Commodity Corner: Oil Falls Amid Softer Demand Outlook

- Commodity Corner: Oil Falls Amid Softer Demand Outlook

Friday, September 02, 2011
Rigzone Staff
by Matthew V. Veazey

Light sweet crude oil for October delivery lost nearly three percent Friday after the U.S. Department of Labor announced that the U.S. economy added zero jobs last month.

The WTI settled at $86.45 a barrel, a $2.48 day-on-day decline, after the Labor Department reported that the loss of 17,000 government jobs in August offset the addition of the same number of private-sector jobs during the period. According to media outlet MSNBC, the government last reported zero job growth 66 years ago. The Labor Department also announced that the unemployment rate held steady at 9.1 percent.

The unimpressive employment figures support the view that the U.S. economy is experiencing a double-dip recession, lowering expectations for oil demand.

Brent futures also ended the day lower, losing 1.7 percent to settle at $112.33 a barrel. The benchmark traded within a range from $111.57 to $113.51. The WTI peaked at $88.99 and bottomed out at $85.42.

By noon Friday, one-third of Gulf of Mexico natural gas production had been shut-in as Tropical Storm Lee ambled toward the Louisiana coastline. That was not enough to counter the aforementioned dismal economic prospects, however; October natural gas lost more than four percent Friday to settle at $3.87 per thousand cubic feet.

Front-month natural gas fluctuated from $3.85 to $4.065 during floor trading. Reformulated gasoline for October delivery lost a nickel to end the day at $2.84 a gallon after trading within a range from $2.795 to $2.90.

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Commodity Corner: Crude Up on Weather Threat

- Commodity Corner: Crude Up on Weather Threat

Thursday, September 01, 2011
Rigzone Staff
by Saaniya Bangee

Despite shaky equities and a rising dollar, crude futures inched modestly higher Thursday on weather reports of a storm brewing in the Gulf of Mexico.

October oil added 12 cents to its final price tag, settling at $88.93 a barrel on the New York Mercantile Exchange. Oil traded as low as $88.21 a barrel after an earlier intraday peak of $89.90.

The National Hurricane Center reported an 80 percent chance that a tropical wave in the Gulf of Mexico could develop into a tropical cyclone within the next 48 hours. Oil majors such as Shell, ExxonMobil, BP, Anadarko and BP have evacuated nine platforms in the Gulf of Mexico and shut in nearly 80,000 barrels of oil production, according to the Bureau of Ocean Energy Management, Regulation and Enforcement. In addition, 127 million cubic feet per day of natural gas was also shut in.

In other forecasts, initial unemployment claims fell by 12,000 to 409,000 last week. Data reported by the Labor Department helped boost optimism about the economy.

Brent crude, which is used to price many international oil varieties, lost 56 cents to settle lower at $114.29 barrel on fresh concerns over Greece's debt problems. The intraday range for Brent was $113.89 to $115.31 a barrel on the ICE future exchange.

Natural gas for October delivery remained unchanged at $4.05 per thousand cubic feet Thursday.

Gasoline gained 1.64 cents for the first trading session for the October contract. Reformulated gasoline settled at $2.89 a gallon. Some East Coast refineries remain shut down due to Hurricane Irene. Prices fluctuated between $2.85 and $2.92 Thursday.

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Commodity Corner: Oil Rises on Economic Data

- Commodity Corner: Oil Rises on Economic Data

Thursday, July 07, 2011
Rigzone Staff
by Saaniya Bangee

Propelled by forecasts that better days—and improved petroleum demand—are ahead for the global economy during the second half of this year, oil prices ended the day higher Thursday.

The front-month WTI contract price rose 2.09 percent Thursday, settling at $98.67 a barrel. Positive employment news contributed to the increase. According to the U.S. Labor Department, claims for unemployment benefits fell by 14,000—the lowest level in seven weeks. Meanwhile, payroll processor ADP said private-sector employment grew by 157,000 jobs last month. This is more than double of what economic experts had anticipated.

In addition, top U.S. retailers reported better-than-average sales for the month of June.

Light, sweet crude oil futures traded between $96.99 and $99.42—the highest intraday since June 15.

Its European counterpart gained nearly 5 dollars, settling at $118.59 per barrel on the ICE futures exchange. Brent prices fluctuated between $114.20 and $118.68 Thursday.

