US Crude Oil Supplies Increased while Gasoline Inventories Fell

On Wednesday December 29, 2011, the US government revealed that its stockpiles of crude oil rose last week. Crude oil supplies were up by 3.9 million barrels and reached 327.5 million barrels, which depict a 3.5 percent increase against that of last year records. The reports came from the Energy Information Administration.

Analysts however predicted that the oil reserves might decline by 2.3 million barrels. The prediction was made by Platts, which is the energy information arm of McGraw-Hill Cos.

Gasoline supplies on the other hand fell by 700,000 barrels indicating a fall by 0.3 percent to reach 217.7 million barrels. That is still 1.3 percent above the average of previous year. Analysts however had assumed a fall by 500,000 barrels.

The demand for gasoline has fallen by 5.6 percent and has averaged to 8.8 million barrels per day as against last year. The records came on December 23, the fourth week of the month.

The US refineries were at an average of 84.2 percent of their total estimated capacity, depicting a .5 percent drop from reports of the prior week. The analysts on the other hand had expected a rise by 84.8 percent.

Likewise distillates supplies including that of diesel and heating oil also increased by 1.2 million barrels to reach 140.4 million barrels. Analysts on the other hand had expected a decline by 1.2 million barrels.

Benchmark crude also witnessed a fall by $1 and was at $98.36 per barrel in New York.

The increases in supplies were a positive sign for the investors and the consumers too. The rise in crude prices to about $100 a barrel further signaled a steady development in US economy. At the gas pumps the price for unleaded gasoline was $3.254 a gallon, marking an increase by 1.1 cents; as reported by AAA.

Oil Prices below $100 with Improving US Economy

Encouraging signs of improvement came from the US economy and therefore oil prices in Asia hovered roughly below $100 per barrel.

Benchmark crude ready for February delivery was at $99.77 after it rose by 12 cents. These prices were recorded at the electronic trading exchange of the New York Mercantile Exchange, midday Singapore time. 29 cents later added to the contract and it reached $99.65 in New York.

In London moreover, Brent Crude fell by 6 cents and was at $107.95 a barrel on the Futures Exchange ICE. Since mid November, Crude oil has been trading below $100, ever since it jumped over from the $75 mark, with the news that the US economy might escape the approaching recession next year. The claims for benefits for jobless people too fell drastically. The past four week average was at 375,000 over a period of 3 and half years.

Another report from the National Association of Realtors revealed a striking rise in the number of contracts to purchase homes, which is a high since one and half years.

Nevertheless there are some analysts still fearing that the Europe’s debt crisis might drag the continent in a recession undermining its crude oil demands. The Eurozone is the prime driving force behind the oil prices and will continue to remain so in the first quarters of 2012 as well. The issue in the Eurozone is still intractable says energy consultant at Ritterbusch and Associates.

Tehran’s program of nuclear power is yet another crucial issue that concerns the investors. They are closely watching out for escalating tensions between the Western countries and Iran. Earlier this week, Iran threatened to shut down the key passage for oil exports – the Strait of Hormuz. There are speculations saying that oil prices are bound to gallop over by $50 in case Iran, exporting largest amount of oil closes the strait.

US Supplies Soar to Lower Oil Prices

Oil prices on December 29, 2011 hovered below $100 a barrel in the Asian sub continent after there were reports that US crude supplies were up last week. This also indicated that the demand for crude in US might be weak currently.

Benchmark crude ready for February delivery increased by 19 cents and reached $99.95 per barrel at the electronic trading exchange of New York, Singapore time midday. It later fell by $1.98 and settled at $99.36 in New York.

In London, the Brent crude witnessed a fall by 2 cents and was at $107.54 per barrel on the Futures Exchange of ICE.

The American petroleum Institute further reported that crude inventories increased by 9.6 million barrels last week, while as predicted by the analysts at Platts, they were supposed to drop by 2.3 barrels.

The gasoline inventories further added to 1.9 barrels while that of distillates added another 600,000 barrels as reported by the API. Another data by the Energy Department’s Energy Information Administration was yet to be revealed later on December 29, 2011.

