Better Fill up today

[frawin]

Oil Little Changed Around $78 on Forecast U.S. Supplies Grew



By Grant Smith and Ann Koh

Oct. 27 (Bloomberg) -- Crude oil was little changed around $78 a barrel in New York before a report forecast to show that U.S. crude inventories expanded for a third week.

An Energy Department report due tomorrow will probably show that U.S. stockpiles of crude oil rose 1.5 million barrels last week, according to a Bloomberg News survey. Analysts forecast that supplies of gasoline and distillate fuel, a category that includes heating oil and diesel, declined last week.

R20;ItR17;s overvalued and it may be time for a correction," said Carsten Fritsch, an analyst with Commerzbank AG in Frankfurt. "The fundamental picture is bearish. Demand outside China is still weak and global stockpiles are ample."

Crude oil for December delivery was at $78.55 a barrel, down 13 cents, at 8:49 a.m. London time. Yesterday, it dropped 2.3 percent to close at $78.68 a barrel on the New York Mercantile Exchange, the biggest decline since Sept. 24 and the lowest settlement since Oct. 16.

Prices have gained 76 percent this year and reached a one- year high of $82 a barrel on Oct. 21.

R20;The upper limit is at $82 at the moment," said Ken Hasegawa, a commodity derivatives sales manager at brokers Newedge in Tokyo. "Unless there is a collapse in the economy, this market would be supported at around $75 a barrel."

U.S. Stockpiles

An Energy Department report due tomorrow will show that U.S. inventories of crude oil rose 1.5 million barrels last week, according to the median of nine estimates by analysts in a Bloomberg News survey. Supplies in the week ended Oct. 16 climbed 1.3 million barrels to 339.1 million, leaving stockpiles 9.4 percent above the five-year average for the period.

The Organization of Petroleum Exporting Countries, which accounts for 40 percent of global oil output, will meet Dec. 22 in Luanda, Angola, to review production quotas.

The group may boost production targets at the December meeting, OPEC President and Angolan Oil Minister Jose Maria Botelho de Vasconcelos said in an interview on Oct. 25.

R20;The price of oil was pushed back below the $80 mark by the thought of OPEC increasing production at their next meeting in December and increased concerns over banking sector liquidity," said Mike Sander, an investment adviser with Sander Capital in Seattle.

Brent crude oil for December settlement was at $77.27 a barrel, up 1 cent, on the London-based ICE Futures Europe exchange at 8:42 a.m. London time. Yesterday it declined $1.66, or 2.1 percent, to end the session at $77.26 a barrel.

The dollar dropped to $1.4880 per euro as of 8:42 a.m. in London from $1.4876 yesterday in New York. The U.S. currency reached $1.5063 against the euro yesterday, the weakest level since August 2008.

[frawin]

Dec-09 Crude settled at $79.55,up $0.87 on the day, November-09 Natural Gas settled at $4.557, up $0.044 on the day.

[frawin]

Dec-09 Crude is trading at $78.775, down $0.775, Dec-09 Natural Gas is trading at $5.23, down $0.052. Today is last day trading for Nov-09 Natural Gas.

[frawin]

Oil Falls, Trading Around $79 Before Report on U.S. Inventories


By Grant Smith and Ann Koh

Oct. 28 (Bloomberg) -- Oil fell, trading around $79 a barrel in New York before a report forecast to show that U.S. crude-oil inventories expanded last week.

Oil slipped as European and Asian shares declined, sending the MSCI World Index lower for a seventh straight day. Crude oil stockpiles rose 1.91 million barrels in the week ended Oct. 23 from 339.1 million the prior week, according to a Bloomberg survey before today's Energy Department report.

R20;Oil is losing ground before the U.S. fuel inventories report," said Andrey Kryuchenkov, an analyst with VTB Capital in London. "The huge inventory overhang we have makes a modest pull-back towards the low $70s likely in coming weeks, before heating oil demand takes the market back up again."

Crude oil for December delivery fell as much as 56 cents, or 0.7 percent, to $78.99 a barrel on the New York Mercantile Exchange and traded for $79.06 a barrel as of 8:57 a.m. London time. Prices have gained 78 percent this year and reached a one- year high of $82 a barrel on Oct. 21.

Crude oil advanced 1.1 percent yesterday after the industry-funded American Petroleum Institute reported that crude stockpiles fell 1 percent to 339.5 million last week. The S&P/Case-Shiller home-price index also showed prices increased from the prior month.

R20;We do see the global economy continue on its recovery path, and we could see more dollar weakness, which has a positive effect for dollar-denominated commodities," said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. "As much as underlying fundamentals, we haven't really seen a huge degree of improvement."

