Crude Oil

[setravis]

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%.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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%.

[setravis]

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).

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

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.

[setravis]

House Votes to Lift President Obama's Ban on Offshore Drilling...  
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    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.

[setravis]

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.

[setravis]

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%.

[setravis]

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.