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Oil settles above $111 a barrel

Inventory report sparked record selloff, leading some to believe the Fed will cut rates further.

April 10, 2008: 6:57 AM EDT

SINGAPORE (AP) -- Oil prices steadied near $111 a barrel Thursday after jumping to a new record in the previous session on an unexpected drop in U.S. crude inventories.
The U.S. Energy Information Administration's inventory report, closely watched by the market, showed Wednesday that crude stocks fell 3.2 million barrels last week.
"The crude inventory draw was a big surprise to the market, which had actually expected an increase of 2 to 3 million barrels. It was a substantial drawdown," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Analysts surveyed by Dow Jones Newswires had expected, on average, an increase of 2.4 million barrels.
The decline in crude stockpiles pushed light, sweet crude for May delivery up $2.37 to settle at a record $110.87 a barrel on the New York Mercantile Exchange on Wednesday. It rose as high as $112.21 a barrel during the floor session, surpassing the previous trading record of $111.80 set last month.
On Thursday, the contract fell 9 cents to $110.78 a barrel in Asian electronic trading by midafternoon in Singapore.
Some analysts cautioned against reading too much into last week's drop in crude supplies, noting a sharp drop in imports over the same period.
"Imports have been somewhat erratic, I would say this one week's result is not a trend," Shum said. "It might be compensated by a large import next week."
Gasoline demand[more]
http://money.cnn.com/2008/04/10/markets/oil.ap/index.htm?postversion=2008041006
 
Oil dips, gas prices hit record

Yesterday's inventory report sparked historic highs and profit-taking today as oil dips to $109; average U.S. retail gas prices hit record $3.35 a gallon.

Last Updated: April 10, 2008: 1:37 PM EDT

oil_well_new.03.jpg
Some analysts warn against reading too much into reported drop in crude supplies last week.

VIENNA, Austria (AP) -- U.S. retail gas prices extended their record run Thursday, adding to the pain consumers feel every time they fill up. Experts predict prices will rise even higher as peak summer driving season approaches.
Meanwhile, crude oil futures fell as the dollar strengthened, giving investors an opportunity to collect profits from the previous session's record run above $112.
At the pump, the national average price of a gallon of gas rose 1.4 cents overnight to a record $3.357 a gallon, according to AAA and the Oil Price Information Service. Prices have set a string of records in recent weeks, and are 56 cents higher than a year ago.
Retail diesel, the fuel of trucks, trains and ships, rose overnight to a new national record of $4.045 a gallon.
The Energy Department expects gasoline prices to average as much as $3.60 a gallon this summer, but believes the national average price could spike as high as $4 a gallon at times.
"Gas hitting $3.60, $3.65 a gallon seems like a done deal," said James Cordier, president of Tampa, Fla., trading firms Liberty Trading Group and OptionSellers.com.
Gasoline prices are rising, in part, because of a supply crunch that occurs every spring when refiners switch over from making winter grade gasoline to the less polluting fuel they're required to sell during the summer. Summer grade gasoline is more expensive to make. Also, refiners try to sell off all of their winter grade fuel before the switchover, which drops supplies to very low levels.
This year, the spring price spike is being exacerbated by two unusual factors: tight supplies of key gasoline blending components and record oil prices. Analysts say alkylate, an ingredient critical to the manufacture of summer grade gasoline, is in short supply and will push prices higher.
Meanwhile, crude oil, the main ingredient in gasoline, dipped Thursday, but remains close to record levels.
Light, sweet crude for May delivery fell $1.67 to $109.20 a barrel on the New York Mercantile Exchange as the dollar strengthened against the euro, giving some investors an opportunity to take profits. Crude prices rose to a new trading record of $112.21 on Wednesday after the Energy Department said supplies fell unexpectedly last week.
Many analysts place most of the blame for oil's run above $100 in recent months on the steadily falling dollar. But the effect reverses when the greenback rises, making commodities such as oil a less effective hedge against inflation. Also, oil is more expensive to investors overseas when the dollar strengthens.
However, analysts are reluctant to define a single day's decline as the end of crude's bull run. Many believe investors will continue plowing money into crude futures on expectations that Federal Reserve rate cuts - perhaps two more this year - could weaken the dollar further.
"We could now see a lot of 'system money' join the upside breakout, propelling prices even higher," said Edward Meir, an analyst at MF Global UK Ltd., in a research note, referring to hedge fund investors.
In other Nymex trading Thursday, May gasoline futures fell 2.74 cents to $2.7468 a gallon, while May heating oil futures fell 1.95 cents to $3.215 a gallon. Heating oil futures are trading near record levels due to falling supplies and strong demand overseas.
Nymex natural gas for May delivery rose 7.6 cents to $10.132 per 1,000 cubic feet. The Energy Department said natural gas supplies fell by 14 billion cubic feet last week, in line with analyst expectations.
In London, May Brent crude fell $1.19 to $107.28 on the ICE Futures Exchange.
http://money.cnn.com/2008/04/10/markets/oil.ap/index.htm?postversion=2008041013
 
