Oil & Gas 01 (May 08 - Jul 08)

[winston]

''Crude Oil Falls as Naimi Says Record Prices Are `Unjustified' By Mark Shenk

June 13 (Bloomberg) -- Crude oil fell as Saudi Arabian Oil Minister Ali al-Naimi said record prices are ``unjustified'' and the state oil company signaled it may soon start pumping from a new field.

The June 22 ``meeting in Jeddah will discuss the price rise, which are unjustified by fundamentals, and suggest appropriate solutions,'' al-Naimi said in a statement today. The kingdom will start pumping oil from its new 500,000 barrel-a-day Khursaniyah field within the next month, a board member of Saudi Aramco said.

``The Saudis are trying to get some of the heat out of the market and off of them at the same time,'' said Antoine Halff, head of energy research at Newedge USA LLC in New York. ``The meeting is an attempt to get beyond the blame game and find solutions to the problem of high prices.''

Prices have moved more than $3 each day this week as the market digested Saudi announcements, falling U.S. crude-oil stockpiles, increasing price forecasts from Wall Street banks and a strengthening dollar.

``This meeting is expected, God willing, to produce positive results that will contribute to stabilizing the international oil market,'' al-Naimi said.

Saudi Arabia invited nations including the U.S., Russia, Norway, U.K., China, Germany, India and Japan to the meeting, al- Naimi said. The kingdom is the world's largest oil exporter and the most influential member of the Organization of Petroleum Exporting Countries.

OPEC Gridlock

``The meeting underscores the central position the Saudis hold,'' Halff said. ``It's clear that OPEC is somewhat paralyzed and too divided to take action. The meeting is a way to bypass OPEC and end the gridlock.''

Members of OPEC, which pump more than 40 percent of the world's oil, have kept production targets unchanged at the group's past three meetings, on Dec. 5, Feb. 1 and March 5.

``There is a need for an increase in oil production, but price gains are outstripping the growth in demand,'' Russia's Finance Minister Alexei Kudrin said in Osaka, where he is attending a meeting of Group of Eight finance ministers.

``The position that more development, more investment and an increase in supply are needed is becoming universal and is something we support,'' said Kurdin.

`Sizable' Increase

Saudi Arabia is likely to propose a ``sizable'' increase in oil production at the meeting, the Middle East Economic Survey reported today, without saying where it got the information.

Current oil prices threaten the global economy and hurt the long-term interests of oil producers, Ibrahim al-Muhanna, an adviser to al-Naimi, was cited as saying by the newsletter.

Khursaniyah will start ``very, very soon, definitely within the next month,'' Khalid A. Al-Falih, who is also an executive vice president at Saudi Aramco, said in a telephone interview today. He couldn't say when full production would be reached. The field is forecast to produce as much oil as the daily output of Ecuador, OPEC's smallest member.

``I think that at about $80 the market crossed into the irrational exuberance level,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``It's hard to find a rational explanation for the gain of the last six months.''

Falling Demand

Oil demand this year will rise 1.1 million barrels to 86.88 million barrels a day, OPEC said in a report today. That's about 60,000 barrels a day lower than last month's estimate.

Global oil-market volatility, reflected in price moves of more than 2 percent in two-thirds of the trading days this month, has snarled attempts by industry players to plan for the future.

Volatility is a measure of how far the price of a commodity such as oil deviates from average closing prices over a prior period, such as 30 or 365 days. Futures traded in New York veered 41 percent from the 30-day average today, according to Bloomberg data. They strayed 41.7 percent from the average June 11, the highest volatility in 16 months.

Rising Dollar

Prices also dropped because the rising dollar reduced the appeal of commodities to investors looking for an inflation hedge. The U.S. currency is heading for its biggest weekly gain versus the euro in more than three years as inflation accelerated in May, raising speculation the Federal Reserve will increase borrowing costs this year.

[winston]

TOL on a dark rainy Saturday morning:-

If you are an oil trader, would you dare to go long at this point in time ? Even if you dare, wouldn't you be a bit skittish ? And wouldn't you be taking any small profits when u have ? In addition, your stops would also be quite tight..

If everyone is behaving like that, where's the line of least resistance ? Any news on the US dollar going up, better than expected numbers on the economic data front, lower demand for gasoline eg. lower summer driving, higher inventories, release of Oil Strategic Reserve will send oil southwards...

On the other hand, any bad news eg. Nigerian militant, Chaves' rhetoric etc. may not move the market northwards by much. Well, maybe an attack on Iran would spike things up ...

