Better Fill up today

[srkruzich]

Frank it looks like their contango gamble is going to result in a net loss for them doesn't it?  The longer they hold it the more costly that oil is going to be unless it jumps way high again.

[frawin]

Steve, I agree and I don't see demand and the price going up very much or very fast in the short term. The number of contracts trading is down. I don't see any reason to hedge or lock in the current prices.

[frawin]

Crude Oil Trades Near Five-Week High in Thin Holiday Trading
A

By Ayesha Daya

May 4 (Bloomberg) -- Crude oil was little changed near a five-week high in New York, with trading volumes limited by today's U.K. public holiday.

Crude oil for June delivery was at $53.23 a barrel, up 3 cents, in after-hours electronic trading on the New York Mercantile Exchange at 11:19 a.m. London time. London's ICE Futures exchange was closed for a U.K. holiday.

The contract jumped 4.1 percent to $53.20 a barrel on May 1, the highest settlement since March 26, after the Reuters/University of Michigan U.S. consumer sentiment index rose for a second month and an manufacturing index reached a seven-month high.

"Other than general background bullish indicators such as equity markets, nothing specific is driving prices, which is why oil is trading sideways," said Ronald Smith, chief strategist with Moscow-based Alfa Bank. "Also, volumes will be very low in the absence of London investors."

Futures earlier rose as much as 0.7 percent, or 39 cents, to $53.59 a barrel, following a report that manufacturing in China, the world's second-largest crude user, had gained for the first time in nine months.

The CLSA China Purchasing Managers' Index rose to a seasonally adjusted 50.1 in April from 44.8 in March, the bank said today in a statement. A reading above 50 indicates an expansion.

Brent crude oil for June settlement was at $52.86 a barrel, up 50 cents. The contract rose $2.05, or 4 percent, to $52.85 a barrel on May 1.

[frawin]

U.S. Energy Independence? Get Real, Oil Execs Say in Survey


By Edward Klump

May 4 (Bloomberg) -- Most oil-industry executives scoff at the idea that the U.S. can wean itself off foreign crude in the next couple of decades, a survey showed.

Only 16 percent of oil and natural-gas executives said that by 2030 the U.S. will be able to depend solely on its own energy supplies, according to a survey by KPMG LLP's Global Energy Institute. A majority said it will be after 2015 before it's "viable" to mass-produce alternative energy.

"The executives' perceptions of energy independence mirror their views on the viability of alternatives in the near-term," Bill Kimble, executive director of the institute, said in a statement. KPMG surveyed 382 U.S. financial executives in the oil and gas business last month.

Net imports of petroleum into the U.S. were about 57 percent of the total consumed last year, and that will fall to about 40 percent by 2030, according to the U.S. Energy Information Administration.

The U.S. government has said it wants to reduce its dependence on imports. In January 2006, then-President George W. Bush said, "America is addicted to oil, which is often imported from unstable parts of the world." Later that year, he said, "We're going to have to get off oil as much as possible to remain a competitive economy."

Under President Barack Obama, 35 percent of those surveyed view wind energy as the biggest winner among energy sources.

Global-Warming Skeptics

The executives viewed fossil fuels as the biggest losers under President Obama, with 42 percent selecting coal and 36 percent choosing oil.

On the issue of global warming, 47 percent of respondents said they agreed with the statement that "global warming, if it is occurring, is a natural weather cycle." Last year, 62 percent said they agreed.

Regarding the issue of restricting the carbon emissions that scientists say are linked to the gradual warming of the earth's atmosphere, 18 percent said they would support a cap- and-trade system, and 23 percent backed a carbon tax.

On capital spending, 65 percent of those surveyed expect reductions at their companies, KPMG said. That includes 47 percent who see a decline of more than 10 percent. Seventeen percent see an increase over last year's spending, according to the survey. A year earlier, 70 percent of respondents expected a boost in capital spending.

Sixty-three percent of those surveyed think ending deductions on so-called intangible drilling costs and depletion would lead to increased drilling outside the U.S. and some unconventional wells not being drilled, KPMG said.

[larryJ]

Okay, you made me look!  My thoughts after reading this post was about nuclear reactors.  So I checked a website and found that there are 104 reactors licensed to operate in the U.S. and amazingly enough, only 20 of those are located west of the Mississippi!!!  Does the Eastern part of the country require more power and does that part of the country use more petroleum products?  Maybe because there is a larger population in the east.  I don't know.  Oh yeah, it just occurred to me that they use a lot of oil for heating, more so than the west which relies more on natural gas and electricity.  Great post because it made me look!

