Better Fill up today

[Diane Amberg]

Thanks! I always learn good things from you.

[larryJ]

Don't we all, Diane!  I see that with Memorial Day here the price of gas has gone up as usual.  It is all supply and demand, I guess.  OR, the oil companys don't anticipate that there might be an increase in usage of gasoline as there is every year.  My suggestion to them is to get the money while you can before someone figures out an alternative source of power, OR, get with the program and develop their own alternate source of power.  I wonder if the oil companys actually are already doing that research in a big way OR just relying on the consumers to keep on keeping on.  OR, both?

Larryj

Post Script:  When the newspaper industry began to see the light behind the internet providing the daily news, they wisely chose to continue printing a paper and at the same time establishing their own internet sites.  While they didn't recover all the lost advertising, they didn't lose as much.

[frawin]

Larry the Major Oil Companys all have big research labs and ConocoPhillips has setup a special research Lab in Colorado with a select group researching alternate energy possibilities. ConocoPhillips just last week announced they would be adding 30 New Alternate Energy Research Scientists to the Main research Center which is here in Bartllesville. By the way, contrary to public opinion the Major Oil Companys do not set or control the price of Crude oil. Also as far as the service stations prices, ConocoPhillips does not own any service stations and the Margins and pricing is basically set by the Operators.

[larryJ]

Yeah, I know.  Just wanted to complain about something.  Back in the dark ages when I was a senior in high school I worked in a Conoco (before Conoco-Philips) gas station.  My boss was a good guy, an alcoholic, but a good guy.  I had my own green and white striped uniforms complete with hat.  The boss insisted that I come to work in a clean uniform so my mom was going nuts trying to keep up with the laundry.  Those were the days that the gas was put in, the oil and tire pressure checked, and all the windows cleaned.  When I wasn't gassing up cars I was washing them or changing the oil in them.  Good memories there, too.

Larryj

[frawin]

July (Front Month) Crude is trading at $60.35, down $1.32 this A.M.


Oil Falls on Concern OPEC May Maintain Output as Demand Slows


May 26 (Bloomberg) -- Crude oil fell to the lowest in a week on speculation that OPEC will maintain production targets this week even as the global recession curbs fuel demand.

OPEC is unlikely to change output quotas at its May 28 meeting, and talk of overly high inventories is exaggerated, said a Persian Gulf oil official with knowledge of the matter. German exports and company spending plunged in the first quarter, dragging Europe's largest economy into its deepest slump on record.

"The fundamental situation is very weak; demand in the U.S. is just collapsing," Eliane Tanner, an analyst at Credit Suisse Group AG said in a television interview from Zurich. "The market is already pricing in a no-change scenario" with regard to OPEC.

Crude oil for July delivery fell as much as $2.14, or 3.5 percent, to $59.53 a barrel on the New York Mercantile Exchange, and was at $59.85 at 11:50 a.m. in London. The exchange will combine yesterday and today's trading for settlement purposes because U.S. floor trading was shut yesterday for Memorial Day.

The dollar rose against the euro for the first time in seven days after Britain's Telegraph newspaper cited a German banking regulator as saying debt at the nation's biggest lenders may increase. A stronger dollar limits investors' need for assets to hedge against inflation such as commodities.

The euro declined to $1.3888 as of 11:28 a.m. in London, from $1.4017 yesterday in New York.

Bearish Expectation

Crude oil inventories held by the 28 nations advised by the International Energy Agency rose to 62 days of demand in the first quarter, according to the agency's report on May 13. That is up from 54 days in the year-earlier period and from 58 days in the fourth quarter of 2008.

"The expectation that OPEC won't change its output quotas can be viewed as bearish because inventories are indeed high," said Victor Shum, a senior principal at oil industry consultants Purvin & Gertz Inc. in Singapore. "Most traders do feel that the fundamentals aren't supportive of the current level of pricing. That's adding to the downward pressure."

Still, charts suggest prices may resume their rally. Oil in New York may rise to $77 a barrel in coming months as futures contracts "correct" the decline from a record $147.27 in July, according to technical analysis from MF Global.

