Oil & Gas 01 (May 08 - Jul 08)

[blid2def]

27 May 2008 09:00 GMT

Oil rises above $133/bbl following Nigerian pipeline attack
LONDON (Thomson Financial) - Oil prices climbed back above $133 a barrel on Tuesday, after news of further militant attacks in Nigeria heightened global supply fears.

Money makes the world go crazy.

[blid2def]

these nigerians attackers are all LONG crude positions...

More like the ones funding them are. Then when they go short, we have "truce" and "ceasefire".

[kennynah]

these caviar overdosed fishermen also LONG oil

27 May 2008 10:31 GMT

French Fishermen Blockade Fos Oil Depot, Dunkirk Ferries
MARSEILLE, France (AFP)--French fishermen blockaded a key Mediterranean oil depot and halted cross-Channel ferries at Dunkirk Tuesday as they resumed their protests over fuel prices and European Union fishing quotas.

Fishermen set up a new roadblock cutting access to the Fos-sur-Mer oil depot near France's biggest port of Marseille, according to their representatives, but they lifted a separate blockade of a depot in nearby Lavera.

Some port workers in Marseille also walked off the job as part of a running strike over privatization plans.

In Dunkirk on the Channel coast, 75 fishermen were blocking access to the ferry port, union leaders said, while in Boulogne-sur-Mer they stopped two trucks carrying Norwegian salmon from reaching a local fish factory.

Fleets along France's Atlantic coast agreed at the weekend to head back to sea, after the government promised aid to compensate for diesel costs.

But fishermen from a dozen French ports voted Monday to extend their blockades, as protests by fishing fleets threatened to spread across Europe.

Spanish fleets joined the stoppage Monday and Italian and Greek fishermen may also join the strike later this week.

In France the cost of a liter of diesel fuel for fishing boats has shot up from 45 euro cents a liter to 70 euro cents in six months.

French President Nicolas Sarkozy, whose country takes the helm of the 27-nation E.U. in July, called Tuesday for European countries to agree to cap value-added tax on oil, to help cope with the soaring price.

[LenaHuat]

Right now English truck drivers are joining their Euro comrades in their protests against rocketing diesel oil prices.

I'm wondering when the oil bubble will pop.
George Soros's opinion : When the UK and US economies go into recession.
(that would be 2ndQ 2008 and 3rdQ 2008).

Other possb : (1) consumers protest with their feet - leave their cars at home. US SUV manufacturers are oredi suffering from poor sales (2) some countries impose taxes on sales of air-conditioner?? (3) (4) .

I'm stepping back into the equities market only when I've made up my mind abt oil.

[millionairemind]

Lena,

I guess for oil to drop double quick time, if US congress all of sudden wakes up their idea and allowed drilling in the Alaska's Arctic National Wildlife Refuge... a step they should have taken back in 95 but Clinton vetoed it cos' he gave in to the environmental groups. Arctic National Wildlife Refuge holds about 20Billion barrels of oil and just off shore, they are talking about another 30 billion of reserves.

Still waiting for the FAT CATS in congress who are "sponsored" by the big oil majors during their elections to finally put their country's interest ahead of their own economic interest..

Cheers,
mm

[kennynah]

what santali (cnbc fella) said makes sense to me about oil... whilst we agree that oil prices have been speculated up ...

come the oil expiration contract, there is actual taking of delivery of this commodity...ie, actual demand.

perhaps, these buyers are afraid and fear the rising price of crude, hence they punch in their bids to buy at the futures market and are obliged to take delivery at the end of 30 days..indirectly causing the price of crude to rise.

the quesion is whether they are hoarding or have an actual need for such quantities purchased.

refiners are one big source of demand generation...given that they cannot raise their prices at will....it seems silly that they would be keen to continue producing at maximum volumes...

i am still thinking about this matter....

ps : a singapore taxi driver told me that in the last few months, a gallon of diesel has risen from 60cts to a S$1...and that only if he pumps at his company's subsidised kiosks...otherwise, it would caost S$1.60/gallon... ooouuuccchhhhh!!!!

[LenaHuat]

MM and K
Very thought-provoking comments I'll add these to my mental summary.

Juz read this :http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/27/ccseas127.xml

A precis as follows:

Oil crisis triggers fevered scramble for the world's seabed

A fevered scramble for control of the world's seabed is going on - mostly in secret - at a little known office of the United Nations in New York.

Bemused officials are watching with a mixture of awe and suspicion as Britain and France stake out legal claims to oil and mineral wealth as far as 350 nautical miles around each of their scattered islands across the Atlantic, Pacific, and Indian oceans. It takes chutzpah. Not to be left out, Australia and New Zealand are carving up the Antarctic seas.

.......
The Law of the Sea allows the maritime powers to claim 200 miles of waters around their islands. They can win an extension to 350 miles if the geology of the seabed fits a set of complex technical conditions.

The requests are studied by a panel of world experts, and usually granted on a strict scientific basis. This is not conducted like the Eurovision Song Contest, where imperialists score "nul points".

