Better Fill up today

[srkruzich]

Sorry, been really slacking of late.....Will try to do better 


April-09 Crude is trading at $41.54.

Appears all the outer months are trading higher as well.  I haven't had a chance to do much reading or talk to Frank, but I would make a general assumption that there is fear of the weaking of our dollar to to all the stimulus and gov't producing capital. (printing money).

its quite interesting that its still as high as it is even thuogh yesterday the world markets crashed big time. 

[Teresa]

Squandered opportunities?

Commentary: Smart traders know oil's retreat is temporary
By Kevin Kerr, Global Commodities Alert
Last update: 12:01 a.m. EST March 2, 2009

NEW YORK (MarketWatch) --

Human beings are a predictable bunch and we tend to wait until things get to a painful crisis mode before taking drastic action.
My question is why does it always have to get to that point?

Take the most recent run-up of oil prices, when crude hit $147 a barrel and gasoline was trading around $5.
As prices reached nosebleed levels, the general public was in a great deal of pain and they acted accordingly. There was an outcry for more alternatives, more refineries, conservation, infrastructure investment etc. Everything from clean-coal technology to nuclear was on the table.
Fast forward to today, with crude prices at around $38 and gas back below $2, and it's a very different picture. No pain means no gain in solving the problem.
Let me be clear, though. That problem hasn't gone anywhere.
$300 crude not far off

While the global recession and credit crunch have severely impacted global demand for energy, it's only temporary. The problems propelling oil prices to $147 haven't gone away. The patient is, at best, in temporary remission.
Traders are seasick from the oil markets lately; the volatility has been so extreme. Aside from the obvious macro-factors, what else is driving the abnormally large swings in crude oil?

It's called "contango." Contango occurs when futures prices are higher than current prices. The scenarios are not uncommon, but the recent spread widths are extreme by any measure.

For example: the April 2009 crude oil contract is around $38.10 -- while the April 2010 crude contract, crude for delivery a year from now, is trading at $50.26. That's a $12.16 spread.

That means major oil companies like Royal Dutch Shell royal dutch shell   can store oil on tankers and then sell the April 2010 contract at $50.26.
Even factoring in the cost of storage, they come out better selling forward than selling at current market prices. This maneuvering causes additional volatility throughout the oil curve, as physical oil companies position themselves in the futures markets to take advantage.

Contract rolls
Another strategy we see consistently in the energy market is contract rolls at major hedge funds, commodity-trading advisers and exchange-traded funds. One ETF is the U.S. Oil Fund LP (USO   united states oil fund lp units   USO) , the world's largest oil fund, said to account for 22% of the outstanding front-month contracts each month.

When the front-month contract approaches expiration, this gigantic ETF must sell its position in the expiring month and buy it back for the coming month.

Also, long-term trends following CTAs and hedge funds have been short on the front months. When a contract expiration approaches, the fund has to roll its short position into the next month's contract, since most CTAs and hedge funds have neither the ability nor the interest to take physical delivery of oil.

The volatility in energy is due to the gigantic tug of war going on around key days of the month where funds, ETFs and oil companies are adjusting for the roll.
Old problems are new again

So what were the major factors that drove oil to record levels the last two years? There are many.

Global demand is among the biggest. Pent-up demand is exploding in growth areas like China and India. Once that global manufacturing engine begins firing again, you can count on energy prices ramping up. Here in the U.S., demand is down dramatically, but as the economy recovers, it will pick up swiftly.

Any economic recovery results in higher energy prices -- it's elementary. That means $300 crude oil could be one year away or three years away, but certainly not much more.

There's been almost no progress on the march to alternatives. The global investment engine has ground to a halt. With oil prices at these levels and the market in tatters, the last place investors want to put their money is in the alternative energy space.

Every sector from uranium miners and clean-coal technology to bio-fuels and oil drillers has seen investment and share prices dry up. The call for building of new refineries and pipelines has all but gone silent.
But OPEC has cut production across the board. We already are seeing supplies start to taper off. Eventually, demand will catch up with supply and we'll be right back in the same boat we were in a year ago.

The realities are chilling. The largest oil field in Mexico Cantarell is still in major decline and when it does run out civil unrest in that nation could explode. These types of chokepoints, both political and physical, still exist with several major oil exporting nations.