Oil may first climb to $71.75 a barrel, the level reached on Nov. 4, P.A. Rajan, a Singapore-based technical analyst at MF Global, said in a telephone interview yesterday. Crude could reach $77, near the so-called Fibonacci retracement of 38.2 percent of oil's decline from the July record.

Unsustainable Rally

"An overhang of inventories built up at sea and continuously poor economic data encourages selling because the rally looks unsustainable," said Harry Tchilinguirian, BNP Paribas's senior oil-market analyst in London.

Saudi Arabia, the largest producer in the Organization of Petroleum Exporting Countries, wants the group to "stay the course" when it reviews quotas at this week's meeting, Oil Minister Ali al-Naimi said on May 24. Saudi Arabia is producing more crude than its OPEC quota, according to data from the Joint Oil Data Initiative, citing figures submitted by the country.

OPEC, responsible for 40 percent of global crude supply, is likely to keep output quotas unchanged for a second time this year as recovering oil prices forestall the need for new cuts, according to a Bloomberg survey published on May 22.

At the last summit on March 15, the group decided to leave quotas unchanged and adhere to its commitment to restrict supply.

Brent crude for July settlement fell as much as $1.80, or 3 percent, to $58.41 a barrel and was at $58.90 a barrel at 11:30 a.m. on London's ICE Futures Europe exchange.

[frawin]

Oil Rises Above $63 on Gasoline Supply Forecast, Naimi Comments


By Grant Smith and Christian Schmollinger

May 27 (Bloomberg) -- Crude oil rose to a six-month high above $63 a barrel as the Saudi minister said demand has has started to recover.

A report tomorrow is forecast to show U.S. gasoline supplies fell a fifth week amid growing optimism the worst of the recession is over. Crude rose above its 200-day moving average for the first time since September, a sign that prices may rally further.

"It looks like we won't see any significant deterioration in demand anymore, hence OPEC is bullish," said Andrey Kryuchenkov, an analyst at VTB Capital in London. "But, we still need to see improving gasoline demand in the U.S."

Crude oil for July delivery rose as much as $1, or 1.6 percent, to $63.45 a barrel in electronic trading on the New York Mercantile Exchange. That's the highest since Nov. 13. Oil was at $63.21 at 11:30 a.m. in London.

The U.S. Conference Board's sentiment index surged to 54.9, more than forecast and the biggest increase since 2003, the New York-based research group said yesterday.

OPEC, responsible for 40 percent of global crude supply, is likely to keep output quotas unchanged for a second time this year as recovering oil prices forestall the need for new cuts, according to a Bloomberg survey published on May 22.

The Organization of Petroleum Exporting Countries has "no need" to cut production because there are signs of a recovery in demand, Saudi Arabian Oil Minister Ali al-Naimi told reporters today in Vienna, where the group meets tomorrow.

Meeting Tomorrow

Saudi Arabia is the biggest and most influential member of OPEC. The producer group is likely to keep daily output quotas unchanged at 24.845 million barrels when it meets tomorrow, according to a Bloomberg News survey of 27 analysts.

"If they do keep production at current levels then it should push oil back down, at least below $60," said Mike Sander, an investment adviser at Sander Capital Advisors Inc. in Seattle.

U.S. gasoline inventories probably fell for a fifth week as fuel deliveries rose to meet holiday demand and refinery operations slowed, a Bloomberg News survey showed.

U.S. crude oil supplies probably rose 50,000 barrels in the week ended May 22 from 368.5 million the previous week, according to the median of 10 estimates by analysts before an Energy Department report tomorrow.

Total U.S. daily fuel consumption averaged 18.3 million barrels in the four weeks ended May 15, down 7.6 percent from a year earlier, the department said last week.

Crude Stockpiles

Crude oil stockpiles held by the 28 nations advised by the International Energy Agency rose to 62 days of demand in the first quarter, according to the agency's report earlier this month. That is up from 54 days in the year-earlier period and 58 days in the fourth quarter of 2008.

