[Focus] Crude Oil Market n News

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Oil falls below US$66

HOUSTON - OIL prices dipped below US$66 (S$98.0430) a barrel on Wednesday as investor sentiment once again seemed to shift to the growing global economic malaise and its potential impact on energy demand.

A day after oil staged an Election Day rally, even indications that Opec was acting on an earlier pledge to pull 1.5 million barrels of crude a day from the market failed to support prices.

Light, sweet crude for December delivery fell US$5.23 to settle at US$65.30 a barrel on the New York Mercantile Exchange. In London, December Brent crude fell US$4.57 to settle at US$61.87 on the ICE Futures exchange.

Prices fell despite a rally in Asian stock markets after the US presidential election was settled, with Mr Barack Obama becoming thefirst black to win the White House.

Oil prices surged above US$70 a barrel for the first time in nearly two weeks Tuesday, mirroring global stock markets that strengthened in the US, Asia and Europe.

That one-day rally, however, 'did not eliminate pervasive fears of a protracted global economic slowdown,' Mr Addison Armstrong, director of market research at Tradition Energy, said in a note on Wednesday morning.

Oil prices have tended to mimic US equities markets of late, and Wednesday was no different. The Dow Jones industrial average fell 400 points.

'What happens when you're in a bearish market that's trying to make a bottom is you do a sort of Texas two-step,' said Mr Peter Beutel, oil analyst at Cameron Hanover in New Canaan, Connecticut.

'Oil goes up for a day or two, and the rug gets pulled out. It goes up for another day or so and the rug gets pulled out. The tide appears to be trying to change from an overwhelmingly lower trend to one that's sideways to higher.'

On the supply front, US crude inventories remained stable after rising the previous five periods, while gasoline stockpiles rose unexpectedly, according to government data released on Wednesday.

For the week ended Oct 31, crude-oil inventories remained at 311.9 million barrels, 1.5 per cent above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.

Analysts had expected a boost of 500,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Gasoline inventories rose by 1.1 million barrels, or 0.6 per cent, to 196.1 million barrels, which is 1.3 per cent below year-ago levels. Analysts expected stockpiles of the motor fuel to fall by 1.1 million barrels.

Demand for gasoline over the four weeks ended Oct 31 was 2.3 per cent lower than a year earlier, the report said.

However, many analysts point to a steady recovery in demand, largely from the dramatic decline in gasoline prices in the past several weeks.

Economic indicators out of the US this week suggest the world's largest economy may be heading for its worst recession in decades. A Commerce Department report on Tuesday said factory orders fell 2.5 per cent in September from August, much worse than analysts had predicted.

On Monday, US manufacturers reported poor figures for October, showing the worst reading in more than a quarter century, according to the Institute for Supply Management.

The slowdown, sparked by a credit crisis that began last year, shows signs of spreading across the world.

'There are two forces working on the oil price,' said Mr David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.

''One is fear of weaker consumption, and the other is OPEC cutting output to wind back surpluses in the market.'

The Opec said last month it would cut output quotas by 1.5 million barrels a day along with a 520,000 barrel cut announced earlier. Venezuelan Oil Minister Rafael Ramirez has said OPEC, which controls about 40 per cent of world crude oil production, may slash production by at least 1 million barrels daily when it meets next in December.

'It's not yet clear that Opec is disciplined in cutting production,' Mr Moore said.

'Compliance will be a key issue going forward.'

Oil prices have fallen by about 55 per cent since peaking at US$147.27 a barrel in mid-July.

Commodities such as oil are used as a hedge against inflation and a weak dollar. Investors flood the crude futures market when the greenback falls. A weak dollar also makes oil less expensive to buyers dealing in other currencies.

In other Nymex trading, gasoline futures fell 10.83 cents to settle at US$1.4244 a gallon, heating oil plunged 10.69 cents to settle at US$2.0547 a gallon and natural gas for December delivery rose 4.4 cents to settle at US$7.491 per 1,000 cubic feet. -- AP

Source: http://www.straitstimes.com/Breaking%2BNews/Money/Story/STIStory_299013.html

via : http://forums.vr-zone.com/showthread.php?t=348751

looks like the 60s see saw is back.

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Gas prices continue to fall: survey
      

NEW YORK (Reuters) - The average retail price for a gallon of gasoline in the United States fell more than 48 cents per gallon in the past two weeks to $2.30, according the latest nationwide Lundberg survey.
 

      

http://feeds.reuters.com/~r/reuters/topNews/~3/ZG3nrWrwg7k/idUSTRE4A83F720081109
       

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Oil rises on Chinese stimulus
While $586 billion plan to boost China's economy would help restore demand for oil in world's 4th largest economy, the package may take some time to implement.

