Oil up 38% since ChristmasCrude prices continue to rise as concern that Israel's move into Gaza could lead to a withholding of supply paces the futures advance.By Kenneth Musante, CNNMoney.com staff writerLast Updated: January 5, 2009: 2:58 PM ETNEW YORK (CNNMoney.com) -- Oil prices soared again Monday - moving closer to the $50 mark - as the movement of Israeli forces into the Gaza Strip this weekend added to worries about Middle East supply disruption.U.S. crude for February delivery rose $2.47, or more than 5%, to settle at $48.81 a barrel. It rose as high as $49.28 before easing.It was the fifth gain for oil in the past six sessions, rising 38% in that span from a close of $35.35 on Dec. 24.Prices have risen in recent days as investors worried that fighting in the Middle East could lead to a withholding of supplies from a major oil producing nation such as Iran."That's a wild card all the time (Israel gets involved in a conflict), but that's really hard to imagine," said James Cordier, founder of brokerage OptionSellers.com in Tampa, Fla.An Iranian military commander called on Islamic nations Sunday to pressure Israel's Western allies by withholding crude oil supplies. However, a source within the Organization of Petroleum Exporting Countries, of which Iran is a member, said the implementation of any such plan was "very unlikely," according to Reuters."The reality is there's no oil involved," said James Williams, energy economist with WTRG Economics in London, Ark.Israel and the Gaza Strip are not major oil producers.The last major crude disruption resulting from a conflict involving Israel came in 1973 with the Middle East oil embargo, Williams said.That year, Middle Eastern nations withheld exports in protest over American support of Israel during the Yom Kippur war.2009 bulls: Prices also rose as a lot of commodity investors, who had been waiting in the wings toward the end of 2008, began making their first 2009 purchases, according to Cordier.The first official day of 2009 oil trading was Friday, but because it was not a full week due to the New Year holiday, the number of trades in the market was relatively low."A lot of (investors) were sidelined at the end of last year," said Cordier. "The stock market has been in flux, so much that people are looking for an alternative investment."Commodities may be that alternative, and some investors are looking for long-term bets, he added.Russia: Investors have also been keeping a wary eye on Russia after its state-owned energy company held back deliveries of natural gas last week from neighboring Ukraine due to a contract dispute.The move has already reduced the flow of energy supplies to the Czech Republic, Turkey and other Eastern European nations, according to reports.While the current dispute does not involve crude oil, it points out Europe's precarious position of relying on Russia for most of its energy needs, according to Williams."I think (Russian Prime Minister Vladimir) Putin has pretty well demonstrated he will use energy as a policy tool," added Williams.Many investors have been worried over the past several months that Russia, a major oil producer, may try to follow in the footsteps of OPEC and cut production or take some other coordinated action in an effort to boost prices.Demand: Crude oil prices have fallen more than $100 a barrel since hitting a record $147.27 a barrel last year as demand worries began to appear.Demand for crude has fallen off dramatically following an unprecedented slowdown in global economic activity, but supplies have remained steady, according to Michael Lynch, president of energy advisory Strategic Energy & Economic Research, Inc."We still have a lot of surplus oil on the market and in storage," he said.Concern about the economy shows no sign of abating. In the United States, the world's largest oil consumer, President-elect Barack Obama was set to push an economic stimulus package that could cost between $675 and $775 billion.And monetary policy officials at the Federal Reserve and the European Central Bank geared up for what could be a lengthy fight against currency deflation.The market will be looking to see what kind of impact production cuts from OPEC will have on inventories, according to Lynch.OPEC: OPEC, whose members produce about 40% of the world's oil, has been increasingly concerned about the price of crude oil over the past several months.At the end of last year, OPEC pledged to bolster prices by reducing production by 2.2 million barrels a day starting this month.The group is also mulling another emergency meeting in Kuwait in February to discuss production levels, according to reports.The low price of oil has also prompted China to continue expanding its strategic energy stockpiles. The United States has also taken the opportunity to resume filling the Strategic Petroleum Reserve."Because prices are cheap, this is a good buying opportunity (for them)," said Lynch.Talkback: Have you tried to do a mortgage work-out? Was it successful or a failure? E-mail realstories@cnnmoney.com and your story could be included in an upcoming article. To top of page