Adult do-over
You know when you made a mistake as a kid you'd want a "do-over"? If only managing a portfolio were so easy.
In a way, though, it can be.
With oil prices and commodity prices retreating, we have opportunities to take advantage of pricing we thought we'd never see again. Many of the solid energy, refining, drilling and exploration companies that performed exceptionally during the last surge in prices likely will do well again.

Also, several of the more established alternative energy plays should rebound along with crude oil, and they're at just a fraction of their year-ago levels. Investors need to be wary of volatility. But it's prudent to have some exposure.

Shares of many key oil stocks took a plunge, and now they're offering some great entry points. A few ways to play the coming rally in oil is to simply buy the December 2009 crude oil call options. If you prefer to play the equity side, Exxon Mobil is a good bet for the majors while Halliburton  HAL    is one for the drilling side. Many others are attractive.

It's disappointing that during this lull in energy prices, more immediate action isn't being taken to stave off the rapid return of even higher energy prices. But as investors, we need to take action and responsibility to hedge our own portfolios.
High energy prices will be back soon for those that don't prepare. So will the pain, unfortunately.



Kevin Kerr has been trading commodities since 1989. He currently manages the Cane Garden Capital institutional agricultural fund and edits the Global Commodities Alert at www.kerralert.com

[frawin]

Oil Falls as U.S. Jobless Rate May Climb, Limiting Fuel Demand


By Alexander Kwiatkowski and Christian Schmollinger

March 5 (Bloomberg) -- Crude oil fell below $45 a barrel in New York amid speculation the U.S. will report higher jobless figures, adding to signs of the deepening global recession.

The number of people claiming unemployment benefits climbed to a record 5.155 million last week, a Labor Department report may show today. U.S. crude oil stockpiles were at 351 million barrels in the week ending Feb. 27, near the highest level since July 2007, the Energy Department said yesterday.

R20;There is not much prospect for the upside in oil prices as long as we still see weak macroeconomic data," said Eliane Tanner, commodity analyst at Credit Suisse Group in Zurich. "Demand in the U.S. has stabilized now but it is still weak."

Crude oil for April delivery fell as much as $1.26, or 2.8 percent, to $44.12 a barrel in electronic trading on the New York Mercantile Exchange. It was at $44.19 a barrel at 9:24 a.m. London time.

Yesterday, futures rose $3.73 to $45.38. Prices are down 69 percent from the record $147.27 a barrel reached on July 11.

Commodities yesterday had their biggest increase since Dec. 31. The Reuters/Jefferies CRB Index of 19 raw materials rose 7.78, or 3.8 percent, to 211.45.

Crude oil supplies in the U.S. fell 757,000 barrels to 350.6 million barrels in the week ended Feb. 27, the Energy Department said in a report yesterday. Inventories were forecast to rise 1 million barrels, according to the median of analyst estimates in a Bloomberg News survey.

R16;Jumpy MarketR17;

R20;This is a very jumpy market and very news-sensitive to things such as the inventories," said Mark Pervan, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. "There are a lot of investors that are looking to buy the dip, to buy the bottom."

Brent crude oil for April settlement fell as much as $1.48, or 3.2 percent, to $44.64 a barrel on LondonR17;s ICE Futures Europe exchange. It was at $44.76 a barrel at 9:27 a.m. London time.

Stockpiles at Cushing, Oklahoma, where New York-traded West Texas Intermediate crude is delivered, declined 553,000 barrels to 34 million barrels last week, the report showed. Inventories in the week ended Feb. 6 were the highest since at least April 2004, when the department began keeping records for the location.

The decline in inventories has narrowed the difference between WTI futures and LondonR17;s Brent crude. New York oil's discount to Brent narrowed to 50 cents a barrel today, the smallest since Dec. 15.

Contango Narrowing

The price of oil on Nymex for delivery in May is more than $1 a barrel higher than for April. The situation where prompt- month futures are less expensive than later-dated contracts is called contango. The difference narrowed from $2.83 on Feb. 23.

For the Brent contract, the contango between the April and May contracts has narrowed further. It has moved from $1.37 a barrel on Feb. 23 to $1.02 a barrel today.