Oil rises on dollar weakness

Traders wary after Group of Seven industrialized nations warns about currency volatility.

Last Updated: April 14, 2008: 8:08 AM EDT

NEW YORK (AP) -- Oil prices rose Monday after global financial leaders expressed concerns about volatility in major currencies and the dollar slipped against the euro.
Light, sweet crude for May delivery on the New York Mercantile Exchange rose $1.09 to $111.23 a barrel in electronic trading by midday in Europe. The contract rose 3 cents to settle at $110.14 a barrel Friday.
Crude oil's recent run above $100 a barrel has been largely attributed to a steadily depreciating U.S. currency, because a weakening dollar attracts investors to commodities as a hedge against inflation.
The Group of Seven industrialized nations said in a statement Friday that "there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability."
The group pledged to closely monitor the situation and "cooperate as appropriate."
Dollar value [more]
http://money.cnn.com/2008/04/14/markets/oil.ap/index.htm?postversion=2008041408
 
Last edited:
Fivetears said:
When "Magnificient Seven" go to the Euro... the US crude is screwed, dude.
Click to expand...

Yer right there FT!!
Oil hits new trading high

Crude prices rise above $112 a barrel to fresh trading record amid dollar weakness, supply disruptions.

Last Updated: April 15, 2008: 8:05 AM EDT

VIENNA, Austria (AP) -- Oil prices rose to an intraday trading record above $112 a barrel Tuesday as the U.S. dollar fell against the euro and crude oil shipments along one U.S. pipeline were said to be operating below capacity.
Light, sweet crude for May delivery on the New York Mercantile Exchange rose to an intraday record of $112.80 a barrel in electronic trading by early afternoon in Europe, well above the previous trading high of $112.21 set last week.[more]
http://money.cnn.com/2008/04/15/markets/oil.ap/index.htm?postversion=2008041505
 