Moreover reports from Iran about its plans to close the Straits of Hormuz in order to curb crude exports to the world affected investors’ concerns seriously. The US in response said such an action would not be tolerated at any cost, and Saudi oil ministry said that it is ready to provide more supplies along with other producers from the Gulf, if supplies get disrupted.

Energy consultant Cameron Hanover said that the US and its allies would be compelled to use military force to open the Strait, if supplies are curbed.

The game thus is about to change as the officer remarked. In case any sanctions are imposed on Iran, the US will certainly put its foot down. The next week prices are worth a watch.

Iran to Block Oil Shipments

Iran is prepared to jeopardize the world oil supply completely, if the US imposes the sanctions.

A senior Iranian official said that they are prepared for a sharp threat, by blocking shipments of oil through the Hormuz Strait, in case the economic sanctions are imposed by the US. The strait serves as a vital oil shipping artery across the world to and fro.

The US president Barack Obama is planning to put forth a legislation which would reduce the revenue from oil in Iran substantially thereby curbing the Middle East nation from pursuing its nuclear program. The country seeks to build considerable nuclear weapons.

This is the latest move by the US administration to cut off Iran from the rest of the world in terms of energy markets. Earlier it had attempted to do the same by increasing gasoline prices and alienate closest allies of Washington.

The world’s third largest exported of energy is already trying to run a fearfully stressed out economy, and the imposition of these sanctions would further make matters worse. The Iranian official Rahimi said that if the US imposes sanctions, there would not be a single drop of oil flowing across the Strait of Hormuz. It has already begun a 10 day exercise by the navy.

The US President in recent interviews however said that they too have plans to keep the Strait open in case of a crisis. The president while holidaying this Christmas in Hawaii however refused to make any comments on the issue. Moreover this has also been seen as a smart way of avoiding heated exchange of words.

The energy sanctions if imposed however have the potential of a confrontation in future, considering the fact that Iran always has an unpredictable response system. The threat lead to an increase in oil prices to $100 per barrel. Though it might be attributed to the concerns among investors, nothing can be confirmed.

Oil Prices Jump by 3 Percent

Promising news about the bettering economies of US and the Europe has led to a sharp rise in oil prices. On December 20, 2011 Benchmark crude witnessed a 3.6 % increase, which was an increase by $3.34 to reach $97.22 a barrel in New York. Brent crude similarly, used for pricing imported oil to US also witnessed a 3% increase and rose by $3.09 percent to reach $106.73 a barrel in London.

Following oil, stock indexes of major companies too soared by an average of 3 percent.

There was encouraging news about the economy and this sparked off this rise. Germany had reports that the confidence of consumers and that in business rose remarkably in December; likewise Spain’s borrowing expenses dipped following a promise that there would be better measures to combat debt issues.

In US similarly, the government reported that apartment constructions and building permits soared since November. Holiday selling also reported higher leaps. The analysts comment that with a rise in spending and construction by the consumers, oil prices are bound to rise.

However as reported by Phil Flynn, PFGBest analyst, political turbulence in Kazakhstan is yet another concerning factor; Kazakhstan being a remarkable exporter of oil (1.3 million barrels a day): the nation located in Central Asia has lost about 15 people owing to the battles and political protests. `Flynn added that it has caught tremendous attention, more so because of the emergency imposed by the President of Kazakhstan last weekend.

The nation is although a menial exporter of oil, but considering the fact that the oil supplies are utterly tight, any sort of disrupted supply might cause ripples in the entire oil market.

The US also has been reported to be cutting down on gas; it’s been 10 months now. The demand has dropped by an average of 4.2 percent.

US Firm awarded with $640 million Drilling Deal

On Tuesday December 20, 2011, a consortium that was led by Italy’s ENI SpA and the Iraqi government, landed up in a contract with an unnamed US firm. The contract amounts to $640 million and authorizes the US Company to carry out drilling in 60 oil wells at the southern Zubair oil field.