By Kenneth Musante, CNNMoney.com staff writer
Last Updated: November 10, 2008: 3:27 PM ET



NEW YORK (CNNMoney.com) -- Oil prices rose Monday afternoon, after a stimulus package announcement by the Chinese government raised speculation about increased demand.

Oil prices rallied some $4.52 a barrel early in the session after China said late Sunday that it was rolling out a $586 billion stimulus package aimed at protecting its economy from the brunt of the global financial slowdown.

Prices later retreated as investors worried the plan may take time to implement.

While the plan is "very constructive long-term," said Brian Hicks, fund co-manager at U.S. Global Investors in Texas, "we won't start to see the effects of that stimulus until late in the first quarter, early second quarter [of 2009]."

U.S. crude for December delivery ended the day up $1.37 to $62.41 a barrel in New York.

The commodities market has already priced in a pretty significant global recession, said Chris Lafakis, associate economist with Moody's Economy.com. "If the recession doesn't turn out as bad, then all commodity prices could rise," he said.

Long-term, there's no question that a stimulus package would shore up the Chinese economy and be positive for oil demand, according to Lakafis. "This is good for global growth, this is good for the Chinese economy," he said.

Role of the Chinese economy: A surge in Chinese economic growth, coupled with growing oil demand from the fourth-largest economy, led to a rally in oil prices that culminated with a record high of $147.27 a barrel in mid-July.

However, as the global financial crisis deepened in China, speculation that its rapidly expanding economy would continue driving oil demand fizzled.

In the third quarter, China's export-driven economy grew by a modest 9%, marking the slowest pace in five years and a sharp drop from the prior year's 11.9% growth. And exports, which had been growing at an annual rate of more than 20%, may fall to zero in the coming months, according to analysts.

How much, how soon?: While experts agreed that the stimulus package would help shore up the Chinese economy, the real question is by how much and how soon, said Lafakis.

Unlike the U.S. stimulus package, which is focused on tax rebates, China's stimulus plan is aimed at building infrastructure such as roads and bridges, and providing jobs.

"It takes time for these financial stimulus plans to be implemented," said Lafakis, but China's rapid construction projects ahead of the summer 2008 Olympic Games in Beijing demonstrate the country's ability to move rapidly, he added.

While world markets cheered the Chinese stimulus package - the Hong Kong index jumped more than 5%, Japan more than 6%, and markets in Europe also turned higher - U.S. stocks were dragged down by dire corporate news that fueled recession fears.

Over the past several weeks, investors have focused on the equities markets for signals about the state of the world economy and, by default, for future demand indications for fuel.

Russian influence: Meanwhile Russian Prime Minister Vladimir Putin said late Monday the oil producer should take a more active role in influencing oil prices, according to Russian news service Interfax.

Russia, the world's second largest oil exporter, is facing an annual decline in oil production as fields in western Siberia mature. State oil pipeline company Transneft also said that Russian exports have fallen 25% in November, according to a separate report.

Russia exerts strong influence over several key pipelines in the former Soviet republic of Georgia, which shuttle oil and natural gas between Europe and Asia.

The rapid decline in oil prices since July has caused concern among oil producing nations.

Last month the Organization of Petroleum Exporting Countries, a coalition of producers including Venezuela and Saudi Arabia, pledged to cut production by 1.5 million barrels a day.

Russia is not an OPEC member, but attends the group's meetings as an observer nation.

-- The Associated Press contributed to this report. To top of page
First Published: November 10, 2008: 1:53 PM ET

http://money.cnn.com/2008/11/10/markets/oil/?postversion=2008111015

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Crude oil futures fall below $59
11/12/2008 | 02:33 AM

HOUSTON - Oil prices continued their downward spirals Tuesday as crude hit a 20-month low and Wall Street offered yet more evidence that US consumers are holding on to the money they have.

Light, sweet crude for December delivery fell more than 5 percent, or $3.25, to $59.16 a barrel on the New York Mercantile Exchange. In earlier electronic trading, crude fell to $58.32, its lowest point since March 2007.

In London, December Brent crude tumbled 6 percent, or $3.54 to $55.54 a barrel on the ICE Futures exchange.

Oil prices fell two days ahead of a report from the International Energy Agency, which some analysts expect will cut its 2009 oil demand forecast for the third consecutive month.

Volatile price swings are occurring almost every day.

While the Nymex contract is now trading near first-half 2007 prices, the difference then between daily highs and lows was around $1.50 a barrel, while now the average daily range is around $5.50 a barrel with recent daily peaks at $9.50, said analyst Olivier Jakob of Petromatrix in Switzerland.

