3SOF

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.

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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%.