Iran has reportedly bought three million barrels of gas oil from a Singapore trader to compensate for a loss of supplies from India.Hin Leong already supplied Iran with one million barrels of gas oil (diesel) in December, with another cargo of the same size due to be sent later in January, the Reuters news agency quoted an unnamed trader as saying.Industry sources had said this week that the deal was for January to March, Reuters reported.Iran signed a deal with India's MPRL in May to export 240,000 tons of gas oil up to December. The volume of the deal was doubled in August. Iran lacks adequate refining capacity to meet domestic demand.However, the two sides have failed to resolve a price dispute. MPRL has confirmed that it was not slated to ship any cargoes to Iran in January, which might have prompted Tehran to turn to the Singapore trader."It really makes sense. They're buying 0.5 percent (sulfur gas oil) and Iran takes 0.5 percent," said a Singapore-based trader.According to FACTS Global Energy, Iran will need an average of nearly 70,000 barrels of gas oil per day from 2008 to 2010 to help meet power generation needs during the colder months of the year.Meanwhile, the Business Standard newspaper reported on Wednesday that under US pressure India's Reliance Industries Ltd has decided to stop gasoline supplies to Iran.The decision came after eight US congressmen wrote to the US Export-Import Bank to suspend all financial assistance to the Indian company until it agreed to halt sales to Iran, the paper said, without citing any sources.Reliance, India's biggest private refiner, also halted gasoline and diesel exports to Iran in the last quarter of 2007 after French banks BNP Paribas and Calyon stopped offering credit on the deals. source
Crude Oil Falls Below $35 a Barrel as Global Recession DeepensBy Christian Schmollinger and Gavin EvansJan. 20 (Bloomberg) -- Crude oil fell below $35 a barrel in New York on concern a global recession may deepen after the U.K. bailed out banks for the second time in three months.Slowing world demand, reduced tension in the Middle East and settlement of Russia’s gas dispute with Ukraine could push prices toward last month’s four-year low of $32.40, Goldman Sachs Group Inc. said yesterday. The British Treasury authorized the central bank to buy toxic assets and increase its stake in Royal Bank of Scotland Group Plc.“For the next six months we’ll see awful economic data coming out, banks possibly having to be nationalized and excess inventories in the U.S.,” said Jonathan Kornafel, a director for Asia at options traders Hudson Capital Energy in Singapore. “There is really nothing that can pull this market higher.”Crude oil for February traded at $34.24 a barrel, down 6.2 percent from last week’s close, in after-hours trading on the New York Mercantile Exchange at 11:26 a.m. Singapore time. The contract, which expires today, fell as low as $33.89 yesterday, when floor trading was closed for the Martin Luther King Jr. holiday. Yesterday’s trades will be booked today for settlement.“We’re pretty close to the bottom if we’re not there already,” Michael Lynch, president of Strategic Energy & Economic Research Inc. in Winchester, Massachusetts, said in a Bloomberg Television interview. “I don’t think the market can sustain a price much below this.”The more-actively traded March contract was at $40.81, down 4.1 percent, after falling as low as $40.21 yesterday.Brent crude oil for March settlement was at $44.48 a barrel, down 2 cents, on London’s ICE Futures Europe exchange at 11:24 a.m. Singapore time. The contract fell $2.07, or 4.4 percent, to $44.50 a barrel yesterday.Rising StockpilesRising U.S. stockpiles and forecasts from the International Energy Agency and OPEC on declining world demand contributed to an 11 percent decline in Nymex crude last week. Prices are down 20 percent this year, after tumbling 54 percent in 2008.Crude-oil inventories at Cushing, Oklahoma, where West Texas Intermediate traded on the Nymex is stored, climbed 2.5 percent to 33 million barrels last week, the Energy Department said this week. It was the highest since at least April 2004, when the department began keeping records for the location.U.S. crude stockpiles increased 1.14 million barrels to 326.6 million barrels last week, the highest since Aug. 31, 2007, the Energy Department said Jan. 14. Gasoline and distillate fuel supplies also rose.Oil may make a “swift and violent rebound” to $65 a barrel in the second half as OPEC production cuts take effect and other producers also trim output, Goldman Sachs analyst Jeffrey Currie said at a conference in London yesterday.Russia, UkraineRussia and Ukraine signed 10-year natural-gas contracts, ending a dispute that’s squeezed supplies to the European Union for almost two weeks and setting the stage for a resumption of deliveries.Russian Prime Minister Vladimir Putin said yesterday gas flows to the 27-nation bloc will restart in “full volumes” through all export routes. His Ukrainian counterpart, Yulia Timoshenko, said there would be “no delays.”The Organization of Petroleum Exporting Countries may have to cut output again should prices fall further, Algerian Oil Minister Chakib Khelil said Jan. 17.Crude oil has lost about three-quarters of its value since rising to a record $147.27 a barrel in July, as the worst global recession since World War II erodes demand. At OPEC’s last meeting in December, members agreed to a record 9 percent reduction in supply targets effective Jan. 1.