R20;The Brent market currently provides the best indication at the global level as to how the contango is narrowing," Barclays Capital analysts Paul Horsnell and Costanza Jacazio said in a report yesterday. "Even amidst all the cacophony of noise that West Texas dislocations generate, there still appears to be at least a delicate tightening trend in place."

U.S. refineries operated at 83.1 percent of capacity, up 1.8 percentage points from the prior week, the Energy Department report showed. Analysts were split over whether there was an increase or decline.

Gasoline inventories rose 168,000 barrels to 215.5 million barrels, the report showed. Analysts forecast that supplies would decline 800,000 barrels.

OPEC Output Falls

The Organization of Petroleum Exporting Countries, due to meet again on March 15, cut output by 2.7 percent in February, a Bloomberg News survey showed. OPEC production averaged 27.78 million barrels a day last month, down 770,000 from January, according to the survey of oil companies, producers and analysts. Output in January was revised 20,000 barrels a day lower.

R20;The market is in a tightening process with the OPEC production cuts, which will keep prices around these levels," according to Tanner of Credit Suisse.

The survey showed the 11 OPEC members with output quotas, all except Iraq, produced 545,000 barrels a day above the target of 24.85 million barrels a day. The countries pumping the most over their quotas were Iran, Angola and Libya.

[frawin]

OPEC May Forgo Cut as Dollar Boosts Oil's Value: Chart of Day

By Ayesha Daya

March 5 (Bloomberg) -- Saudi Arabia, OPEC's largest producer, may oppose a further production cut this month as a stronger dollar boosts the value of revenue from oil sales.

The CHART OF THE DAY shows that while crude futures have slumped 70 percent to around $44 from a July 11 record, the strength of the dollar means the country has about $12 a barrel more in spending power than if the currency had kept steady.

R20;The Saudis would prefer prices in the $60-70 range, but can live with $50 a barrel, given a world which is in meltdown," said Leo Drollas, deputy director of the Centre for Global Energy Studies, a London-based consultant founded by former Saudi Arabian Oil Minister Sheikh Ahmad Zaki Yamani. "They don't want to push the price up against all the odds. OPEC won't do much on March 15."

The euro has fallen 10.2 percent against the dollar this year on concern the financial crisis is worsening in Europe. The European Union is the largest trading partner for Middle East Gulf countries including Saudi Arabia, according to European Commission data.

OPEC members, scheduled to meet in Vienna on March 15, may earn $428 billion from oil exports this year, half of the $857 billion they made in 2008, yet close to the level the group got in 2005, Drollas said.

Crude oil, which fell to a five-year low of $33.87 on Dec. 19, has rebounded as OPEC restricted supply. At its last meeting in December, members agreed to a record 9 percent reduction in supply targets effective Jan. 1.

[Dee Gee]

Welcome back Frank, I enjoy your reports, Thanks

[patyrn]

It sounds like Bartlesville will be hit with layoffs affecting ConocoPhillips.  Sad news for many, as well as the whole town.........  In our years with Phillips, we weathered a lot of layoffs, and even when we weren't directly affected, knowing others that were let go created lots of stress throughout the entire community.  It's a close-knit area originally based on the oil companies.  Seemingly now they've branched out and aren't so crushed when things aren't going well with their major employer.  Out thoughts are with everyone in Bartlesville.  It's a GREAT TOWN!!!!!!!

[Catwoman]

Welcome back, Frank...I've missed reading you. 

[frawin]

Market expects OPEC to cut, $75 is goal: Algeria

Wed Mar 11, 2009 6:56am EDT

ALGIERS (Reuters) - The market expects OPEC to cut supply further, Algeria's energy minister said on Wednesday, adding that oil prices would fall if the group failed to trim output when it meets on Sunday.

"The market is expecting a reduction. If we do not reduce, prices would fall," Energy and Mining Minister Chakib Khelil said.

"I think that the consensus (within OPEC) would shape up around stabilizing the market to reach a price of $75 per barrel," he told reporters and analysts gathered at the government-newspaper El Moudjahid Forum.

"Our objective is to attain $75 per barrel. That objective is in the interests of both producers and consumers," he added.