Oil prices and stock markets jumped Monday after China said it planned to spend $586 billion to spur economic growth, but crude prices gave up most of those gains as an early Wall Street rally failed.

Investors have grown increasingly leery about the swooning US economy, which faces its worst recession in decades.

Industry analysts had expected China and India would continue buying crude if the US and other western nations went into recession, but the booming economies of Asia have begun to show signs of fatigue.

Some forecasts had called for China's gross domestic product to grow 10 percent next year, but more recent forecasts have it closer to 6 percent, the firm Cameron Hanover said in a report Tuesday.

"The big question is whether this stimulus package can work with interest rate cuts to keep Chinese growth at fairly high levels," the report said.

Most Asian and European stock markets fell Tuesday, following the lead of the Dow Jones industrials average Monday.

On Tuesday, the Dow sank more than 200 points after Homebuilder Toll Brothers Inc. and Starbucks Corp. gave investors more evidence the housing market and consumer spending are getting weaker.

Toll Brothers said fourth-quarter revenue fell 41 percent from the year-ago period, while Starbucks reported lower sales across the coffee chain, leading to profits that fell below analysts' expectations.

Investors are grappling with how bad the recession in the US could be, as government statistics and company results reflect an abrupt slowdown in consumer demand, bank lending and investment during the second half of the year.

Crude demand from the US, the world's largest consumer of energy, is a key driver of oil prices.

"We saw extremely poor car sales and pretty shocking unemployment numbers from the US last week," said Toby Hassall, an analyst with Commodity Warrants Australia in Sydney. "It wouldn't surprise me if oil edged down toward $50."

US car sales fell to a 25-year low in October while the unemployment rate shot to a 14-year high of 6.5 percent last month.

Oil prices fell despite signs that OPEC members are going ahead with production cuts agreed to at an emergency meeting in Vienna, Austria, last month.

Saudi Arabia told refiners in Asia on Monday that it would reduce supplies in December by around 5 percent, said Sucden Research in London.

Many analysts are expecting another cut by the Organization of Petroleum Exporting Countries, which will hold an extraordinary meeting on Dec. 17 in Oran, Algeria.

The prime minister of Qatar said Tuesday that "fair" oil prices of between $70 to $90 per barrel would ensure that expensive oil exploration could continue, avoiding price spikes in the future.

Sheikh Hamad Bin Jassim Bin Jabr Al-Thani said that while oil prices below $70 a barrel would help consumers in the short term, it could trigger price spikes in the near future.

Events that earlier this year sent oil prices surging seem to have no effect now.

Militants in Nigeria on Monday resumed attacks on the country's oil installations. The military said it killed eight people while guarding a facility in the oil-rich south of the country.

The Movement for the Emancipation of the Niger Delta, the region's main militant umbrella group, said it wasn't involved in any fighting.

Militants frequently attack oil facilities, seeking to hobble Africa's biggest petroleum industry and force Nigeria's federal government to send more oil funds to the southern states where the crude is pumped.

"The focus of the market has really been on the demand side," Hassall said. "I'd be surprised if supply side issues in Nigeria could change the mood of the market."

In other Nymex trading, heating oil futures fell 7.48 cents to $1.93 a gallon, while gasoline prices dropped 7.3 cents to $1.2945 a gallon. Natural gas for December delivery tumbled 39.8 cents to $6.85 per 1,000 cubic feet. - Ap

via : http://www.gmanews.tv/story/132882/Crude-oil-futures-fall-below-59

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Crude Oil video 5mins
[youtube]mAyAoLb8_xQ[/youtube]
http://www.youtube.com/watch?v=mAyAoLb8_xQ

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LONDON (AFP) - - Oil prices sank under 55 dollars a barrel on Tuesday to strike a 21-month low as fresh recession jitters fanned fears about slowing global energy demand, traders said.
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On London's InterContinental Exchange (ICE), Brent North Sea crude for delivery in December plunged to 54.92 dollars per barrel -- a level last seen on January 30, 2007. Brent later stood at 55.94 dollar, down 3.14 dollars from Monday.

At the same time, on the New York Mercantile Exchange (NYMEX), light sweet crude for December tumbled to 58.32 dollars, the lowest level since March 21, 2007. The contract was later down 2.91 dollars at 59.50 dollars.

Prices have now shed about 60 percent since scaling historic highs above 147 dollars in July on mounting evidence of slowing global economic growth and energy demand.

Crude oil prices on Tuesday extended earlier losses after Wall Street fell in opening trade, with investor sentiment unsettled by fears about a collapse of General Motors and more poor corporate news amid the credit crisis.