SINGAPORE - OIL prices rose in Asian trade on Wednesday ahead of the US Department of Energy's weekly stockpiles report.New York's main futures contract, light sweet crude for delivery in March, rose 67 cents to US$42.25 (S$63.43) a barrel.Brent North Sea crude for March rose 45 cents to US$44.18.The bounce in prices came because Asian traders were 'not as pessimistic' as their Western counterparts about the report on crude and other energy product inventories, said Dave Ernsberger, Asia senior editorial director for global energy information provider Platts.The report was to be released later on Wednesday.Stockpiles were expected to increase but not as much as traders in the United States expected, Mr Ernsberger said.New York oil prices plunged by more than four dollars Tuesday in what an analyst said may have been a reaction to the forecast rise in crude inventories.'We think that the expectation of further growth in crude inventories will weigh on prices at least through Wednesday,' MF Global's Mike Fitzpatrick said.The price drop also coincided with an unexpected fall in US consumer confidence, which fell to an all-time low in January in a further troubling sign for the world's biggest energy consumer.The closely-watched private research firm, the Conference Board, said its consumer confidence index tumbled to 37.7 in January, eclipsing the prior record low of 38.6 in December.Oil prices have plunged since striking record peaks above US$147 per barrel in July, as a deteriorating global economy dents demand for energy. -- AFP
U.S. Oil Demand Hit Lowest Point in DecadeTopics:Energy | CommoditiesSectors:Industrial Goods and Services | Oil and GasBy: Reuters | 27 Feb 2009 | 11:54 AM ETText SizeU.S. oil demand in December was revised down by 4.0 percent from an early estimate to a final number of 19.199 million barrels per day, bringing consumption for the year to its lowest level since 1998, the Energy Information Administration said Friday.RELATED LINKSCurrent DateTime: 01:04:02 04 Mar 2009LinksList Documentid: 29429576 * OPEC Cuts to Boost Oil: Angola * UAE Decreases Oil Supply to Asia * Oil Chiefs Urge Offshore Drilling * Track All Major Commodities HereU.S. oil demand in December was 794,000 bpd lower than the previous estimate of 19.993 million bpd and down 1.520 million bpd, or 7.3 percent, from oil demand of 20.719 million bpd a year earlier, the agency said.U.S. oil demand for 2008 was down 6.1 percent, or 1.261 million bpd lower, to 19.419 million bpd, compared with 2007, the lowest yearly demand level since 1998, the EIA said. * Slideshow: Which Oil Nations Make the Most Money?http://www.cnbc.com/id/27355967
==================18 March 2009Monthly review (17 Feb – 17 March 2009) of long gold + short oil proposition.It's time again for a review which may give us some insights on the outlook of other markets (bonds, stocks, currencies etc.).Since last review was until 18 Feb, this review will only be until 17 March just before Gold's jump on 18 March.(http://img21.imageshack.us/img21/8374/goldoil20090317.jpg)For the first time since this position was proposed in September last year, long gold + short oil did very badly for the 1-month period.Gold was in a consolidation down mode while oil rebounded higher.(http://img21.imageshack.us/img21/2524/goldoilytd20090317.jpg)Due to oil’s strong performance in the past month, oil has now out-performed gold for year-to-date 2009.This is partly due to the rebound in the stock markets as a result of perceived improvement of earnings outlook after some major US and UK banks claimed in early March to be profitable for the first 2 months of 2009.(However, if one were to read their statements more carefully, they only meant operating profits before further write downs and credit losses. Actually, any financial institution will be profitable even in depression if write downs and credit losses are not taken into account. People will realise that the emperors have no clothes when they report their quarterly earnings in April).There was an improvement in investors’ appetite for risk and so commodities (including oil) staged a rebound while Gold, being a safe haven, declined last month.(http://img26.imageshack.us/img26/9003/goldoil20090317180days.jpg)Nevertheless, Gold has still out-performed Oil since the proposition was proposed in September 2008.For the coming month, although Gold is expected to benefit from a further US$ weakness, long gold and short oil is not expected to perform splendidly because Gold is still in a downward consolidation mode (even despite the sharp jump on 18/19 March after this review date) and not expected to breach the US$1007 high reached in Feb 2009, and investors’ appetite for risk are expected to improve further.