The contract had the backing of oil ministry and thus Ali Al Dabbagh commented that the council of ministers therefore approved the recommendation. He further informed that the drilling activity will take three complete years and would be carried on turn-key basis.

The Contractors further informed Dow Jones that back in October drilling giants like Schlumberger AG (SLBS.VI) and Weatherford International Ltd. Along with UnaRos, an Italian joint venture of Rosetti Marino and also the privately owned Unaoil, were all competing for a very crucial contract that would help them boost oil production from the Iraqi Zubair oil fields. The production would be triggered tremendously by adding another 450,000 barrels a day. The contra’ct would also incorporate processing units’ construction.

This field is a significant Iraqi oil filed ranking largest as it produces 195,000 barrels a day, before it was handed over to the Eni-led group. Since then the production has increased to 300,000 barrels a day and would expectedly to reach 1.125 million barrels a day by the year 2016 once the plan for its development gets completed.

Moreover considering the news of stable economies both in US and the Europe the oil prices have headed back from the downfall and have reported a 3 percent rise in price recently. The prices of Brent Crude as well as Benchmark crude have both increased in the oil market. Following a better production from the Iraqi oil fields, there is some stability expected in the near future, around the world.

Oil Tumbles with the Death of North Korean Leader

Oil reached $93 per barrel as the news of the North Korean leader’s death spread like wild fire in Asia. Kim Jong II, the North Korean leader’s death led to a fall in crude prices too. The Benchmark crude, up for January delivery fell by 31 cents and reached $93.22 per barrel by Singapore time in New York Mercantile Exchange, which later fell by another 3 cents to reach the price of $93.53 on December 16, 2011.

Meanwhile in London, the prices of Brent Crude were down by 40 cents and were reported to be at $102.85 at the ICE futures exchange. Following Kim’s death, stocks in Asian markets fell on the following Monday December 19, 2011 too; on apprehensions that his death might bring in greater instability between the two divided Korean regions. Likewise the stock markets in South Korea slid by 3.4% and the markets in Hong Kong reported a 1.2 percent fall. Japan too witnessed a similar fate with 1.3 percent fall in the stocks.

The slid however came as a contrast to better oil prices last weeks following the news on US economy getting better. Later this week we are in expectation of the housing and gross domestic product schedule of the US. These reports play a significant role as they would affect the oil prices considerably, by shifting the centre of focus from Europe’s economic crisis to the US and its rebounding stock markets.

Earlier this month as we all have been reading, crude prices fell below $100, on apprehensions of the Europe’s debt crisis leading to undermined oil demands in the entire world. In the Nymex trading, natural gas was down by 4.7 cents and was at $3.08 per 1000 cubic feet. Likewise heating oil was low by .7 cents and gasoline futures witnessed 0.2 cent fall.

Crude Oil Rebounds with Advances in Equities

Crude oil recovered from the six weeks low in New York as the equities advanced. The debt crisis seems no more to be a stern concern following the European government measures. The earlier losses that crude oil made were erased off and increased by 0.5 percent to reach $94 per barrel.

Meanwhile the European Finance Minister has scheduled a conference to address the deadlines for drawing out additional aids and designing new budget rules. Further a report from the Bank of America Corp. said that halt in Iranian production could lead to a rise in crude prices by $40 per barrel.

Crude oil on the New York Mercantile Exchange, which is up for January delivery, witnessed a 46 cents rise in the morning (according to London time). The prices reached to $93.99 per barrel. February futures moreover, are up by 43 cents, being the most traded futures. On the contrary the contracts which are to expire on December 20, 2011 fell to reach as low as $92.52 on December 16, 2011. Nevertheless, prices this year are 2.9% higher after a 15% rise in 2010.

Brent oil (ready for February settlement) was at $104.09 per barrel on the ICE Futures Europe Exchange. They had earlier declined by 1% or as much as 98 cents per barrel. There are reports and speculations that the oil prices might witness a $40 per barrel rise, following a halt on the Iranian production (as earlier noted by Bank of America Corp.) it also added that a closure of the Strait of Hormuz might escalate oil prices faster.