European stock markets also closed sharply lower on Tuesday as news of more corporate problems highlighted concerns about the spreading damage from the global credit crunch to the underlying world economy.

"The short-term focus continues to be on weak demand," Barclays Capital analysts wrote in a research note to clients on Tuesday.

Crude oil prices closed up almost two dollars on Monday, with sentiment boosted by hopes that China's huge economic stimulus package would lift demand for energy.

But traders banked profits on Tuesday as poor data out of the United States -- the world's biggest energy consuming nation -- reignited fears about recession.

"News that China's crude oil imports jumped by 28 percent in October from a year ago and that militants are threatening to renew attacks on oil facilities in Nigeria failed to lift prices," noted Sucden analyst Michael Davies.

The oil market was also undermined by the strengthening dollar which tends to dampen demand because dollar-priced crude becomes more expensive for buyers holding weaker currencies.

China over the weekend announced a four-trillion-yuan (586-billion-dollar) stimulus package aimed at boosting its economy which would mean greater demand for commodities including oil, dealers said.

The Asian giant is a major buyer of commodities and its voracious appetite for oil to fuel runaway economic growth in recent years was a key factor behind the rise to record levels in July.

OPEC president Chakib Khelil indicated over the weekend another round of production cuts may occur should oil prices remain below the cartel's preferred range of 70 to 90 dollars.

The Organisation of the Petroleum Exporting Countries (OPEC), which pumps more than 40 percent of the world's crude, announced in October that its daily output would be cut by 1.5 million barrels per day to 27.3 million barrels per day from November.

OPEC's next meeting is scheduled to take place in Oran, Algeria, on December 17. Before that, OPEC's Arab members will meet in Cairo on November 29, Khelil said.

Investors were also gearing up for the latest weekly snapshot of US energy inventories, delayed a day until Thursday because of the Veterans Day public holiday on Tuesday.

Source: http://sg.news.yahoo.com/afp/20081112/tts-commodities-energy-oil-price-c1b2fc3.html

via : http://www.mycarforum.com/forum/General_C1/General_Car_Discussion_F1/Crude_slides_under_USD55_per_barrel_P2593640

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http://www.smh.com.au/news/national/all-roads-lead-to-1alitre-petrol/2008/11/12/1226318741524.html



THE petrol price pendulum has swung firmly in favour of motorists. Six months after predicting unleaded fuel would reach $2 a litre, analysts are forecasting prices to approach $1 a litre.

CommSec's chief equities economist, Craig James, said the falls - unleaded petrol is down an average 35 cents a litre across Australia since July - will have a much more direct impact on the economy than interest rate cuts.

But an analysis of offshore prices shows savings are still to be delivered. Since October 1, unleaded prices in Sydney have fallen by 16 cents, settling yesterday at 120.5 cents a litre, but the benchmark Singapore Mogas price has fallen by more than 25 cents, trading this week at a spot price of 51 cents.

The petrol commissioner, Joe Dimasi, said he expected average prices to fall in the next week, to settle slightly above the wholesale price, which was 115 cents a litre yesterday.

"We are in a period of unprecedented volatility," he said. "When I look at wholesale prices, they have been passed on pretty closely to the Mogas prices, so the falls in Singapore prices are being passed on to the retailers.

"There is then a bit of a lag in that price being passed on to the pump. I think prices are falling so quickly that some retailers are being caught out from the pack." The fall in demand for petrol, due to the slowing world economy, has been so drastic that oil companies are now selling refined petrol for less than they can buy raw crude.

Australian Institute of Petroleum figures show the average price of refined petrol is $12 below the average price of crude oil, which Mr Dimasi said was "not sustainable in the long term".

But Mr James said the biggest factor affecting prices was global demand, which was not forecast to strengthen. "The wholesale price has been falling over the past fortnight quite significantly," he said. "The national average [wholesale] price is down around $1.15 so if it stays there, or falls even further, we'll see pump prices anywhere between $1 and $1.10 at the low end of the cycle. It's a big change in a very short period of time for consumers."

In other developments yesterday the Senate voted down the Federal Government's FuelWatch legislation which would have required service stations to fix their petrol prices every 24 hours.

with Mark Davis

via : http://www.singsupplies.com/showthread.php?t=9355

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via : http://oil-price.net/dashboard.php?lang=en

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$49.30.

sub 50.