In addition. I think the shorts have also finished their covering. It has been very painful for them the past two weeks..

[winston]

TOL on a dark rainy Saturday morning:-

If you are an oil trader, would you dare to go long at this point in time ? Even if you dare, wouldn't you be a bit skittish ? And wouldn't you be taking any small profits when u have it ? In addition, wouldn't your stops be quite tight ?

If everyone is behaving like that, where's the line of least resistance ? Any news on the US dollar going up, better than expected numbers on the economic data front, lower demand for gasoline eg. lower summer driving, higher inventories, release of Oil Strategic Reserve will send oil southwards...

On the other hand, any bad news eg. Nigerian militant, Chaves' rhetoric etc. may not move the market northwards by much. Well, maybe an attack on Iran would spike things up ...

In addition. I think the shorts have also finished their covering. It has been very painful for them the past two weeks..

[millionairemind]

No More Excuses: The U.S. Needs To Tap Into Its Own Oil Reserves

TIM WALBERG

The Department of Commerce recently announced that the U.S. trade deficit reached $60.9 billion this past April. America’s trade deficit increased by $600 million from April 2007 to April 2008, even though U.S. exports increased by $25 billion.

Why is our country facing a rising trade deficit even though American-made exports grew 19.2% over the last year (April 2007 to April 2008)? The answer is found at gas stations across the country and in America’s $34.5 billion petroleum deficit, which is roughly half of our monthly trade deficit.

America’s dependence on foreign energy forces us to import about 12 million barrels of oil a day, sending billions of dollars to many countries that do not share our interests. A barrel of oil has gone from $70 to $140 over the last year, dramatically increasing our trade deficit and shattering the family budgets of millions of Americans.

National Priority

Our country has vast and large supplies of energy, but unfortunately tapping into American energy sources has become controversial and mired in politics. And while political games are played in Washington, D.C., Americans keep paying more at the pump.

Just as with the Manhattan Project or the race to the moon, breaking our dependence on foreign oil should be a national priority. Congress needs to allow an increase in America’s investment in our overall production of energy.

Last week, I introduced a discharge petition to force a vote on a bill to increase U.S. energy production and invest in alternative sources of energy. The appropriately named No More Excuses Energy Act, H.R. 3089, would increase the supply of energy produced in America.

Benefits For The Economy

This bill would immediately open up ANWR in Alaska for environmentally sensitive oil exploration. According to recent estimates, today America would receive 1 million barrels of oil per day from ANWR if President Clinton had not blocked exploration in 1996. Outer Continental Shelf exploration, new refineries, wind, natural gas and new nuclear power plants are also covered in this legislation.

This bill would return much of our energy production back to the United States and create good paying American jobs, instead of sending hundreds of billions of dollars overseas to prop up countries like Venezuela that are opposed to American ideals. Despite fuel costs at levels previously only seen in Europe, leadership in this Congress refuses to increase American energy production.

Instead, House Speaker Nancy Pelosi and leading House Democrats would rather increase taxes on domestic energy production and increase our reliance on OPEC. Recently there has been talk in the House of sending lawyers to sue countries such as Venezuela and Saudi Arabia for lower gas prices. Even the best trial lawyers cannot litigate America to lower gas prices.

Since Speaker Pelosi refuses to bring this bill to the House floor, a discharge petition is the only way to force a vote on this legislation. House rules state that a discharge petition must have 218 signatures (a simple majority) in order to bring a bill to the floor for a vote, and I am working hard to bring both Democrats and Republicans together in support of this bill.

In the coming weeks, House Republicans will show the American people we want to increase domestic energy production. If the leadership in Congress holds us back, we will continue fighting for increased American production.

Cutting Back

Right now, many families in my south-central Michigan district are giving up nights eating out at restaurants or family vacations in order to cover the rising cost of gasoline. Working families are paying twice as much to commute and pick up their kids from school and sports. If no action is taken, families will soon be giving up much more than they are now.

While many in Congress may gloss over the current energy crisis in America, the majority of Americans cannot. The American people believe in expanding our American energy supply and developing alternatives to break our dependence on foreign oil. It is time Congress agreed.

Walberg is the Republican representative in Congress for Michigan’s 7th District.

[kennynah]

14 Jun 2008 03:45 GMT
G8 Communique: Urge Oil Producers To Boost Output

OSAKA -(Dow Jones)- The Group of Eight finance ministers want to see oil producers ramp up output and will urge greater transparency on the causes of rising oil prices, including financial flows into the market, a delegate from one of the G8 countries said Saturday.