The deadline expires in May 2009, so there is now a rush to stake out claims. If countries waive their right, the area from 200 to 350 miles automatically returns to the world community: claim it now, or lose it forever.

Last year, the Russians planted their flag in the Artic Sea bed.

[winston]

Technical Outlook: Don't Slip on Oil
05/26/08 - 09:53 AM EDT by Mark Manning

Oil ,oil, oil. That is about all that you hear anymore when you read the financial papers, turn on the news or go out to dinner, and everyone is talking about investing in oil. The average investor walking down the street seems to be an expert, and is quoting the master T. Boone Pickens and his call for $150-a-barrel crude. I normally like to focus my columns on opportunities in the market, but protecting readers from a possible severe correction is also very important, and that's my goal today.

The situation with oil today reminds me of the story of the great investor Bernard M. Baruch back in the 1920s. One day while he was walking down Wall Street he decided to get his shoes shined. While he sat down and began to read the paper, the shoe-shine boy started giving him tips on stocks to buy in the market. Mr. Baruch proceeded to go straight back to his office and sold every holding in his portfolio. Soon after, the market begin to spiral downward.

This is not to say that what we're seeing now is going to lead to a mind-boggling correction. However, any time an industry, sector or stock gets extremely extended to the upside and everyone you know is talking about it, that may be time to take some profits off the table.

Oil and oil stocks have had a tremendous run, and over the long term they are likely to go much higher. However, once the hot money and momentum traders enter the market like they have in the oil service and drilling stocks, corrections can be sharp and severe.

One of the most glaring signs that the oil stocks are overextended to the upside is the fact that while oil was up almost $5 a barrel on Wednesday, the oil service and drilling stocks sold off hard. That usually tells me that the easy money has been made, and the institutions that move the markets are taking profits while individual investors are still buying.

Institutions like mutual funds and hedge funds need to take their profits while there is plenty of momentum and investors are overconfident about a certain sector. Once they have their profits and remove the buying support, you will see sharp spikes down in price. Those are situations that we want to avoid because they can quickly wipe out profits.

One of the sentiment indicators that I watch closely in the oil sector is the S&P Energy Sector Bullish Percent Index. This index measures how many stocks in the sector are in bullish patterns. You can see from the chart below that the index has closed over 90. That means over 90% of the stocks in the oil sector are in bullish patterns.

Now, that may sound like a positive thing to most investors and should be a signal that they should be buying energy shares. However, that's not how it usually works, because the chart cannot go above 100 and it rarely goes above 90.

In fact, when this chart reaches this area, it is a warning sign that investors have become too confident. That's normally a good time to take profits or to set protective sell stops under solid support levels on your stocks. Once the stocks have finished their correction, that is the time to go back in and buy solid companies at a discount.

Oil-Bullish

The U.S. Oil FundUSO is a domestic ETF designed to track the movements of light sweet crude oil. You can see from the chart below that the green line that represents the price is up almost 22% above its normal trend. When you have a stock or sector that becomes this extended from the normal price movement, it normally suggests that the momentum traders are in control. That is great when the stock is going up, but when they start to take profits and head for the exits, look out!

It would probably be a lot less risky to start or add to positions after the price drops back down to the yellow trend-line. However, you don't want to get too carried away at first in case the price slices straight down through it. It is better to start off with a small position and add to it when you see that the uptrend remains intact.

Most oil-and-gas drilling and exploration companies are also well extended from their normal bases. You can see that from the chart below that this index is more than 24% above the normal three-year up-trend. In most cases, that is certainly not a good time to buy and it is usually a reasonable time to take some profits off the table.

I've been talking positively about the commodity and oil stocks on the Real Money Web site for several years now. However, there are times when every industry gets ahead of itself from our price standpoint. When that happens, it normally means we are close to a time of correction.

Much of this also depends on supply and demand of oil. Currently, demand is aggressively outstripping supply. You also hear many commentators talking about a bubble in this area of the market. I personally think that is ridiculous because these stocks are trading at very low price-to-earnings ratios compared with their growth. However from a short to intermediate-term perspective I believe the hot money has pushed these markets too fast and too far in a short period of time.

[HengHeng]

just corrected 4 bucks .. hmm if one was sharp he would have taken at least 2 bucks.

[winston]

Oil prices rose to a fresh record on Thursday after data showed China's voracious appetite for diesel before the Olympics was growing. Diesel and heating-oil prices also hit new highs.

So far this year, Chinese demand for diesel has increased 13 per cent compared with the same period in 2007, draining supplies from elsewhere. Analysts believe the country is stockpiling fuel before the Olympics, when demand is expected to rise.

China's figures rattled the wider oil market, still reeling from Wednesday's surprise fall in US crude stocks.

Robin Batchelor, who manages BlackRock's BGF World Energy fund, said China consumes as much oil per person as America did in 1905.

"If China and India were to increase their consumption per person to current US levels, these two countries alone would require 160m barrels per day, more than twice the world's supply of oil today," he said.
– Financial Times