Crude Oil

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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

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

[setravis]

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.

[setravis]

I think we are being screwed at the pumps! 

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.

[setravis]

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.

[setravis]

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.

[setravis]

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. 

[setravis]

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.