The European Benchmark contract reached a premium price of 49.90 to West Texas Intermediate traded in New York. Olivier Jakob remarks, “There are enough contradictory pressures on the oil market to go into the holidays with a neutral position. On the bearish side there is the risk of European downgrades, but there’s also the risk of tougher rhetoric against Iran.”

US Approves Plans of Arctic Drilling by Shell

The Royal Dutch Shell has managed a very crucial approval from the US government to further its plan of drilling in the Arctic Waters, a campaign much criticized by the campaigners for environment safety.

The recent approval is the latest Obama move to encourage more production of oil and gas from offshore fields. The plan however witnessed a setback last year following the BP Deepwater Horizon disaster.

The Bureau of Ocean Energy Management came to a conclusion that the drilling will not cause any significant impact on the ocean life as well as the wildlife surrounding it. The Bureau – a US Government Agency is responsible of the offshore leasing. But Shell is of the opinion that the conditions imposed by the US Government shall severely affect its plans.

Shell had acquired lease to carry on drilling in the Chukchi Sea near the north-west coast of Alaska in the year 2008; but has been several times prevented by legal actions to carry out drilling. It also failed in 2010 to get the necessary permits.

However the latest BOEM permits gives the much coveted green signal to Shell for drilling in Chukchi Sea and also in the adjoining Beaufort Sea North of Alaska. Shell shall resume drilling the wells in the next summer of 2012.

Shell however needs to secure another set of permits from the Bureau of Safety and Environment Enforcement which is the watchman of the offshore areas, and shall approve Shell’s plans to counter accidents and oil spills.

Shell had faced severe opposition from the environmentalists to block drilling in the Arctic Ocean. They are of the opinion that any accident or spill in the region might have catastrophic effects on the adjoining environment including the flora and fauna that is dependent on the sea. A representative of the Natural Resource Defense Council opines that the Government’s decision might lead to disasters.

Oil Prices Retreat as Concerns over Europe’s Debt Rise

Europe’s increasing debt concerns have been pushing oil prices towards a three day low. The Eurozone has been constantly wrestling with mammoth sized debt and the only solution seems to be cutting down on expenditures and ask for international help. The leaders of European Union have been constantly toying with the idea of central financial control and balancing budgets. However several experts opine that such measures will reap hardly any noticeable benefits.

Spending deficits in the Eurozone is a potent threat to declining oil consumption. It also implies lesser imports of goods manufactured in countries like China and US. Many experts are of the opinion that the Eurozone is already on its way to recession and there are concerns that banks might fail drastically leading to further problems for businesses to increase income. Investors are gradually yet significantly losing confidence in the economic concerns of the Eurozone.

The Fitch Ratings has changed its outlook on France from a stable economy to a negative economy, owing to the country’s hefty load of debt. The Fitch ratings, is also to revise its credit ratings for six other nations that make use of the euro as its currency. The countries are Italy, Spain, Ireland, Slovenia, Belgium and Cyprus.

Following this the Benchmark crude fell by 34 cents and reached $93.53 a barrel in New York. Earlier in the day prices were as low as $92.52 a barrel. Brent Crude used as landmark for pricing oil fell by 25 cents to reach $103 a barrel in London trading exchange.

Retail gasoline prices also fell by a penny on December 16, 2011 reaching $3.25 a gallon as reported by the AAA, Wright Express and Oil Price Information Service. In other energy trading heating oil was low by 2.2 cents and reached $2.8005 a gallon, however gasoline futures and natural gas were unchanged.

Oil Falls below $100 before OPEC Meet

Oil prices fell below $100 on December 14, 2011 in Asia amid apprehensions that OPEC will keep its output quota unmodified. Benchmark Crude witnessed a 29 cent fall and reached close to $99 per barrel in Singapore electronic trading on the New York Mercantile Exchange. The contact however rose only to settle down at $100.14 later.

Brent crude in London was down by 16 cents and was at $109.34 on the ICE exchange. The OPEC was scheduled to meet a day later in Vienna amidst a slow global economy which is threatened by rising costs of energy. The OPEC which is a 12 nation conglomerate will also try to avoid the supply vacuum created by less supply from Libya which is likely to assume normal hood by only the next year.