OPEC Output

The Organization of Petroleum Exporting Countries will raise oil output if there's a "real" shortage of supply, Qatari Oil Minister Abdullah bin Hamad al-Attiyah said yesterday in Ras Laffan, Qatar. The 12-member group is scheduled to meet Dec. 22 in Luanda, Angola, to review production targets.

R20;Sometimes the price of oil has no correlation to demand and supply," al-Attiyah said. "Now what we are seeing is that oil has a strong correlation with the dollar."

Oil fell 2.3 percent on Oct. 26 when the dollar climbed, reducing investor demand for commodities. The U.S. currency was at $1.48302 per euro as of 8:49 a.m. in London from $1.4787 yesterday. It also touched $1.4770 yesterday, the strongest level since Oct. 13.

The dollar has weakened so far this year versus all but one of its 16 major counterparts, including a 5.7 percent drop against the euro.

An Energy Department report today will probably show that U.S. crude-oil supplies rose 1.91 million barrels in the week ended Oct. 23 from 339.1 million the prior week, according to the median of 16 estimates by analysts before the department's report. All respondents forecast a gain.

Supplies of distillate fuel, a category that includes heating oil and diesel, declined 1 million barrels from 169.9 million the prior week, according to the survey.

Brent crude oil for December settlement was at $77.35 a barrel, down 57 cents, at 8:48 a.m. London time. It increased 66 cents, or 0.9 percent, to end the session at $77.92 a barrel on the London-based ICE Futures Europe exchange yesterday.

[frawin]

Dec-09 Crude is trading at $78.00, up $1.00, Dec-09 Natural Gas is trading at $5.o4, down $0.005.

Our neighborhood pump price for Regular is $2.27

[frawin]

Oil Rises From a Two-Week Low as ChinaR17;s Manufacturing Expands

By Grant Smith



Nov. 2 (Bloomberg) -- Crude rose from a two-week low after manufacturing in China, the world's second-biggest oil user, expanded at the fastest pace in 18 months.



A purchasing managers' index released by HSBC Holdings Plc today and a government-backed PMI issued yesterday showed that ChinaR17;s manufacturing grew in October. In the same month, output from the Organization of Petroleum Exporting Countries expanded to its highest in 10 months, a Bloomberg survey showed.



R20;Everything coming out of Asia shows they are developing better than other countries," said Sintje Diek, an analyst with HSH Nordbank in Hamburg. "Elsewhere, demand is still weak, and it's going to take a long time to lower the oversupply in crude and product inventories."



Crude oil for December delivery rose as much as $1, or 1.3 percent, to $78 a barrel in electronic trading on the New York Mercantile Exchange. It was at $77.87 a barrel at 10:45 a.m. London time. Earlier it fell to $76.56, the lowest price since Oct. 15.



Futures lost 4.4 percent last week, the first pullback in a month, after U.S. crude oil and gasoline stockpiles rose, equities declined and the dollar's rebound reduced the investment appeal of commodities. Prices were down 3.6 percent Oct. 30 after a report showed U.S. consumer spending in September fell for the first time in five months.



OPEC output averaged 28.76 million barrels a day in October, up 80,000 barrels from September, according to a Bloomberg survey of oil companies, producers and analysts. The entire gain came from the OPEC members with quotas, all except Iraq. The 11 countries pumped 26.31 million barrels a day, 1.465 million barrels above their target. Iraqi output was unchanged.



Demand 'Not Robust'



R20;It doesnR17;t help OPECR17;s cause if, as reports indicate, they decide to increase production at a time when demand is still not very robust," said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. "It may be some time before there's another test of $80."



Hedge-fund managers and other large speculators increased their bets on rising oil prices to a 19-month high last week, according to U.S. Commodity Futures Trading Commission data.



Speculative net-long positions, the difference between orders to buy and sell the commodity, climbed 47 percent to 109,619 contracts in the week ended Oct. 27, the commission said Oct. 30. That's the highest since March 14, 2008.



Brent crude for December settlement climbed as much as $1.18, or 1.6 percent, to $76.38 a barrel on the London-based ICE Futures Europe exchange. The contract was at $76.26 at 10:44 a.m. in London.

[frawin]

Dec-09 Crude settled at $78.13,up $1.13 on the day, December-09 Natural Gas settled at $4.824,down $0.221 on the day.

[frawin]

Dec-09 Crude is trading at $77.15, down $0.98, Dec-09 Natural Gas is trading at $4.79, down $0.034.

[frawin]

Crude Oil Futures Decline Before Data on U.S. Fuel Inventories

By Grant Smith and Alexander Kwiatkowski



Nov. 3 (Bloomberg) -- Crude oil fell in New York before a report forecast to show that crude-oil inventories increased for a fourth week.



The industry-funded American Petroleum Institute publishes its weekly inventory figures today. Tomorrow's U.S. Department of Energy report may show crude stockpiles rose 1.5 million barrels last week from 339.9 million the prior week, according to a Bloomberg survey. Prices also fell as the dollar gained against the euro, reducing commodities' appeal for investors.