Also many investment in oil have stop because of the recession now n low prices experience previously (in Mac it was trading US$30) when in fact oil price have to be US$55- US$60 for oil exploration/ investment to be viable.LONDON -- Energy investment is "plunging" because of the recession, paving the way for oil-price surges within three years, the International Energy Agency warned in a new report.The Paris-based watchdog for the world's major energy-consuming nations said that in recent months, oil companies and investors have canceled or postponed about $170 billion of investment equivalent to roughly two million barrels a day in future oil supply.An additional 4.2 million barrels a day in future oil-supply capacity has been delayed by at least 18 months as companies slash spending.The study will be presented to energy ministers from the Group of Eight industrialized nations this weekend in Rome and to G-8 leaders at a July summit.The report highlights the growing risk that the crude supply -- though currently abundant because of weak global consumption -- could tighten quickly once the world economy gets back on its feet."What we're saying is that come around 2012 the impact of this big recession on oil investment and capacity, if current trends continue, could be severe with much higher oil prices," said IEA chief economist Fatih Birol. The IEA is funded by the world's 28 biggest energy-consumers, notably the U.S. and Japan. It has long argued for more aggressive investment in building oil capacity.The report, which was reviewed by The Wall Street Journal, also notes that most delayed or canceled projects are located in politically stable non-OPEC nations like Canada. Those resources take more years to develop than crude oil found in the members of the Organization of Petroleum Exporting Countries, which is typically easier and cheaper to get out of the ground.The rate at which world oil demand recovers remains a critical -- and unknowable -- variable. Several governments in the developed world are advancing energy-efficiency measures, which could temper the rise in oil prices as demand recovers.The IEA estimates oil demand this year will fall by 3%, the sharpest drop in about 30 years, to about 83 million barrels a day.Many analysts, however, say they believe crude prices in the next few years could again soar over the $100-a-barrel mark seen last year because of two factors: relatively rapid energy consumption growth in emerging markets like China and the fact that much of the world's easy-to-tap oil is already discovered.Benchmark crude prices on Tuesday closed up 62 cents at $59.65 a barrel on the New York Mercantile Exchange.Through criticized at times for missing some industry developments, the IEA is still seen as one of the most reliable energy statisticians in the industry, in part due to data from its member countries.The agency said Canada, with the world's second-biggest proven oil reserves after Saudi Arabia, has been worst hit by falling investment.Around 15 Canadian oil-sands projects involving 1.7 million barrels a day in production capacity and $150 billion of investment have been suspended or canceled. Oil sands yield a viscous and expensive-to-produce crude.But oil sands usually need at least $55 to $60-a-barrel crude prices to be produced profitably. Oil has traded below that level since late last year.