The Cartel said a consultant at Ritterbusch and Associates shall aim to thin out any gaps leading to further escalation in prices and also to bring back Libyan supplies in the market. There are further opinions that crude supplies need to increase amidst increasing oil demands in the developing countries.

Chief Economist at International Energy Agency said that energy producing nations are surely wary of the ever increasing oil prices and the effect on the global economy and thus should make their decisions accordingly.

Another report revealed that US supplies of energy remained unchanged last week and a day prior to the scheduled meeting, US crude inventories rose to reach 462,000 barrels while there was a prediction of 2.0 million barrels decrease by the energy information wing of Mc Graw-Hills cos.

Gasoline inventories fell and reached 12,000 barrels while distillates rose to 1.2 million barrels as reported by the API. In Nymex trading exchange natural gas was low by 2.0 cents while heating oil fell by 0 .5 cents as Gasoline slid by 0.8 cents.

OPEC’s Demand Forecast and the Wobbling Prices

Oil prices witnessed a remarkable wavering on last week of october, 2011, as a result of OPEC’s trimmed estimates of Oil demands across the world. It further added that there would be no increases in the demands next year too.

The morning markets though experienced a fall, letting the crude fall but in the afternoon it rose by 5o cents, and reached at $85.91 a barrel in New York. Brent Crude also witnessed a remarkable inching, and rose to $107.71 a barrel in London.

Oil prices have been rising since past five days, due to the easing of concerns regarding the US economic recession. Simultaneous hopes on Europe’s efforts to resolve the debt crisis have made the prices ease off too. Walter Zimmerman, analyst at ICAP said that, "The stock market has been leading oil prices around by the nose,"

The stock market is also being used rampantly to measure the economic issues and hopes around the world. Currency trends and economic fluctuations are major factors that affect the oil fundamentals. “Nothing else seems to matter,” said Zimmerman.

OPEC further said that the weak economy across the world was a major factor that took its toll on oil demands. This is typical of developed countries.

Gasoline prices at pumps remained unchanged, the national average being at $3.40 a gallon, as reported by the AAA. This was in fact 59 cents higher than what was last year.

The coming weeks’ movements of the stock market, will further affect the rise and fall in the oil market. OPEC is the largest oil producer in the world, and has set quotas for its 12 members, to effectuate stable oil prices. It has advised higher production if there is a rise in demand and lower productions if there is less demand. Heating oil was also unchanged at #2.9002 a gallon.

Oil faces a drop as a result of Low US demands and Denial by Saudi Arabia

It’s a second day that the oil has dropped in New York, on apprehensions of a weak demand for fuel by the US, along with a slow import of crude from China. There is a feeling that the world’s leading energy consumer will decrease its demands.

There was about 1.9 percent drop in the futures on October 13, 2011. Further reports from the American Petroleum Institute said that the demand for gasoline too slid, remarkably since last five years. China’s net imports of crude has declined said the custom bureau.

“Oil prices are still high compared to the economic risks we face, not only in Europe but also in the U.S. and Asia,” said Sintje Diek, the analyst at HSH Nordbank in Hamburg who so correctly said in January that prices would fall in the next half of the year 2011. “Overall, volatility is very high.”

Furthermore on the New York Mercantile Exchange, the crude for November delivery declined and reached $83.94 a barrel. However at 1 pm (London Time) on the same day it was at $84.11. Overall this year the prices are down by 8 percent.

Meanwhile Saudi Arabia, the largest producer of oil in the OPEC declined any excess oil production, and the oil minister, Ali-Al-Naimi said that they have strived hard to match the demands in the oil markets. Libya on the other hand, has a potential to produce as much as 100,000 barrels per day on an average basis, while Saudi Arabia can produce only 9.76 million barrels per day. Libya thus is the only country presently which is not producing oil beyond its official limits.

Oil may further increase losses in the New York futures of the IT industry. Prices have increasingly come to close around the $84.86 per barrel a day.