Larryj

[frawin]

Thanks Larry, good observation. I market natural gas in several states, the biggest volume I handle is in Arkansas and a lot of that gas goes into the Eastern markets. Many of the Eastern Power plants are setup to run on Fuel Oil and/or Natural Gas and they switch back and forth depending on supplies/pricing.

[frawin]

Oil Little Changed, Paring Earlier Losses as Equities Advance


By Grant Smith

May 5 (Bloomberg) -- Crude oil traded little changed, paring earlier losses as advancing equity prices in Europe improved investor sentiment toward commodity markets.

An Energy Department report tomorrow is forecast to show that crude stockpiles climbed from the highest level since September 1990. Inventories increased 2.55 million barrels in the week ended May 1 from 374.7 million the previous week, according to a Bloomberg survey before the report.

"Equities look friendlier and the dollar has been weak, improving sentiment in the oil market," said Eugen Weinberg, analyst at Commerzbank AG in Frankfurt. "But the real driving force is the belief that the slowdown is now slowing down."

Crude oil for June delivery was at $54.46 a barrel, down 1 cent, at 11:36 a.m. London time in electronic trading on the New York Mercantile Exchange, after declining as much as 77 cents, or 1.4 percent, to $53.70 a barrel. Oil is up 21 percent this year.

The U.S. dollar fell to $1.3438 against the euro earlier, its weakest against the European currency in a month. Declines in the dollar often drive investors toward crude and gold that can be used to hedge against inflation.

The Energy Department is scheduled to release its weekly report tomorrow at 10:30 a.m. in Washington.

Refineries probably operated at 83.1 percent of capacity, up 0.4 percentage point from the week before, according to the median of responses in the survey. Refineries operated at 85 percent of capacity in the week ended May 2, 2008.

Gasoline Inventories Grow

Gasoline stockpiles probably rose 550,000 barrels from 212.6 million the prior week, according to the survey. Four analysts forecast an increase, one said there was a decline and one said supplies were unchanged.

Supplies of distillate fuel, a category that includes heating oil and diesel, probably rose 1 million barrels from 144.1 million. All six of the respondents forecast an increase.

"It weighs on prices when you have this amount of inventories weighing on the market," Ed Morse, head of economic research at LCM Commodities LLC, said in Doha, where he was attending a conference. "Commercial inventories are expected to continue to build through the second quarter."

Europe's Dow Jones Stoxx 600 Index was 1.3 percent higher at 206.48 as of 11:22 a.m. in London. Equities worldwide have gained as investors speculate the U.S. government's plan to finance the purchase of as much as $1 trillion in illiquid assets from banks will help to pull the global economy out of its first recession since World War II.

Construction Spending Rises

Yesterday, oil rose $1.27 to $54.47, the highest settlement since Nov. 24 after a report showed spending on U.S. construction unexpectedly rose in March for the first time in six months. Increases in commercial and government projects overshadowed a drop in home building.

Brent crude oil for June settlement was at $54.52 a barrel, down 6 cents, on London's ICE Futures exchange at 11:35 a.m. local time. The contract rose $1.73, or 3.3 percent, to end the session at $54.58 a barrel yesterday. U.K. financial markets were closed yesterday for a holiday.

"For as long as demand remains weak, stock levels high and economic data fails to show solid evidence of recovery, oil is likely to be trapped in a $50 to $55 range," said Christopher Bellew, senior broker at Bache Commodities Ltd. in London.

[Diane Amberg]

Frank, I know this is a little off subject, but do you think trying to normalize relations with Cuba might be about oil? There is supposed to be a lot not far from Cuba.

[frawin]

Diane, I don't think it is off subject and no I don't think it has anything to do with oil. You won't like the rest of my answer but here it is, I think it is about our President trying to be the good guy when he doesn't know what he is doing and I think it is about two leaders, one a Communist/Socialist Leader and the other wanting to be a Communist/Socialist leader. Diane I know that you try to be a middle-of-the-road moderator, but surely you see what Obama and his Cabinet, staff and COMRADES are trying to do. Look at the comments by Tom Daschle about the elderly, look at Obama's religous back ground, enough said. Your question was a good one though.

[Diane Amberg]

Well, at least you didn't say Marxist too! Thanks Frank