NEW YORK (MarketWatch) -- Oil futures tumbled more than 9% Monday, coming under heavy selling pressure after the OPEC oil cartel decided to keep output unchanged and weak economic data from around the world heightened worries over a slowdown in energy demand. Crude oil for January delivery fell $5.15, or 9.4%, to end at $49.28 a barrel on the New York Mercantile Exchange. Earlier, the contract hit an intraday low of $49.05 a barrel in electronic trading on Globex.

via : http://www.marketwatch.com/news/story/crude-oil-futures-end-down-94/story.aspx?guid={1247EC72-CFCD-48A1-B84F-1AF88C332F21}&dist=msr_1

Crude Oil Falls After OPEC Defers Decision to Cut Production
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By Mark Shenk and Samantha Zee

Dec. 2 (Bloomberg) -- Crude oil fell for a third day after the Organization of Petroleum Exporting Countries deferred a decision to reduce output until its next meeting on Dec. 17.

OPEC said it will use the time to gauge the impact of a 1.5 million-barrel-a-day reduction agreed to in October. The group will trim production at its next meeting, the secretary general said today. Slowing growth means demand will be “much lower” than expected a month ago, OPEC said after a Nov. 29 gathering.

“OPEC sent a Valentine to the bears,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “Rather than announce a production cut over the weekend, they said they might cut when they next meet on Dec. 17. It looks like they missed an opportunity to support prices by making a cut sooner rather than later.”

Crude oil for January delivery fell 60 cents to $48.68 a barrel at 11:04 a.m. Sydney time in after-hours trading on the New York Mercantile Exchange. January futures declined $5.15, or 9.5 percent, to $49.28 a barrel yesterday, the lowest settlement since May 23, 2005.

Oil prices have tumbled 67 percent since reaching a record $147.27 on July 11 as the U.S., Europe and Japan face their first simultaneous recession since World War II.

Gasoline for January delivery declined 9.84 cents, or 8.1 percent, to settle at $1.1112 a gallon in New York yesterday.

Pump prices in the U.S. have followed futures lower. Regular gasoline, averaged nationwide, dropped 0.5 cent to $1.82 a gallon, AAA, the country’s largest motorist organization, said on its Web site yesterday. It’s the lowest price since January 2005. The fuel has tumbled 56 percent from the record $4.114 a gallon reached on July 17.

OPEC Meeting

OPEC ministers put off debate on a second cut in output in as many months during the Nov. 29 meeting in Cairo. The group will reduce crude production when it meets in Oran, Algeria, this month, OPEC Secretary General Abdalla el-Badri said. Oil demand is likely to drop further next year, he said.

“For sure there will be action” at the meeting, el-Badri told reporters in Tehran yesterday, declining to specify the amount of output that may be curbed.

“The market is oversupplied,” el-Badri said. “We are seeing the stocks are very high.”

Prices around $75 a barrel would be “fair” and would support investment in new fields, Saudi Arabian Oil Minister Ali al-Naimi said over the weekend. The global market is oversupplied by more than 2 million barrels a day, Iranian Oil Minister Gholamhossein Nozari said.

“OPEC’s postponement of a decision on output combined with the fact that there’s nothing out there to take cheer from about the economy is sending prices lower,” said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. “The path of least resistance remains down.”

U.S. Recession

The U.S. economy entered a recession in December 2007, the panel that dates American business cycles said yesterday. The declaration was made by the National Bureau of Economic Research, a private, nonprofit group of economists based in Cambridge, Massachusetts. The last time the U.S. was in a recession was from March through November 2001, according to NBER.

Manufacturing in the U.S. contracted in November at the fastest pace in 26 years, putting American factories at the forefront of a global industrial slump, a report showed today. The U.S. is the biggest oil consumer.

The Institute for Supply Management’s factory index dropped to 36.2, the lowest level since 1982, the Tempe, Arizona-based group reported. A reading of 50 is the dividing line between expansion and contraction.

South Korean Imports

South Korea imported 73 million barrels of crude last month, down 6.5 percent from a year earlier, the Ministry of Knowledge Economy said in an e-mailed statement. It was the third month that imports declined. South Korea is the world’s fifth-biggest oil importer, according to the U.S. Energy Department.

Brent crude oil for January settlement fell $5.52, or 10 percent, to settle at $47.97 a barrel on London’s ICE Futures Europe exchange. It was the lowest settlement since May 19, 2005.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net; Samantha Zee in Los Angeles at szee@bloomberg.net
Last Updated: December 1, 2008 19:22 EST

http://www.bloomberg.com/apps/news?pid=20601103&sid=aRmwXzwTyb.s&refer=us

once again, oversupply? or little demand?

get this right and you will know what to do.

good luck.

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40. going sub 40.

Crude Oil (CL)

via : http://www.nymex.com/lsco_fut_cso.aspx

Brent Crude (BZ)

via : http://www.nymex.com/BZ_cso.aspx

============

holy moly.