Hottest Oil Options Show 18% Drop as OPEC Cheats, Demand FallsShare | Email | Print | A A ABy Alexander KwiatkowskiMay 26 (Bloomberg) -- As oil passes $60 a barrel for the first time in six months, the fastest-growing options trade in July on the New York Mercantile Exchange is for an 18 percent decline.The number of options to sell oil at $50 a barrel for July settlement rose 22 percent last week to 24,948. Traders expect prices to fall because U.S. crude inventories are 1.8 percent below the highest level in two decades and the International Energy Agency says demand is falling the most since 1981. There’s enough unsold crude to supply the U.S. for a week stored in tankers anchored offshore.Oil jumped 38 percent this year to as high as $62.26 a barrel on May 20 in New York on optimism that the worst of the global recession had passed. Prices also rose after the Organization of Petroleum Exporting Countries agreed to cut supplies by the most on record. Now, economic reports are increasing speculation that the world economy will continue to sputter, and OPEC, which meets May 28 in Vienna, has yet to complete the supply curbs promised in December.“Oil prices are rising way ahead of reality, way ahead of fundamentals,” said Eugen Weinberg, a senior commodity analyst at Commerzbank AG in Frankfurt. “It would be more reasonable for prices to drop a little and correct to $50 or below.”Put OptionsThe number of contracts to sell July oil at $50 a barrel, or so-called put options, tripled to 24,948 on May 21 from May 7, according to Nymex data. The second most-popular contract for July settlement is the right to sell at $40, with 23,254 outstanding. There are almost twice as many positions that profit if oil falls as low as $40 a barrel as there are bets on a rise to $70.Lower prices would threaten government budgets from Venezuela to Saudi Arabia, while hindering Iranian President Mahmoud Ahmadinejad’s campaign promise to redistribute his country’s oil wealth. Also at risk are profits at Exxon Mobil Corp., Royal Dutch Shell Plc and BP Plc, which reported an average 61 percent drop in first quarter earnings.British Airways Plc and Air France-KLM would benefit if prices fell after they posted full-year losses as the recession curbed travel, while consumers and businesses would see lower driving costs and household energy bills. European jet fuel prices were 42 percent higher last year than in 2007, while regular gasoline cost American motorists 17 percent more at the pump, according to data compiled by Bloomberg and the U.S. Energy Department.China DemandOil rose more than 50 percent to a record $147.27 in July as investors flocked to crude as a hedge against inflation and a weakening dollar. Accelerating world demand led by China and India raised expectations that supplies were being squeezed, and threats against supplies mounted in Nigeria and the Middle East.The rally ended, and oil tumbled 78 percent to as low as $32.40 on Dec. 19 as credit markets froze and the global economy fell into its first recession since World War II. The collapse of Lehman Brothers Holdings Inc. in September triggered a drop in gasoline demand and auto sales. U.S. car and light-truck sales in April were down 34 percent from a year earlier.The world economy faces near-stagnation for 10 years because of rising unemployment in the U.S. and Europe, Nobel Prize-winning economist Paul Krugman said at a forum in Taipei on May 14.‘Large Correction’Japan’s economy, the world’s third-largest oil consumer, shrank at a record 15 percent pace last quarter as exports declined 26 percent and consumers and businesses slashed spending. The European economy contracted at the fastest pace in 13 years, and the World Bank said optimism for an economic recovery in China may be “premature.” The U.S. and China are the biggest oil users.“Given the high level of crude inventories and contraction in activity in advanced economies, we still expect a large correction from these levels,” said Harry Tchilinguirian, the senior oil market analyst at BNP Paribas in London. “A low $40s level is still possible” before the end of September, he said.Any decline may be short-lived as violence escalates in Nigeria, Africa’s biggest oil producer, and the U.S. hurricane season approaches, threatening Gulf of Mexico production and refineries in Louisiana and Texas.Attacks against oil rigs and pipelines in Nigeria, the seventh largest crude supplier to the U.S., place a “risk premium” on oil prices, said Olivier Jakob, the managing director of Zug, Switzerland-based Petromatrix Gmbh. Seasonal maintenance in the North Sea, which accounts for about 5 percent of world production, may further reduce supply, Jakob said.Hurricane RiskIn the U.S., the 2009 tropical weather season will be about normal, with four to seven hurricanes forming in the Atlantic Ocean, the National Oceanic and Atmospheric Administration predicted May 21. The most-active season was 2005 when Hurricanes Katrina and Rita devastated the Gulf.While analyst forecasts compiled by Bloomberg show most projections are for oil at about $60 in the fourth quarter, now there’s a glut. U.S. crude stockpiles were 368.5 million barrels in the week ended May 15, according