Stockpiles of gasoline probably dropped 1.65 million barrels from 204 million the prior week, according to the median of 10 estimates by analysts. Wholesalers and retailers increase motor fuel deliveries before the summer, when Americans take to the highways for vacations.

Brent crude for July settlement rose as much as $1.05, or 1.7 percent, to $62.29 a barrel on London's ICE Futures Europe exchange. It was at $62.05 a barrel at 11:30 a.m. London time. Yesterday it gained $1.03, or 1.7 percent, to end at $61.24 a barrel, the highest settlement since Nov. 5.

--

[frawin]

OPEC Keeps Production Unchanged, Sees Demand Recovery (Update1)


By Ayesha Daya and Fred Pals

May 28 (Bloomberg) -- OPEC decided to keep production quotas unchanged at today's meeting in Vienna, banking on a recovery in oil demand toward the end of the year.

The Organization of Petroleum Exporting Countries, responsible for 40 percent of global crude supply, agreed to maintain production quotas, Saudi Oil Minister Ali al-Naimi said. It's the second time this year the 12-member group has met without revising that total.

OPEC's resolve not to cut further comes even as U.S. inventories reached their highest level in two decades earlier this month and after a forecast from the International Energy Agency that global demand is falling the most since 1981.

Crude oil for July delivery traded up 1 cents at $63.46 a barrel on the New York Mercantile Exchange at 11:20 a.m. London time. Prices have gained 36 percent since the group's last meeting in March.

OPEC's choice not to cut further may have been influenced by its failure to complete previous reductions that came into effect at the start of the year.

The 11 nations bound by quotas, which exclude Iraq, pumped 25.81 million barrels a day in April, an increase of about 225,000 from March and the first increase in nine months, according to OPEC's latest monthly report. The countries have a total target of 24.845 million barrels. That means the group has completed 77 percent of its cuts, down from a revised 82 percent for March.

The outcome of today's gathering is in keeping with a Bloomberg survey, in which 25 of 27 analysts said they expected existing quotas to be upheld.

[frawin]

Oil Heads for Biggest Monthly Gain Since 1999 as Asia Rebounds

By Grant Smith and Ann Koh

May 29 (Bloomberg) -- Oil headed for its biggest monthly gain in a decade as economic indicators from Asia and shrinking crude inventories in the U.S. pointed to a global recovery.

Oil rose to a six-month high above $66 a barrel after India's economy grew more than expected in the last quarter, while Japan said today that its industrial output climbed the most in at least six years in April. The Organization of Petroleum Exporting Countries predicted stronger demand as it decided yesterday to keep output quotas unchanged.

"While the real economy remains in the deepest part of the recession, people see some hope of things getter better," said Gerrit Zambo, an oil trader at BayernLB in Munich. "Money from financial investors who don't want to miss these low prices is coming back into the oil market."

Crude oil for July delivery rose as much as $1.09, or 1.7 percent, to $66.17 a barrel on the New York Mercantile Exchange. That's the highest since Nov. 10. It was at $66.16 at 11:58 a.m. in London. Oil has advanced 29 percent in May, the biggest monthly increase since March 1999, when Asia was recovering from the 1997-1998 financial crisis.

U.S. crude inventories declined 5.41 million barrels to 363.1 million last week, the Energy Department said yesterday. It was the biggest drop since September, when hurricanes hit the Gulf of Mexico coast. Analysts expected a drop of 150,000 barrels, according to the median estimate of 12 analysts surveyed by Bloomberg News.

Fragile Fundamentals

The decline left inventories 27 percent higher than the five-year average, up from a 23 percent surplus a week earlier. Stockpiles were the highest since 1990 in the week ended May 1.

"Oil market fundamentals still remain relatively fragile, notwithstanding the gains in the oil price," said David Moore, a Sydney-based strategist at Commonwealth Bank of Australia.

Refineries operated at 85.1 percent of capacity, up 3.3 percentage points from the previous week, the biggest gain since October, the report showed. Gasoline stockpiles dropped 537,000 barrels to 203.4 million, the lowest since the week ended Dec. 5, according to the report.