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Source: http://sg.news.yahoo.com/afp/20081217/tts-opec-energy-oil-price-c1b2fc3.html

AFP - 2 hours 55 minutes ago

ORAN, Algeria (AFP) - - OPEC plans to announce an output cut of two million barrels a day, cartel officials said Tuesday as they appealed to non-members to slash their own production by up to 600,000 barrels.

"There will be a cut of about two million barrels," Saudi Oil Minister Ali al-Nuaimi said on arriving here ahead of an OPEC ministerial meeting on Wednesday.

"Supply is still somewhat in excess" of demand, Nuaimi told reporters.

"Inventories are also higher than normal. To bring things in balance there will be a cut of about two million barrels."

Ministers from the Organization of Petroleum Exporting Countries had been widely predicted to approve a major reduction in output to shore up prices, which have fallen sharply since July as the global economy falters and energy demand dwindles.

OPEC has appealed to Russia and other non-member producers to help it stabilise the market.

But it was not clear if the two-million-barrel cut envisaged by Nuaimi included output reductions by non-members or would be in addition, which would bring the total to 2.6 million barrels.

OPEC kingpin Saudi Arabia rivals Russia, which is sending a delegation to the conference and has said it might join OPEC, as the world's largest oil producer.

"OPEC alone cannot do everything," Qatar Oil Minister Abdulla al-Attiyah said on arriving here.

"Really, I don't know how we can manage those two million (barrels). Maybe we (will) have the support of Russia and others."

The OPEC daily production quota now stands at 27.3 million barrels.

The OPEC secretary general, Abdalla Salem El-Badri, said late Tuesday the cartel would like to see non-members slash their oil production by between 500,000 and 600,000 barrels a day.

"I would like not less than 500,00-600,000 barrels a day" from non-members, Badri told reporters.

"I think two million is the most likely cut," Badri said.

But it was likewise unclear whether Badri wanted the 500,000-600,000 barrels cut to be part of the two million announced earlier by OPEC kingpin Saudi Arabia.

Several OPEC members heavily dependent on oil exports, notably Nigeria, Ecuador and Venezuela, are being squeezed financially as oil prices have plummeted 70 percent from highs of 147 dollars a barrel just five months ago.

The problem facing OPEC is that whatever steps it takes to reduce supply to shore up prices risks dampening demand further as many of its biggest customers are grappling with recession and need less oil.

"The decision in Algeria will not be whether to cut quotas further, but how large a reduction to make," analysts at the Centre for Global Energy Studies (CGES) said in its latest monthly report.

But it warned: "If OPEC cuts too far it risks undermining demand even further at a time when the global economy needs moderate oil prices."

The CGES forecast that global oil demand would fall by half a million barrels per day next year.

"The weakening economic outlook means that global oil demand will contract for the second year in succession in 2009," the influential research group said.

OPEC itself readily acknowledges that world demand is shrinking as industrialised countries slip deeper into recession.

The organisation said in a report on Tuesday that "the growing imbalance on the oil market... presents a real challenge for all market participants and will be the main focus of discussion" at the Oran meeting.

OPEC president Chakib Khelil has said producers are "very pessimistic about demand" and that within the cartel there was unanimous support for an output cut.

OPEC, which provides about 40 percent of global oil production, is also struggling with high crude inventories held by consumer countries, which according to Khelil currently amount to 57 days of supply.

"The average over the last five years was 52 days, so we have five days of over-supply. That is 400 million barrels."

In its report Tuesday OPEC described oversupply as "a real challenge" to the oil market.

"The growing imbalance in the oil market over the coming quarters will lead to a much higher overhang in inventories, if the global recession deepens," it warned.

back the 40s range. under 50.

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Dec. 17 (Bloomberg) -- Oil fell below $40 a barrel for the first time in more than four years as OPEC failed to convince traders that the glut in crude will diminish and the U.S. government said supplies climbed for the 11th time in 12 weeks.

The Organization of Petroleum Exporting Countries agreed that the group’s 11 members with quotas will trim current production by 2.46 million barrels a day to 24.845 million barrels a day, OPEC president Chakib Khelil said in Oran, Algeria. OPEC has held four meetings in as many months in an attempt to stem the slide in prices.

“It’s less than meets the eye,” said Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co. in New York. “This may stem the bloating in stocks but isn’t enough to get rid of the surplus.”

Crude oil for January delivery declined $3.54, or 8.1 percent, to $40.06 a barrel at 2:47 p.m. on the New York Mercantile Exchange, the lowest settlement since July 13, 2004. Futures touched $39.88 during trading today. Prices have tumbled 73 percent from a record $147.27 on July 11.