AP
Oil Sets New High Above $113 a Barrel
Tuesday April 15, 9:23 am ET
By George Jahn, Associated Press Writer Oil Climbs to Intraday Record Above $113 a Barrel on Dollar Worries, Supply Concerns
VIENNA, Austria (AP) -- Oil prices set yet another intraday trading record Tuesday, surging close to $114 a barrel as the U.S. dollar fell and crude oil shipments along one U.S. pipeline were said to be moving below capacity.
Light, sweet crude for May delivery on the New York Mercantile Exchange traded as high as $113.66 a barrel by afternoon in Europe. That was $1.45 above the trading record set last week and $1.90 above Monday's record settlement close of $111.76 a barrel.
The recent run above $100 a barrel has been largely attributed to a steadily depreciating U.S. currency because a weakening dollar prompts investors to seek a safe haven in hard commodities such as oil and gold.
"We've seen another swing down in the U.S. dollar so I think we saw short term traders go back into oil as a hedge against the falling dollar," said Mark Pervan, senior commodity strategist at the ANZ Bank in Melbourne, Australia.
Stephen Schork, in his Schork Report, described the rush into oil on the falling dollar as an automatic reflex.
"Traders on the Nymex saw the dollar take another tumble, so they did what they have been conditioned to do when the dollar falls, i.e. they bought crude oil," he wrote.
Monday's news from the U.S. bank Wachovia Corp. supported oil prices by making the U.S. dollar less attractive, said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Wachovia, the fourth largest bank in the U.S., reported a hefty first-quarter loss and cut its dividend, and said it was forced to seek a $7 billion cash injection to make up for a poorly timed expansion of its mortgage business.
"This news highlights the strains in the banking sector and credit markets and that has led to more dollar selling, and so that tends to drive investors into oil and other commodities," Shum said.
He said the news from Wachovia as well as disappointing first-quarter results from General Electric Co. on Friday overshadowed concerns raised by the Group of Seven industrialized nations about the dollar's fall. The G-7 remarks were seen as a warning by some analysts that the group may be contemplating an intervention that could lessen crude's attraction as an inflation hedge and send it lower.
Crude was also supported by news of disruptions to crude supplies, though analysts said the interruptions were minor.
"They only look like temporary shut downs but ... the combination of that and the fact that the dollar was off again was the key," Pervan said.
The Capline pipeline -- the Royal Dutch Shell PLC conduit that carries 1.2 million barrels of crude each day from the U.S. Gulf Coast to the Midwest -- was closed on the weekend, and has since resumed operations at a slightly reduced capacity.
In Nigeria, Italian energy giant ENI reported a 5,000 barrel per day reduction in production at one of its facilities. In other Nymex trading, heating oil futures added nearly 4 cents to sell for $3.25 gallon while gasoline prices rose by close to 3 cents to $2.8491 a gallon. Natural gas futures gained more than 12 cents to $10.175 per 1,000 cubic feet.
http://biz.yahoo.com/ap/080415/oil_prices.html
 
Oil breaks $113 - new trading record

Crude prices surge to all-time trading high as dollar loses more ground against euro.

By Kenneth Musante, CNNMoney.com staff writer
Last Updated: April 15, 2008: 10:29 AM EDT

NEW YORK (CNNMoney.com) -- Crude oil prices rose to a new record high above $113 a barrel Tuesday as the U.S. dollar weakened further against the euro.

Light, sweet crude for May delivery rose to a new trading high of $113.93 a barrel in early morning electronic trading. The previous high of $112.21 was set April 9.
Oil settled at a record closing high of $111.76 a barrel on Monday.
"The path to $115 is cleared," said Stephen Schork, publisher of the oil trading newsletter The Schork Report.
Ringing dollar bell[more]
http://money.cnn.com/2008/04/15/markets/oilprices/index.htm?cnn=yes

 
Stratfor
Geopolitical Diary: 'Blue Skying' Brazil
April 15, 2008 | 0209 GMT
Brazil is a rising power politically, economically and militarily. Not only is it South America’s largest country in terms of population, economic heft, military strength and land area, its geopolitical power is expanding while most of its traditional competitors — namely Argentina and Venezuela — are contracting.

But while Brazil is almost certain in the next few years to evolve into a regional hegemon — a step up from the region’s most powerful state — it is still difficult to see Brazil playing a leading role on the world stage. South America’s geography is too fractured for any power to control the whole space, and the continent is too remote from the world’s power centers — 7,000 miles from Buenos Aires to Brussels, more than 10,000 miles from Santiago to Singapore — for any of its powers ever to be a major global player.

Unless, that is, something changes. And for a few hours on Monday, it appeared that that something had indeed changed.

Initial reports from the Brazilian government asserted that a new oil find in the Carioca offshore block contains 33 billion barrels of crude. Within a few hours, however, an announcement that seemed to have global implications fizzled. By nightfall Petroleo Brasileiro, the state-influenced (and quite competent) national oil firm, had formally denied that test drilling had even reached the depth necessary to confirm or deny the presence of oil — much less a mammoth find.

Offshore region rich in oil
Brazil only began exploring the region in question in 2007, and it already has generated probable finds of at least 13 billion barrels of oil equivalent. Many, many more discoveries not only are possible, they are likely. What has been found to date already has doubled Brazil’s reserves.

This crude will not come online cheaply or quickly, however, and much uncertainty remains in these heady early days of exploration in Brazil’s ultradeep. But with potential discoveries of this size it is worth exploring a possible future.

Brazil has recently become self-sufficient in oil production — not counting the recent (and likely future) finds. And that got our analytical team thinking.