Saudi Arabian Oil Minister Ali al-Naimi said OPEC opted not to alter its output targets because "prices are good, the market is in good shape."

Oil's rally is driven by improving sentiment about the global economy and isn't supported by demand, OPEC Secretary General Abdalla el-Badri said today.

Global crude stockpiles remain very high, El-Badri told reporters at a briefing in Vienna. Still, prices may reach $70 to $75 a barrel by the end of the year, partly because speculators are returning to commodity markets, he said.

Asia Recovery

Japan's factory production climbed 5.2 percent from March, when it gained 1.6 percent, the Trade Ministry said today in Tokyo. The increase was faster than the 3.3 percent expected by economists. Companies said they planned to increase output in May and June as well, the report showed.

India, Asia's third-largest economy, expanded 5.8 percent in the three months to March 31, led by government spending and construction, the statistics office in New Delhi said today. Economists were expecting a 5 percent increase.

Brent crude for July settlement was $1.04 higher at $65.43 a barrel on London's ICE Futures Europe exchange at 11:58 a.m. London time.

[Diane Amberg]

Thanks again.

[frawin]

Oil Rises to Seven-Month High on China Manufacturing Expansion


By Grant Smith and Ben Sharples

June 1 (Bloomberg) -- Crude oil rose to the highest since November as China's manufacturing expanded for a third month, signaling that fuel demand in the world's second-biggest energy consumer will increase.

Oil climbed as much as 1.8 percent after the U.S. dollar fell to its lowest against the euro since December, heightening the need for commodities to hedge against inflation. China increased prices of gasoline and diesel by as much as 8 percent, a move that may prompt refiners to boost crude purchases.

"All the attention is on the weaker dollar and macroeconomic sentiment," said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. "The market has advanced a long way on flimsy fundamentals and may pause for breath or see a setback now."

Crude oil for July delivery rose as much as $1.98, or 3 percent, to $68.29 a barrel on the New York Mercantile Exchange. That's the highest since Nov. 10. The contract traded at $67.90 at 9:49 a.m. London time.

Crude had its biggest monthly gain in a decade in May, surging 30 percent, after OPEC left output unchanged on signs the global economy is recovering and fuel demand will increase.

Manufacturers preparing for an economic rebound are rebuilding inventories of everything from benzene to plywood, sparking a commodities rally that Goldman Sachs Group Inc. says will produce 19 percent returns in a year.

The Journal of Commerce index that tracks prices of 18 industrial materials gained 9.5 percent in May, the most in a month since the measure began in 1985.

Alternative Investments

Oil climbed last week as the dollar fell beyond $1.41 against the euro for the first time this year, making raw materials such as oil and gold attractive alternative investments.

China is raising prices for the second time this year, allowing the nation's refiners to pass on climbing crude oil costs. China Petroleum & Chemical Corp., the nation's biggest refiner, said on May 22 it will lose money turning oil into fuels should crude trade above $60 a barrel and the government prevent it from increasing prices.

"The big moves upwards coincided with a sharp decline in the dollar," said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. "Commodities across the board have been boosted by the dollar."

The dollar last traded at $1.4237 per euro, having weakened 6.3 percent in May, the biggest drop since December's 9.2 percent decline. The dollar traded at $1.4146 per euro from $1.4158.

Naimi Speaks

Saudi Arabian Oil Minister Ali al-Naimi said last week that the Organization of Petroleum Exporting Countries opted not to alter its output targets because "prices are good, the market is in good shape."

Hedge-fund managers and other large speculators increased their net-long position in New York crude-oil futures in the week ended May 26, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 40,122 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report on May 29. Net-long positions gained by 4,885 contracts, or 14 percent, from a week earlier.

Brent crude for July settlement rose as much as $2.17, or 3.3 percent, to $67.69 a barrel on London's ICE Futures Europe exchange, and traded at $67.23 a barrel at 9:50 a.m. London time.