Inventories rose 525,000 barrels to 321.3 million barrels last week, the U.S. Energy Department said today in a weekly report. Supplies have climbed 11 percent since Sept. 19.

“They are facing the distinct possibility of oil falling to $30 a barrel and even lower,” said Addison Armstrong, director of market research for Tradition Energy in Stamford, Connecticut. “They have to bring supply down further because they aren’t getting any help on the demand front until the second half of next year at the earliest.”

The cut is larger than a 2 million-barrel reduction indicated yesterday by Saudi Arabian Oil Minister Ali al-Naimi.

OPEC’s Compliance

OPEC’s rate of compliance with a previous output cut is more than 85 percent, al-Naimi told reporters today before the ministerial meeting that decided production targets.

“The market gave every signal that there had to be an additional cut of at least 2.5 million barrels if OPEC expected to bolster prices,” Armstrong said. “There is such a lack of trust when it comes to compliance that it was impossible to agree to what was needed. This lack of trust gives members every incentive to cheat on quotas.”

Russia cut oil exports by 350,000 barrels a day last month and may reduce supply a further 320,000 barrels a day next year, in collaboration with OPEC, if prices remain weak, Russian Deputy Prime Minister Igor Sechin told OPEC ministers during opening speeches at today’s meeting. Other non-OPEC producers, including Kazakhstan, may trim production as well, Sechin said.

Other Producers

Azerbaijan may lower production as much as 300,000 barrels a day, Energy Minister Natig Aliyev said in Oran. BP Plc and partners shut two platforms at the Central and West Azeri fields in the Caspian Sea following a gas leak on Sept. 17.

“Russia will be offering the 300,000-to-400,000-barrel cut that’s already under way,” Eagles said. It may be a sign that disruptions in Azerbaijan are “going to last a bit longer than they previously thought.”

OPEC will next meet on March 15 in Vienna and has chosen Angolan Oil Minister Jose Maris Botelho de Vasconcelos as its president for 2009.

“I think the jury should still be out,” said Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Massachusetts. “We will have to see their compliance. If they come close to their objective, we believe they will forestall a further decline in prices.”

Brent crude oil for February settlement declined $1.12, or 2.4 percent, to close at $45.53 a barrel on London’s ICE Futures Europe exchange.

U.S. gasoline inventories rose 1.3 million barrels to 204 million barrels in the week ended Dec. 12, the Energy Department report showed. Supplies of distillate fuel, a category that includes heating oil and diesel, climbed 2.94 million barrels to 133.5 million barrels, the highest since November 2007.

‘Nothing Bullish’

“There is nothing bullish in these numbers,” said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. “The OPEC announcement looks big on first glance but really isn’t. They are playing with smoke and mirrors.”

Inventories have gained because the oil market is in contango, where crude for future delivery is more expensive than near-month prices, encouraging stockpile increases.

Supplies at Cushing, Oklahoma, where oil that’s traded in New York is stored, climbed 21 percent to 27.5 million barrels, the highest since May 2007.

“The big build at Cushing shows that in a contango market everyone who can is taking delivery, which makes it much more difficult for OPEC to hold it together,” Barakat said.

Tumbling Demand

U.S. fuel demand in November dropped 7.4 percent from a year earlier to the lowest for the month since 1998, the industry- funded American Petroleum Institute said in a report today.

Volume in electronic trading on the exchange was 578,537 contracts, as of 2:57 p.m. in New York. Volume totaled 593,607 contracts yesterday, up 17 percent from the average over the past 3 months. Open interest yesterday was 1.17 million contracts. The exchange has a one-day delay in reporting open interest and full volume data.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
Last Updated: December 17, 2008 16:10 EST

via : http://www.bloomberg.com/apps/news?pid=20601087&sid=aPpl4oHIK13w&refer=home

==============

spook effect at work?

something that came up while talking to a friend of mine.
supply has cut X%. price has dropped Y%. but has demand drop more than X% to result in a Y% in prices?

[zuoom]

Oil at US$36 per barrel ! Why isnt diesl coming down to below $1 yet ? Why petrol is still at $1.50 ? Why SP said that our elect bill can only be cut by 25% only ?

There is so much question !!!!!!!!!!!!!!!!!!!! But so little answered !


==========================================================

SINGAPORE: World oil held steady above 36 US dollars on Friday, at its lowest levels in more than four years, after OPEC's announcement of a record production cut failed to rally prices.

New York's main futures contract, light sweet crude for delivery in January, rose four cents to 36.26 dollars a barrel, off its morning low of 36.04.

The contract dived 3.84 dollars to 36.22 dollars, its weakest finish since July 2004, on the New York Mercantile Exchange Thursday.