‘What if’ exercise
What would a world look like with a Latin American Saudi Arabia? How would things change on the global scene? At Stratfor we undertake what we term “blue sky” exercises from time to time, albeit typically in a much more compact geography and on a much shorter time line. These exercises help us think outside the tactical minutiae of day-to-day events, and prevent us from becoming too wed to our own predictions. It is not every day that something happens that can change global economic and political interactions on such a grand scale.

So rather than tightly edit our analysts’ responses to this question, here are some of their responses in the raw:

Should Brazil become a significant oil producer, global interest in Latin America will increase in proportion — not only from the United States, but also China, Russia, Europe and others. Competition for access to — and potentially control of — the resources, for security of the shipping routes, and for influence over the Brazilian government and energy companies also would rise. A resource-powerful Brazil, coupled with China’s labor, India’s tech and labor pool, and Russia’s energy and arms could also revive the BRIC (Brazil, Russia, India, and China) concept, perhaps making it a more viable bloc of formerly second-tier players, and bringing some counterbalance to U.S. global hegemony.
Brazil is too far away from energy consumers like India and China to tap without great cost. The United States is a much closer consumer. In time this would lessen U.S. energy dependence on the Middle East, especially Saudi Arabia — leaving that region for other energy consumers, like the aforementioned India and China. Such a shift largely would regionalize energy routes, leaving the United States looking at its own hemisphere for energy supplies, Europe to the former Soviet Union, and Asia to the Middle East (leaving Africa as a swing player). Though this may look like a more peaceable reality, it would be far from it, and could actually lead to more instability as no power would have much of an interest in stabilizing energy supplies going to other regions.
Canada’s tar sands hold anywhere from 800 billion to 1.2 trillion barrels of oil. Oil shale deposits in the U.S. Rocky Mountains are estimated at around 800 billion barrels. The success of tapping these deposits is uncertain, and technological and economic factors must play out, but in 15 to 20 years, substantial oil flows from Brazil, coupled with these potential new sources of North American oil (though more difficult to extract and expensive), and only moderate efficiency gains could guarantee almost complete energy independence for the entire Western Hemisphere.
A legitimate and proximate alternative oil source means the primary geopolitical motivation for immense U.S. investment in military operations in the Middle East begins to slowly evaporate. Though mastery of the world’s oceans remains a core geopolitical imperative for Washington, the disproportionate focus of the U.S. Navy on the Persian Gulf and the maintenance of the Strait of Hormuz becomes far less critical. Suddenly freeing the energy and capability the Pentagon would lead to a very robust and flexible — but far more evenly distributed — global U.S. naval presence. This could also be just the opening for the Navy, which in many ways has failed to re-evaluate its post-Cold War stance, to fundamentally remake itself for the 21st century.
The region with most to worry about from this development is the Middle East. From Washington’s view, getting oil from a relatively friendly and stable country to its south is far, far preferable than dealing with the chaos of the distant Middle East. Saudi Arabia and the other major Gulf powers will become distant not only from their biggest energy customer, but also from their biggest security guarantor. With a diminished U.S. interest in the Middle East, regional fault lines are more likely to erupt, spelling more instability for this already largely volatile region. Israel in particular has much to lose as it sees its regional security framework — which is built around having the United States deeply involved in the Middle East — weaken, and its alliance with the United States strained as a result.
 
AP
Crude oil at new high just under $114; gas also at a record
Tuesday April 15, 3:24 pm ET
By Adam Schreck, AP Business Writer Crude oil prices reach a new high just under $114; gas prices also reach a record at the pump
NEW YORK (AP) -- Crude oil prices rose to within a penny of $114 a barrel Tuesday, setting new records as concerns mounted about global supplies. U.S. retail gasoline and diesel prices also struck new highs.
Traders honed in on a report by the International Energy Agency that said Russian oil production dropped this year for the first time in a decade. The report raised concerns about whether the key oil-producing nation will have enough supply to help feed growing global demand. "In an emotionally driven market like we've got now, it just doesn't take much in the way of a headline to prompt a psychological response," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill.[more] http://biz.yahoo.com/ap/080415/oil_prices.html
 
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