.

Last week the government's data showed a surprise 5.2 million barrel decrease in crude inventories.

Ahead of the supply data, September heating oil /quotes/zigman/2075596 HO1U -0.06%  closed down 1 cent at $2.93 a gallon, while September gasoline /quotes/zigman/2075611 RB1U -0.66%  fell by 2 cents to $2.85 a gallon.

September natural gas /quotes/zigman/2049443 NG11U -2.14%  suffered the biggest decline among energy futures, down 9 cents to finish at $3.93 per million British thermal units. It closed at its lowest level in over a week.

Iraq oil exports now at 2.2 mln bdp -min

Tue Aug 16, 2011 2:01pm EDT

BAGHDAD Aug 16 (Reuters) - Iraq's oil exports for August currently average 2.2 million barrels per day, Oil Minister Abdul-Karim Luaibi said on Tuesday.

Luaibi said crude exports were expected to be at 2.5 million bpd in 2012, adding that he expected oil revenues to reach over $80 billion by the end of 2011.

Venezuela, Iran seek to boost dialogue within OPEC
Venezuela, Iran seek increased coordination in OPEC as economic woes weigh on oil prices

On Tuesday August 16, 2011, 5:03 pm EDT
CARACAS, Venezuela (AP) -- The presidents of Venezuela and Iran have agreed to work together within OPEC as economic concerns weigh on world oil prices, the Venezuelan government said Tuesday.

President Hugo Chavez spoke with Iranian President Mahmoud Ahmadinejad by telephone Monday, and the two agreed on the need to coordinate more closely in OPEC, Venezuela's Foreign Ministry said. It cited the "ominous effects of the crisis in the dominant powers' economies."

It also said the leaders agreed to instruct their oil ministers to maintain "fluid and constant communication."

Venezuela and Iran have traditionally favored efforts to boost oil prices within the Organization of Petroleum Exporting Countries.

Oil prices declined Tuesday amid concerns about sluggish growth in Germany and economic troubles in Europe. Benchmark West Texas Intermediate crude for September delivery declined $1.23 to finish at $86.65 a barrel on the New York Mercantile Exchange.

Chavez and Ahmadinejad also discussed the conflicts in Libya and Syria. They plan to closely follow the situation in those countries and deepen efforts "to achieve peace," the Foreign Ministry's statement said, without elaborating.

Chavez has put an emphasis on building strong ties with Iran in recent years. He has also been a staunch defender of Libyan leader Moammar Gadhafi.

These are two leaders " Ahmadinejad and Chavez that need to be removed from their government..Permanently !Another couple of thugs

Futures Movers
Aug. 18, 2011, 3:49 p.m. EDT

Oil down 5.9% on growth fears, stocks selloff
Housing, factory activity, and jobs data come in worse than expected

SAN FRANCISCO (MarketWatch) — Crude-oil futures tanked Thursday as fears of a recession flared and macroeconomic reports reinforced concerns about a slowdown in oil demand.

Crude for September delivery /quotes/zigman/2075827 CL1U -1.53%  retreated $5.20, or 5.9%, to settle at $82.38 a barrel on the New York Mercantile Exchange. It had traded as low as $81.86 a barrel.

The settlement price was the largest one-day percentage and dollar decline since Aug. 8, and the lowest finish since Aug. 9.

Oil added to losses after data showed a fall in sales of existing homes and higher consumer prices.

In addition, a gauge of manufacturing activity in the Philadelphia area weakened to its lowest level in more than two years. Earlier, a weekly jobless claims report had pointed to a still ailing job market.

"It's a demand story," said Kyle Cooper, a managing director of IAF Advisors in Houston. "Typically we'd be close to peak demand time, and demand is just not very good."

Lower stock prices and the overwhelmingly negative macroeconomic data points added to the worries about demand, he said.

Oil has declined 14% so far this month and 10% for the year as concerns about the euro zone's sovereign-debt crisis and the U.S.'s anemic recovery keep investors worried demand for oil will be weak for some time to come.

Jobless claims rose back to the 400,000 level, according to a Labor Department report on Thursday. Read more about jobless claims.

Initial jobless claims in the week ending Aug. 13 rose 9,000 to 408,000, according to the Labor Department. The increase was larger than analysts had expected, with the consensus forecast around a rise to 400,000.

The Philadelphia Federal Reserve Bank's business outlook survey fell to negative 30.7 in August from 3.2 in July -- the lowest reading since March 2009. See more about the Philly Fed report.

The cost of living in the U.S. climbed in July, mostly thanks to energy prices, as the consumer price index rose 0.5%, its biggest gain since March. Read more about inflation.

Sales of existing homes fell 3.5% in July to an eight-month low. See more about existing-home sales.

Oil had tracked stocks on Wednesday, rising 1.1% and looking past a surprise increase in inventories reported by the Energy Information Administration.

Supplies rose by 4.2 million barrels against expectations of a draw of 500,000 barrels. Read more about Wednesday's action in oil futures.

The EIA inventory data was bullish on gasoline, with stocks sliding 3.5 million barrels.

Rather than a sign of improving demand, however, "the drawdown stems from low imports of below 700,000 (barrels a day) while U.S. refiners are hiking distillate yields, with four-week average diesel output recently hitting all-time highs," analysts at JBC Energy wrote in a note to clients Thursday.

September gasoline /quotes/zigman/2075611 RB1U -0.43%  declined 9 cents, or 3%, to $2.78 a gallon. September heating oil /quotes/zigman/2075596 HO1U -0.47%  was off 9 cents, or 2.9%, to $2.87 a gallon.

Natural-gas futures retreated after the weekly government inventory report showed a larger-than-expected increase in supplies.