R20;The conditions are there for a slide back to $75," said Rob Montefusco, a broker at Sucden Financial in London. "Demand for products is still weak, while the stronger dollar and worries about the financial sector are weighing on sentiment."



Crude oil for December delivery fell as much as $1.10, or 1.4 percent, to $77.03 a barrel and was at $77.08 a barrel on the New York Mercantile Exchange at 10:05 a.m. London time. Crude has risen 75 percent this year.



The contract yesterday gained $1.13, or 1.5 percent, to settle at $78.13 a barrel after the Institute for Supply Management said its U.S. factory index rose to a three-year high in October.



The Energy Department is scheduled to release its weekly report at 10:30 a.m. tomorrow in Washington. All 10 analysts surveyed by Bloomberg forecast a gain in crude stockpiles.



U.S. supplies of distillate fuel, a category that includes heating oil and diesel, declined 850,000 barrels last week from 167.8 million the prior week, according to the survey. Stockpiles in the week ended Oct. 2 were at the highest level since January 1983. Refineries operated at 82.1 percent of capacity, up 0.3 percentage point from the previous week.



R16;Fits and StartsR17;



Brent crude for December settlement fell as much as $1.01, or 1.3 percent, to $75.54 a barrel and was at $75.58 a barrel on the London-based ICE Futures Europe exchange at 10:06 a.m. local time. The contract yesterday climbed $1.35, or 1.8 percent, to $76.55 a barrel.



R20;Despite its fits and starts, the dollar is in the throes of a mini-correction that could see it strengthen somewhat further from here and likely exert continued downward pressure on energy," Edward Meir, an analyst with MF Global Ltd. in Darien, Connecticut, said in a report today.



The U.S. currency traded at $1.4646 against the euro, the strongest in four weeks. It was at $1.4658 per euro at 10:11 a.m. in London, from $1.4775 yesterday.

[frawin]

More backlash coming from the lack of respect and confidence in the dollar. It has been my feeling for several months that world markets are going to disconnect their trade from the Dollar.

Saudi Arabia and the Price of Crude Oil
by: Tim Iacono November 02, 2009

Here's an interesting report from over the weekend out of Saudi Arabia via The Telegraph. It appears that the Kingdom is unhappy with using West Texas Intermediate crude oil as traded on the New York Mercantile Exchange as a basis for its oil sales.

Who could blame them after what's happened over the last year?

That is, when huge spreads between WTI crude and brent crude developed and then, like clockwork every month when the near-month futures contract was about to expire, the price of that expiring contract would plunge - to as low as $32 a barrel at one point - as the next front-month contract was trading $10 or $15 higher.

The Saudis have dropped a key US benchmark for crude oil – but why?

For Saudi Arabia, it is a philosophical issue that the black gold pouring out of its deserts should be treated as a tangible, physical commodity – not the paper plaything of traders on Wall Street hedging against the weak dollar. This thinking is at the heart of the Middle Eastern country's decision last week to abandon its long alliance with West Texas Intermediate crude – the famous oil used by most global producers to price their exports to the US.

The decision is loaded with symbolism, but not likely much more than that.

It's not like they're selling the oil for yuan or rubles or some other far-away currency, though that may happen soon enough - that would be much more than symbolism.

Some details on how the Saudi oil export market works and what this change might mean...




Saudi Arabia exports around 1.5m barrels per day of oil to the US, making it the second largest supplier after Canada, but its physical crude output is not actually traded on the exchange. This is done separately through contracts between countries and oil companies – but Saudi Arabia still bases its prices on the dominant benchmark, WTI.

For several years now, Saudi Arabia has argued that it has not been well-served by the New York Mercantile Exchange's faith in this oil. Saudi Aramco, the national oil company, is fed up with being given a price for WTI crude that it claims fails to represent the global picture of supply and demand.

This year, the dominant crude oil's volatility and disconnection from the fundamentals of the physical market went one step too far.
...


The question now is: how much clout does Saudi Arabia have to destroy the dominance of NYMEX and who could be next to follow its rebellion?

The exchange moved quickly to assure its customers that it would launch two products linked to the new Argus sour crudes index. But the new benchmark will not be so inextricably wedded to the famous Wall Street exchange.

In practice, the shift may not after all make an immediate difference. But all oil market observers will wait to see whether the Saudis really do get a better, more stable price for their oil with the benchmark of sour crudes. Brazil, Venezuela and even Canada could all follow suit if they see that Saudi Aramco has made a smart move.


This is just one more, albeit quite small, step away from U.S. hegemony in global financial markets and part of the blame must surely lie with some Wall Street firms who, for years now, have profited from increased volatility in energy markets, everyone's favorite whipping boy Goldman Sachs topping that list.