to the U.S. Energy Department. They reached a 19-year high two weeks earlier.OPEC, the supplier of about 40 percent of the world’s oil, said in a May 13 report that brimming stockpiles and shrinking demand threaten to undermine its efforts to support prices.OPEC President Maria Botelho de Vasconcelos called for members to stick to their quotas on May 18 because inventories were mounting.OPEC TargetAmong oil analysts, 25 out of 27 surveyed by Bloomberg predict OPEC will maintain a target of 24.845 million barrels a day at the Vienna conference this week.To reach a goal of $75 oil when demand recovers, Saudi Arabian oil minister Ali al-Naimi told reporters in Rome on May 23 that he will recommend OPEC that members “stay the course” at their meeting in Vienna.Saudi Arabia is OPEC’s biggest oil exporter and its most influential member. Of the 11 OPEC members with quotas, only Iran has called for supply cuts.With oil at $60, OPEC will find it “hard to justify” more reductions, said Michael Wittner, head of oil market research at Societe Generale SA in London.Rising prices encouraged OPEC to backtrack on last year’s pledges to plug budget deficits. Saudi Arabia, the biggest Arab economy, projects a 65 billion-riyal ($17 billion) deficit this year as the kingdom builds infrastructure and creates jobs.Slipping ComplianceThe 11 OPEC members outside of Iraq produced 25.81 million barrels a day in April, an increase of about 225,000 from March and the first increase in nine months, according to OPEC’s monthly report, which uses outside estimates from analysts and news agencies. Those 11 nations collectively made 77 percent of the 4.2 million barrels a day of planned output cuts, down from a revised 82 percent for March.“I’m happy with compliance,” al-Naimi told reporters on May 24. “When it’s around 80, this is the best we can expect.”Extra oil is piling up. Industry-held inventories in the Organization for Economic Cooperation and Development were 2.75 billion barrels in March, 6.7 percent more than a year earlier, according to the Paris-based IEA. As much as 130 million barrels are stored offshore on 65 supertankers each the size of New York’s Chrysler Building awaiting buyers, according to the U.S. Energy Information Administration.‘Hanging Over Market’The oil is “hanging over the market,” said David Fyfe, head of the IEA’s oil industry and markets division. Rising prices may encourage traders who are hoarding that crude to dump it onto the market, he said.Trading departments in BP, Shell and Hess Corp. are among those making money from storing crude, according to the companies.Shell, based in The Hague, reported a 62 percent decline in first-quarter profit to $3.49 billion, while London-based BP Plc had a 64 percent drop in net income to $2.56 billion. Shell’s second-quarter profit is likely to decline 64 percent, while BP’s tumbles 63 percent as demand slows, according to data compiled by Bloomberg.World oil consumption will shrink 3 percent this year to 83.2 million barrels a day, the biggest annual drop since 1981, according to the IEA.“Oil fundamentals are getting worse, not better, on a daily basis,” said David Hufton, managing director of PVM Oil Associates Ltd., the world’s largest broker of over-the-counter crude trading between banks, hedge funds and oil companies. “Oil strength in the near term depends totally and utterly on economic sentiment.”To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net
KUWAIT, May 26 (Reuters) - Saudi Arabia thinks $75 to $80 a barrel is a fair price for oil at present and sees signs of increasing demand for oil as the world's economy recovers, King Abdullah said in remarks published on Tuesday."We see a fair oil price of $75 a barrel or perhaps $80 a barrel, especially at the moment," he said in an interview in Kuwait's al-Seyyasah daily."We are now seeing a quick recovery in the global economy, and we see indications of increasing demand for this material (oil)."He did not say what signs there were of global recovery but said economists were now less worried about the downturn and that world leaders had taken action.The monarch, who presides over the world's largest oil exporter, also said he saw room for reviewing the Gulf Cooperation Council monetary union agreement after the United Arab Emirates last week dropped plans to join any single currency.He said Saudi ties with the UAE would not be affected by the surprise move that the UAE linked to a decision to place the joint central bank that would manage the currency in Riyadh."The atmosphere for reviewing the monetary union agreement is open and the UAE has an alert leadership ... We do not doubt they are keen to maintain a strong Gulf (Cooperation) Council," he said referring to the GCC bloc that also include Kuwait, Oman, Bahrain and Qatar."The coming review before the implementation would resolve what had been disputed," he added. The monarch, thought to be 85, said Saudi Arabia had not liquidated any state investments during the downturn."There has been no sale of the kingdom's sovereign investments and I want to point out that Saudi money and assets have not been affected by the global economic crisis, which is seeing a gradual recovery," he said."Therefore, we are not in need of selling any of our investments."(Reporting by Eman Goma, Inal Ersan, Andrew Hammond; editing by Thomas Atkins) UPDATE 1-Saudi sees fair oil at $75-80, demand rising -paper | Markets | Reuters