The Organization of the Petroleum Exporting Countries (OPEC) has since September agreed to cut output by 4.2 million bpd, around 5 percent of global supply.

The group has delivered about 80 percent of the pledged reductions in February, according to a Reuters survey.

A Saudi-owned newspaper reported on Monday that the world's top exporter wanted stricter compliance with existing production cuts before considering more.

But some OPEC members, alarmed by falling demand as the economy contracts, have made the case for more cuts

[srkruzich]

Boy they sure are really interested in gambling big time with world economy.  I suspect if they cut more, it will send the world into a spiral.

[frawin]

Oil Rises Above $50 on Speculation Fed Plan Will Spur Growth
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By Alexander Kwiatkowski

March 19 (Bloomberg) -- Crude oil rose above $50 a barrel, reaching a three-month high, after the U.S. Federal Reserve announced plans to spend $1 trillion buying back debt.

The Fed is seeking to purchase U.S. Treasuries, mortgage- backed bonds and other debt, raising expectations that moves to end the global recession will increase fuel demand. The dollar traded near a two-month low against the euro, prompting investors to purchase oil as a hedge against inflation.

"The action of the Fed yesterday put the U.S. dollar under strong pressure and revived hopes of a quick turnaround in oil demand," said Carsten Fritsch, a commodity analyst at Commerzbank AG in Frankfurt. If prices rise above $50 a barrel, the "bottoming out period can be considered over," he said.

Crude oil for April delivery rose as much as $3.51, or 7.3 percent, to $51.65 a barrel on the New York Mercantile Exchange, the highest since Dec. 1. It was at $51.34 a barrel at 12 p.m. London time.

Futures have risen 12 percent this year as record production cuts by the Organization of Petroleum Exporting Countries started to drain the crude glut caused by the worst economic crisis since World War II. Even at $50, prices remain 64 percent below July's record of $147.27 a barrel.

The April contract expires tomorrow. The more-actively traded May contract was at $51.98 a barrel, up $3.08, at 12:02 p.m. London time.

Dollar Slump

The Dollar Index may fall for an eighth day, the longest stretch in a year, against its major trading partners after falling yesterday by the most in 23 years as the Fed prepared to flood the market with dollars as part of the debt buyback.

The U.S. currency traded at $1.3551 against the euro at 11:43 a.m. in London, from a close of $1.3474.

"Today, we could see more financial flows coming into oil and commodities in general," helping support prices, said Olivier Jakob, managing director of Zug, Switzerland-based Petromatrix Gmbh.

The decline in the value of the dollar, which helped push oil to a record $147.27 a barrel in July, will not "be on the agenda" at OPEC's next meeting, the group's president, Jose Maria Botelho de Vasconcelos, said today.

The May 28 meeting will focus instead on how the oil market is reacting to OPEC's March 15 decision to hold targets steady and concentrate on complying with earlier cuts, he said in an interview in Vienna today. Botelho de Vasconcelos is also the oil minister for Angola.

Brent crude oil for May settlement rose as much as $2.89, or 6.1 percent, to $50.55 a barrel on London's ICE Futures Europe exchange. It was at $50.48 at 11:53 a.m. local time.

Stockpiles Gain

Oil prices settled lower yesterday after a government report showed that supplies of crude oil, gasoline and distillate fuel rose last week in the U.S., the world's largest energy consuming nation.

Crude stockpiles climbed 1.94 million barrels to 353.3 million last week, the Energy Department said yesterday. Inventories were forecast to rise by 1.5 million barrels, according to the median of estimates in a Bloomberg News survey.

Fuel consumption in the U.S. dropped 0.6 percent last week to 18.8 million barrels a day, the lowest since the week ended Jan. 9. Total daily fuel demand averaged over the past four weeks was 19.1 million barrels, down 3.2 percent from a year earlier.

Stockpiles at Cushing, Oklahoma, where New York-traded West Texas Intermediate crude oil is delivered, increased 368,000 barrels to 33.9 million barrels last week, the Energy Department said. Supplies in the week ended Feb. 6 were the highest since at least April 2004, when the department began reporting on inventories at the location.

U.S. refineries operated at 82.1 percent of capacity, down 0.6 percentage point from the prior week, the report showed.