Better Fill up today

[DanCookson]

Frank,
Do you have any opinion on a bottom.  I have read in some blogs and articles that the expected recession in Japan and China is going to be much more severe than even here, causing a massive reduction in demand.  This said, I have heard the 30-35 dollar amount bounced around.  What do you think?

[frawin]

Dan, I think you and I discussed this some months back and I told you $50.00 range would be a low, as I felt at that number, Gasoline would be low enough that people would start driving more and also that OPEC would cut exports big time. The whole playing field has changed, $147.00 oil and the resulting $4.00 US and $10.00 European Gasoline prices have resulted in a worldwide recession, and unfortunately I think things are going to get much worse before they get better, that said, I think we could see $30.00 to $35.00 oil. OPEC keeps saying they are going to cut exports big time but I think they know they need to keep oil prices down to help with the recovery of the World economy and I think cooler heads, Saudi Arabia, Kuwait, U.A.E and  Russia will keep exports up.
The longterm negative is that drilling in the US is dropping and we are only pushing back any efforts to be less energy dependent on foreign sources for our energy needs.
Let's visit this discussion again periodically, it will be interesting to see where we are.

[littlelamb]

Ive learned alot for reading this topic and i dont keep know enough about what youre talking about but however i do know it only cost me $40.00 to fill up from empty on my truck and i almost did a cartwill at the station now if some one would just check the oil and wash my windows id realy get excited.

[frawin]

Below is an excerpt from todays, weekly EIA/DOE Crude and product Inventory report:

Total products supplied over the last four-week period has averaged nearly
19.1 million barrels per day, down by 7.0 percent compared to the similar
period last year. Over the last four weeks, motor gasoline demand has averaged
9.0 million barrels per day, down by 2.2 percent from the same period last
year. Distillate fuel demand has averaged 4.0 million barrels per day over the
last four weeks, down by 3.3 percent from the same period last year. Jet fuel
demand is 20.3 percent lower over the last four weeks compared to the same
four-week period last year.

[littlelamb]

ok i just looked at my last post and im realy not as stupid as it might look . sorry about that ill make sure i proof read next time

[frawin]

Dec-08 Crude settled at $53.62 down $0.77 on the day, Dec-08 Natural Gas settled at $6.743, up $0.227 on the day.

[frawin]

Dec-08 Crude is trading at $52.625, down $1.475, Dec-08 Natural Gas is trading at $6.70, down $0.043.

[frawin]

Oil Falls Toward $50 a Barrel as Fuel Use Falls, Equities Slump

By Christian Schmollinger and Grant Smith

Nov. 20 (Bloomberg) -- Crude oil fell for a fifth day, approaching $50 a barrel, as the contracting world economy increased concerns that demand for fuels will slow.

U.S. fuel use during the past four weeks averaged 19.1 million barrels a day, down 7 percent from a year ago, an Energy Department report said yesterday. Stocks declined worldwide after the Dow Jones Industrial Average dropped to a five-year low yesterday.

"We have a good chance to make another leg down to the downside," said Gerrit Zambo, an oil trader at BayernLB in Munich. "Fifty is a critical point, and if this is broken we could see Brent going down to $40."

Crude oil for December delivery fell as much as $1.13, or 2.1 percent, to $52.49 a barrel on the New York Mercantile Exchange. It was at $52.78 a barrel at 9:22 a.m. London time. Yesterday, futures touched $52.79 a barrel, the lowest since Jan. 23, 2007.

Brent crude oil for January settlement fell as much as $1.24, or 2.4 percent, to $50.48 a barrel on London's ICE Futures Europe exchange. It was at $50.90 a barrel at 9:22 a.m. London time. The contract yesterday declined 12 cents to $51.72 a barrel, the lowest settlement since Jan. 11, 2007.

"U.S. demand has really been collapsing and dragging the OECD demand as well," said Antoine Halff, head of energy research at Newedge USA LLC in New York, in an interview with Bloomberg Television. "We might end up with a contraction in global demand growth for the year."

Japan Exports Drop

Oil has dropped 64 percent since reaching a record $147.27 a barrel on July 11. Yesterday, December futures fell 77 cents, or 1.4 percent, to $53.62 a barrel, the lowest settlement since Jan. 22, 2007.

The more active January futures contract was down 78 cents, or 1.4 percent, at $53.32 a barrel. December futures expire at the close of trading today.

In the latest evidence that the global recession is deepening, exports from Japan dropped at the fastest pace in almost seven years in October. Japan, the world's largest oil importer, fell into a recession last quarter.

Democratic congressional leaders disagreed with Republicans and President George W. Bush's administration over how to provide $25 billion in aid to GM, Ford Motor Co. and Chrysler LLC. Only two days remain in a lame-duck session for lawmakers to resurrect a compromise.

The MSCI World Index lost 1.9 percent to 806.29, the lowest since April 2003, as of 8:30 a.m. in London.

Stockpiles Grow

Oil prices also fell as U.S. crude inventories climbed because of declining demand for fuels.

Crude-oil supplies rose 1.6 million barrels to 313.5 million barrels last week, the Energy Department said yesterday. Stockpiles were forecast to rise 1 million barrels, according to a Bloomberg News survey of analysts.

Gasoline inventories rose 539,000 barrels to 198.6 million barrels in the week ended Nov. 14, the report showed. Analysts surveyed by Bloomberg News were split over whether supplies of the motor fuel increased or declined.

U.S. fuel demand fell 5.2 percent in the first 10 months of this year, the biggest drop since 1981, the American Petroleum Institute said in a report yesterday.

[Catwoman]

OK...not to sound too ignorant...but what exactly is brent crude? 

[frawin]

Good Morning Cat, Brent is the Main or Marker Crude in Western Europe, it is Equivalent to our WTI-Cushing NYMEX/Futures Crude. Brent trades in the Commodities Futures Market pretty much in line with WTI (West Texas Intermediate, Sweet Crude), except for some location difference. US Refiners run quite a lot of Brent Crude here in the States, mainly in the Atlantic Coast Area refineries. Phillips Petroleum, now ConocoPhillips has had a long on going Partnership with the British in developing their North Sea production.