Oil Heads for Biggest Monthly Gain Since 1999 on OPEC OutputShare | Email | Print | A A ABy Ben Sharples and Ann KohMay 29 (Bloomberg) -- Crude oil headed for its biggest monthly gain in a decade after OPEC kept its output unchanged amid signs the global economy is recovering.Oil has gained 28 percent in May as equities rose and the U.S. dollar weakened, spurring demand for commodities. Japan said today that its industrial output climbed the most in at least six years in April, improving the outlook for a rebound in fuel demand.“Oil has followed equities primarily because investors have cash on hand on the sidelines,” Victor Shum, a senior principal at Purvin & Gertz Inc., said in Singapore. “They are counting on some of the positive economic indicators, and are placing bets.”Crude oil for July delivery rose as much as 36 cents, or 0.6 percent, to $65.44 a barrel on the New York Mercantile Exchange. It was at $65.40 at 2:46 p.m. in Singapore. Yesterday, the contract gained $1.63, or 2.6 percent, to settle at $65.08 a barrel, the highest since Nov. 5.Oil is poised for the largest increase since March 1999, when Asia was recovering from the 1997-1998 financial crisis and fuel demand started rising in China and India. Oil gained 37 percent, according to Bloomberg data.Saudi Arabian Oil Minister Ali al-Naimi said that the Organization of Petroleum Exporting Countries opted not to alter its output targets because “prices are good, the market is in good shape.”Dollar, StocksCrude should stay in a $60-to-$70 a barrel range for the rest of the year, OPEC Secretary General Abdalla el-Badri said. The Energy Department said yesterday that U.S. oil supplies fell the most since September.“If we are able to keep this $60 to $70 price for the remainder of the year, it will be fine,” OPEC’s El-Badri said in a Bloomberg Television interview.The dollar is set for the first decline in two months versus the euro, falling to $1.4005 per euro at 7:16 a.m. in London from $1.3941 in New York yesterday.U.S. stocks rallied, led by banking and energy shares, as a rebound in 10-year Treasuries eased concern record government debt sales will trigger higher borrowing. The Standard & Poor’s 500 Index added 1.5 percent and the Dow Jones Industrial Average advanced 1.3 percent.Japan’s factory production climbed 5.2 percent from March, when it gained 1.6 percent, the Trade Ministry said today in Tokyo. The increase was faster than the 3.3 percent expected by economists. Companies said they planned to increase output in May and June as well, the report showed.U.S. InventoriesOil jumped to a six-month high yesterday after the Energy Department weekly reported showed a drop in inventories.U.S. crude inventories declined 5.41 million barrels to 363.1 million last week, according to the department. It was the biggest drop since September, when hurricanes hit the Gulf of Mexico coast. A 150,000-barrel reduction was forecast, according to the median of 12 analyst responses in a Bloomberg News survey.The decline left inventories 27 percent higher than the five-year average, up from a 23 percent surplus a week earlier. Stockpiles were the highest since 1990 in the week ended May 1.“The oil market fundamentals still remain relatively fragile, notwithstanding the gains in the oil price,” said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.Refineries operated at 85.1 percent of capacity, up 3.3 percentage points from the previous week, the biggest gain since October, the report showed.Gasoline stockpiles dropped 537,000 barrels to 203.4 million, the lowest since the week ended Dec. 5, according to the report.OPEC LimitsGasoline for June delivery rose 0.2 cent, or 0.1 percent, to $1.9125 a gallon in New York at 2:21 p.m. in Singapore. It gained 1.88 cents, or 1 percent, to end yesterday’s session at $1.9105 in New York, the highest settlement since Oct. 13.Saudi Arabia’s Al-Naimi forecast that oil may rise to $75 a barrel by this year’s third or fourth quarter. The group’s next meeting will be on Sept. 9, he said.Other OPEC ministers said the group would work toward finishing previously announced reductions. OPEC has yet to complete output cuts totaling 4.2 million barrels a day agreed to last year.“I don’t buy the story that we are going to go to $150 next week,” Jan Stuart, Macquarie Group Ltd.’s oil analyst in New York, said in an interview with Bloomberg Television. “What I do buy is that there is the beginning of a recovery.”The production ceiling is 24.845 million barrels a day for 11 of its members. They pumped 25.812 million a day in April, a May 13 report from the group showed. Iraq has no quota.Brent crude for July settlement was 26 cents higher at $64.65 a barrel on London’s ICE Futures Europe exchange at 2:48 p.m. Singapore time.To contact the reporters on this story: Ben Sharples in Melbourne bsharples@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.netLast Updated: May 29, 2009 02:52 EDT
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