Oil has risen to within a whisker of $140 a barrel on the futures market. While some have attributed the rise to demand and supply issues, others blame speculators and called for action to tamp down such activities in the market.

The person said the joint statement from the finance ministers gathering in Osaka this weekend will say: "On the supply side, we urge oil producing countries to increase production and to invest to enhance refinery capacity."

"In addition, the oil market can be made more efficient by promoting greater transparency and reliability in market data including on oil stock, which wider and more timely participation in the joint oil-data initiative (JODI) would address, and on the size of financial flow coming into the oil markets. We ask relevant national authorities to examine the functioning of commodity futures markets and to take appropriate measures as needed.

"We also call on the IMF (International Monetary Fund) and the IEA (International Energy Agency) to work together, with appropriate national authorities, in carrying out further analysis of real and financial factors behind the recent surge in oil prices and volatility, and the effects on the global economy, and report back at the next annual meeting."

[kennynah]

14 Jun 2008 05:03 GMT
Italy Econ Min: Speculation In Oil Markets Is "Enormous"

OSAKA -(Dow Jones)- The massive amount of speculation rocking the oil markets and pushing up the price of commodities will force countries to act soon to preserve the stability of their democracies, Italy's Economy Minister Giulio Tremonti said Saturday.

"Enormous" speculation is the responsible for the increase in energy prices, Tremonti said. "We're suffering problems of democratic consensus. Markets are very important, but political stability and democracy are even more important."

European countries from Italy to the U.K. have experienced strikes and demonstrations in the past month, as truckers and fishermen blockaded ports and roads to protest against record high oil prices.

"We are collecting messages coming from the people on this, and we must act," Tremonti said.

[kennynah]

14 Jun 2008 16:13 GMT
Saudi oil chief to address reports of oil increase

RIYADH, Saudi Arabia (AP) - Saudi Arabia's oil minister on Sunday will address reports that the world's largest oil-producing country is set to raise production by about 500,000 barrels per day, his adviser said.

The increase would bring Saudi Arabia's oil production to 10 million barrels a day, the country's highest ever, according to reports by The New York Times and the Middle East Economic Survey, an industry publication.

Adviser Ibrahim al-Muhanna told The Associated Press on Saturday that he could not confirm the reports, but added: "Minister Ali al-Naimi will clarify this tomorrow (kenny>> that's sunday 15jun08)."

Saudi Arabia has called for a meeting of oil producing and consuming countries on June 22 in the port city of Jiddah to discuss ways of dealing with soaring energy prices.

The New York Times report on Saturday, citing unnamed analysts and oil traders briefed by Saudi officials, said the production increase was to be announced following the meeting.

The Middle East Economic Survey said Friday that Saudi Arabia was considering a production increase, but did not provide a source.

The Saudis are concerned that sustained high oil prices will eventually slacken the world's appetite for oil, affecting them in the long run.

Crude prices have reached record highs, surpassing $139 per barrel on June 6 after surging nearly $11 in the biggest single-day price leap ever.

The prices had receded by Friday, with the benchmark light, sweet crude for July delivery falling $1.88 to settle at $134.86 on the New York Mercantile Exchange. In London, July Brent crude lost $1.84 to settle at $134.25 on the ICE Futures exchange.

Meanwhile, the average national price for a gallon of regular gas in the U.S. rose to a record $4.066 Friday, from $4.06 a day earlier, according to AAA and the Oil Price Information Service. Diesel also set a new record, rising 0.2 cent to $4.796 a gallon.

Even with record highs in the U.S., prices remain far cheaper than in Europe and some parts of Asia. Oil-related protests have swept Europe, with fishermen staging strikes in Spain, Portugal, France, Belgium and Italy. Several Asian countries, including India, Indonesia and Malaysia, have slashed fuel subsidies, raising prices for millions of consumers and sparking demonstrations.

Wrapping up a summit in Japan on Saturday, finance ministers from the Group of Eight nations _ Britain, Canada, France, Germany, Italy, Japan, Russia and the U.S. _ urged oil-producing nations to increase production.

The current president of the Organization of Petroleum Exporting Countries, Chakib Khelil, has said that the cartel will make no new decision on production levels until its Sept. 9 meeting in Vienna. OPEC ministers often follow the lead of the Saudis when discussing whether to increase production to take the pressure off rising prices.

[winston]

BCA Research: Oil continues to threaten growth

“Crude oil prices surged by over $10/bbl on Friday, hitting a new record high and presenting a significant headwind for the growth/earnings outlook.