Natural gas for September delivery /quotes/zigman/2049443 NG11U +1.18%  declined 4 cents, or 1%, to $3.89 per million British thermal units.

The Energy Information Administration said Thursday that supplies of natural gas rose 50 billion cubic feet in the week ended Aug. 12.

Analysts surveyed by Platts had expected an increase between 45 billion cubic feet and 49 bcf for the week.

Oil finishes lower for the week
Oil ends the week lower, pointing to lower gas pump prices down the road

Friday August 19, 2011, 4:42 pm EDT
Oil ended the day below $83 a barrel on Friday, finishing down about 4 percent for the week, on fears that another recession could cut demand for energy.

Benchmark West Texas Intermediate crude for September delivery fell 12 cents to finish at $82.26 per barrel on the New York Mercantile Exchange after earlier rising as high as $83.55 per barrel. Stocks also started the day with gains but the major indexes ended down more than 1 percent, posting their fourth straight week of losses as uncertainty about the global economy continued.

Benchmark crude remains well above its lowest point in the past year. It finished at $71.63 a barrel last Aug. 24.

Still, oil has been falling since April and lower prices will likely mean more relief at the gas pump. The national average for retail gasoline is $3.59 a gallon, according to AAA, Wright Express and Oil Price Information Service. That's down 10 percent from this year's high of $3.98 on May 5.

Gas could be around $3.25 a gallon by Labor Day and may drop as low as $3.15 by the end of the year, according to Fred Rozell, OPIS retail pricing director.

While gas may be headed lower, it's still taking a big piece out of household income. The median U.S. household income before taxes is almost $50,000 a year. In July families spent about $374 a month on gasoline, or around 9 percent of household income, according to Rozell. For the year, monthly gas expenses average about 8.4 percent, compared with 6.7 percent in 2010.

Crude got some support Friday from a weaker dollar, which hit a new post-World War II low against the Japanese yen. Oil and other commodities are priced in dollars, so a weaker dollar makes them cheaper for traders who use other currencies. Oil lost some ground by the end of the day as the dollar got a little stronger.

In other Nymex trading for September contracts, heating oil rose 2.97 cents to finish at $2.9045 per gallon and gasoline futures added 5.08 cents to end at $2.8412 per gallon. Natural gas rose 4.8 cents to finish at $3.940 per 1,000 cubic feet.

In London, Brent crude rose $1.63 to end the day at $108.62 per barrel on the ICE Futures exchange.

Oil: What I Would Do if I were President...
September 24, 2011


In 2007, the House of Representatives passed a $16 billion increase in taxes on oil companies. Actually, this is a lie. Oil companies, like every company in America, see taxes as the cost of doing business. Any tax increase will be passed onto consumers. If the voting public supports this increase, then they have only voted for a tax increase on themselves.

The profits oil companies make go to pay millions of share holders. Additionally, the money brought in from the sale of gasoline and other petroleum products is used to locate, transport, refine, and distribute. The oil industry employs tens of thousands of people, creates related support businesses, takes all the risks in drilling and transportation, pays billions of dollars in taxes, and gets blamed for gouging the consumer for unfair "profits" for delivering a volatile product safely to outlets of distribution a few miles from our homes and next to highways that criss-cross America. Government agencies, on the other hand, simply cash the checks for the taxes the gas stations collect from their customers.

The combined state and federal taxes for California is over 50 cents per gallon. The United States average is somewhere around 45 cents per gallon. With the bridge collapse in Minneapolis, you're going to hear about taxing the oil companies even more. Here's a question: Where have all the taxes gone that we've been paying every time we put gasoline in our cars? Our politicians have been spending these billions of dollars on their own pet projects to keep them in office and grow the government.

Politicians don't want to talk about high gasoline taxes. In fact, revelations of high taxes on gasoline might anger the American public and produce sympathy for "big oil." It would expose the fraud of "price gouging" by the oil companies. I'm hopeful if prices remain high that more people will start talking about how state and federal governments are the real problem. Maybe even some in the mainstream media will start asking lawmakers why oil profits of about ten cents per gallon are "obscene" but nearly 50 cents per gallon of taxes is . . . patriotic?


As a national security issue, as president I would declare a state of emergency and immediately enact the following:

Oil is the lifeblood of this economy. As a nation, we are too dependent on foreign sources for oil. As you know, the oil we need — 11 million barrels a day — is located in the most hostile region in the world. While we consider a nuclear attack to be a possibility, our enemies could do far more damage by destroying the majority of oil fields in Saudi Arabia. Any disruption in the flow of oil could bring our nation to a standstill, not just economically but militarily. We would find it almost impossible to defend ourselves against domestic and foreign aggressors if gasoline supplies were jeopardized. As a result, I am issuing an Executive Order that will open up all lands and sea rights in the possession of the United States to oil exploration.

In addition, I am temporarily suspending stringent environmental laws that make it nearly impossible to build and bring online new refineries. I am proposing that ten new refineries be built and running within eight years. Five of these refineries will be designed in such as way to be impervious to a military attack. The goal is to have at least a three-year supply of crude oil stored in the United States to take care of domestic and military needs as if the real possibility exists of being completely cut off from our present foreign sources. We need a Manhattan project for oil independency.

If there is a presidential candidate you are supporting, I would suggest proposing that he adopt such a policy.

Crude Oil

Nymex WTI light crude is in a primary up-trend, with the current retracement likely to find support around $100/barrel. Rising Nymex crude prices reflect a stronger US economy. Expect the spread with Brent crude to narrow. Target for the current Nymex advance is the 2012 high of $110/barrel*.