Brent North Sea crude for February delivery slumped 2.17 dollars to settle at 43.36 dollars a barrel on Thursday in London.

A slowing global economy and resulting fears of weaker energy demand have pulled prices down from record highs of 147 dollars a barrel reached in July.

In a bid to shore up prices, ministers of the Organisation of the Petroleum Exporting Countries (OPEC) on Wednesday approved a record output cut of 2.2 million barrels a day, about 7.0 per cent of the cartel's output quota.

Before the latest cuts, OPEC's official daily output target was 27.3 million barrels a day.

"The verdict (of falling prices) was a resounding vote of no-confidence in the cartel's ability to curtail production given its previous tendencies to backslide on commitments, particularly by countries who are financially strapped," said MF Global oil analyst Ed Meir.

via : http://www.singsupplies.com/showthread.php?t=12570

[zuoom]

via : http://www.singsupplies.com/showthread.php?t=12818

[zuoom]

By Grant Smith

Dec. 29 (Bloomberg) -- Crude oil rose for a second day after Israeli air strikes in the Gaza strip raised concerns that supply from the Middle East, the world’s largest producing region, may be disrupted.

Defense Minister Ehud Barak said Israel is fighting a “war to the death” with Hamas, the group that controls Gaza. Prices also advanced as China, the world’s second-biggest energy consumer, said it will supplement its emergency oil stockpiles while prices are low, and the United Arab Emirates announced compliance with OPEC production cuts agreed on this month.

“The instability in the Middle East may well push oil prices higher,” said Rob Laughlin, a senior broker with MF Global Ltd. in London. “China’s plans to stockpile crude may take up some slack from the demand destruction from the economic slowdown.”

Crude oil for February delivery rose as much as $4.49, or 12 percent, to $42.20 a barrel in electronic trading on the New York Mercantile Exchange. It was at $40.44 at 11:10 a.m. in London. Today’s gain pares oil’s plunge from its $147.27 a barrel record on July 11 to 73 percent.

Hamas, the militant Islamist group that seized control of Gaza last year, is backed by Iran and considered a terrorist organization by the United States. Iran holds the world’s second-largest oil reserves and sits on the narrow sea channel through which oil from the Persian Gulf is shipped.

Futures prices fell 11 percent last week, reaching a four- year low of $32.40 on Dec. 19.

Dollar Weakens

Crude was supported today as the U.S. dollar lost more than 2 percent against the euro, its biggest decline in more than a week, bolstering the appeal of dollar-priced assets used to hedge against inflation such as gold and oil. The U.S. currency traded for $1.4339 per euro at 11:09 a.m. London time.

Abu Dhabi National Oil Co., the United Arab Emirates state- owned producer, will reduce crude-oil exports in January and February after OPEC agreed to lower output as of Jan. 1. The Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world’s oil, agreed on Dec. 17 to trim daily production targets by 2.46 million barrels next month.

“There’s an expectation now that we’ll see better compliance among OPEC countries than normal, better than people had expected,” said Olivier Jakob, managing director of Zug, Switzerland-based Petromatrix. “It’s a given that the Saudis will comply.”

China’s Stockpiles

Chinese companies will be encouraged to utilize spare oil- storage capacity while state and commercial reserves of other “strategic resources” will be set up, Zhang Guobao, also the vice chairman of the National Development and Reform Commission, wrote in an article in the official People’s Daily today.

Brent crude oil for February settlement climbed as much as $4.81, or 13 percent, to $43.18 a barrel on London’s ICE Futures Europe exchange.

The Israeli air strikes, launched to halt rocket attacks by Islamic militants after a six-month truce with Hamas ended Dec. 19, killed more than 285 people, prompting protests across the region from Saudi Arabia to Syria.

Israeli tanks and armored personnel carriers began taking up positions outside the perimeter fence of the Gaza Strip, Israel Radio said. The army refused to comment on the report.

Oil prices soared to a then-record $78.40 a barrel in July 2006 after Israel attacked Iranian-backed Hezbollah forces in Lebanon. At the time, Iran, the fourth-largest oil producer, was facing international sanctions over its nuclear program, while pipeline attacks had also cut output in Nigeria.

To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net

via : http://www.bloomberg.com/apps/news?pid=20601087&sid=aL30seWbtRNY&refer=home

[zuoom]

the year close with a over 14% jump in crude.

PETROLEUM ($/bbl)
    PRICE*   CHANGE   % CHANGE   TIME
Nymex Crude Future   44.60   5.57   14.27   12/31
Dated Brent Spot   41.76   3.86   10.19   12/31
WTI Cushing Spot   44.60   5.57   14.27   12/31
via : http://www.bloomberg.com/markets/commodities/energyprices.html