“Oil prices appear to be undergoing a blow-off phase. While longer-term fundamentals remain bullish, our Commodity & Energy Strategy service expects crude prices to undergo a setback in the coming weeks, followed by a consolidation phase at historically elevated levels.

Almost all momentum measures are stretched and bullish consensus is at a cyclical extreme. At the same time, the US has stopped filling its Strategic Petroleum Reserve and many emerging Asian countries are reducing or removing energy subsidies, which should help curb demand. Still, it will be critical for risky assets that the blow-off phase does not persist much longer.

Energy costs are rapidly siphoning off US consumer incomes which are already under strain from declining real estate prices and a softening job market. Moreover, past spikes in oil have historically coincided with significant economic slowdowns.

“Bottom line: We maintain our modest long/overweight allocation in global equities but acknowledge that rising oil prices is the primary threat to this call (via the drag on earnings). In contrast, we are less concerned about the inflationary implications of rising energy costs.”

[millionairemind]

BG, Petrobras Find More Oil in Brazil's Santos Basin (Update3)

By Alexander Kwiatkowski and Eduard Gismatullin

June 13 (Bloomberg) -- BG Group Plc, the U.K.'s third-largest oil and gas company, and Petroleo Brasileiro SA made a second discovery in Brazil's Santos Basin.

The Guara exploration well struck oil in the BM-S-9 concession area, according to the partners, which also include Repsol YPF SA. That's in the same block as the Carioca discovery in September, which Brazil's petroleum regulator said may contain as many as 33 billion barrels of oil.

``This discovery will yet again stimulate debate as to whether Carioca, along with Guara, are one and the same massive structure,'' David Thomas, a London-based analyst at Citigroup Global Markets Inc., said in an e-mailed report. The prospect ``will not be properly tested until a well is drilled in the neighbouring BM-S-22 concession'' later this year.

BG rose as 16 pence, or 1.3 percent, to 1,259 pence in London trading. Repsol increased 31 cents, or 1.2 percent, to 27.11 euros in Spain.

Petrobras, Brazil's state-controlled oil company, plans to invest about $33.5 billion in projects this year to ramp up production and explore the offshore fields. That would be the world's largest investment program in the oil and gas industry, followed by OAO Gazprom which has earmarked $30 billion and Royal Dutch Shell Plc with $27 billion.

Guara and Carioca are ultra-deep wells beneath a salt layer under the seabed known as pre-salt fields. These fields lie below as much as 10,000 meters (33,000 feet) of ocean and seabed, forming a new province of Brazilian oil reserves beneath shallower existing fields.

Tupi Field

BG and Rio de Janeiro-based Petrobras are also exploring the Tupi field in the Santos Basin. Tupi, the biggest discovery in the Americas since 1976, and the nearby fields may cost $240 billion to exploit, according to estimates from Peter Wells, director of U.K. research firm Neftex Petroleum Consultants Ltd. and a former Royal Dutch Shell Plc exploration manager.

``This new discovery extends the very significant potential of this world class-hydrocarbon province,'' said BG Chief Executive Officer Frank Chapman in the statement. ``We will now continue to advance our evaluation and development program, targeting initial production from the pre-salt Santos Basin during 2009.'' The Guara discovery is BG's fifth consecutive drilling success in the deep-water Santos Basin since the company began drilling there in 2005. BG has interests in seven concessions in the Santos Basin, the company said today.

BG has a 30 percent stake in the concession area. Petrobras is the operator with 45 percent and Spain's Repsol has a 25 percent interest.

On April 14, Haroldo Lima, head of Brazil's petroleum regulator, said that Carioca may contain as much as 33 billion barrels of oil, making it one of the world's largest discoveries. Petrobras declined to confirm Lima's estimate, which he attributed to a magazine article, and said the company lacked sufficient information to make a projection.

[kennynah]

15 Jun 2008 16:14 GMT
UN chief says Saudi Arabia to raise oil output by 200,000 barrels in July

JEDDAH (Thomson Financial) - Saudi Arabia is to raise its oil production by 200,000 barrels in July in response to heightened demand, UN Secretary General Ban Ki-moon said Sunday after meeting with the country's oil minister.

"The Saudis did increase production in June by 300,000 barrels. For the month of July, it will be an increase of 200,000 barrels in response to requests from customers," Ban told reporters on board a plane from Jeddah to London, citing his talks with Saudi oil minister Ali al-Naimi.