Natural gas for August delivery fell 8.8 cents Thursday on EIA reports. The U.S. Energy Information Agency reported a 634,000 barrel-decline in gasoline stocks, while distillate stocks fell by 191,000 barrels. Prices for natural gas peaked at $4.25 and bottomed out at $4.11, before settling at $4.138 per thousand cubic feet.

Gasoline futures added 9.23 cents a gallon, ending the trading session at $3.09 a gallon.

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Commodity Corner: Oil Rallies on Fed Report

Commodity Corner: Oil Rallies on Fed Report

Friday, April 15, 2011
Rigzone Staff
by Matthew V. Veazey

Crude oil futures gained $1.55 Friday on news that U.S. industrial production grew last month.

May crude oil settled at $109.66 after the Federal Reserve reported that industrial production increased 0.8 percent in March, compared to just 0.1 percent in both January and February. Year-on-year, total industrial production for March reportedly increased by 5.9 percent.

The Fed also noted that manufacturing output increased by 0.7 percent last month while factory production rose to an annual rate of 9.1 percent during the first quarter. In addition, the central bank noted that total industry capacity utilization climbed by 0.5 percentage point to 77.4 percent.

Oil futures traded within a range from $107.21 to $110.10 Friday. Compared to last Friday's settlement price, oil is down 2.8 percent for the week.

Front-month natural gas lost a penny Friday to settle at $4.20 per thousand cubic feet. The dip followed predictions of above-normal temperatures throughout the eastern U.S. during the next two weeks.

May natural gas peaked at $4.24 and bottomed out at $4.17 during Friday's session. Week-on-week, natural gas is up nearly four percent.

Gasoline for May delivery gained six cents to end the day at $3.29 a gallon. It fluctuated between $3.23 and $3.30 during end-of-week trading. For the week, gasoline is up 0.9 percent.

Allies Expand Libya Air Campaign, Debate Chain of Command

Allies Expand Libya Air Campaign, Debate Chain of Command

March 22, 2011, 8:34 AM EDT

(Updates with oil prices in fifth paragraph, Erdogan in seventh, Turkish offer in 13th. For more on Middle East turmoil, see EXTRA and MET.)

March 22 (Bloomberg) -- Allied forces expanded their air campaign over Libya to thwart Muammar Qaddafi’s fighters and enable rebels to regain control of cities, as leaders debated who should be in overall control of the operation.
Aerial strikes enabled rebel forces to push out from their eastern stronghold of Benghazi as the United States Africa Command indicated that an F-15E jet crashed because of technical difficulties. At the same time, Norway is keeping its fighters grounded until there is clarity on the chain of command as France, the U.K. and allies including Turkey and the Arab states struggle to agree on whether NATO should guide the operation.
“The biggest obstacle to the Libyan intervention right now isn’t the Arab world but rather differences among France, the U.K. and the U.S. about who’s in charge,” Jan Techau, director of the Carnegie Endowment for International Peace in Brussels and former NATO defense analyst, said by telephone.

The conflict, which began in February in Benghazi, is the bloodiest in a series of uprisings that have spread across the Middle East this year and ousted the leaders of Egypt and Tunisia. Five members of the UN Security Council abstained from last week’s resolution that authorized the military operation, which is intended to limit civilian casualties.

Oil Markets

Oil traded near the highest price in more than a week as the airstrikes threatened to prolong a supply disruption. Crude for April delivery on the New York Mercantile Exchange was at $102 a barrel, down 33 cents, at 11 a.m. London time, after rising as high as $102.67. Yesterday, it gained $1.26 to $102.33, the highest settlement since March 10. Tension in the region is adding a risk premium of $15 to $20 a barrel to Brent oil prices, according to Societe Generale SA.

Libyan rebels in Benghazi said they have created a new national oil company to replace the corporation controlled by Qaddafi. Its assets were frozen by the United Nations Security Council. Libya has the largest oil reserves of any country in Africa, according to the BP Statistical Review of World Energy.

The option of the North Atlantic Treaty Organization taking charge of military operations may hinge in part on the extent of reservations expressed by Turkish Prime Minister Recep Tayyip Erdogan. Dialogue with the Libyan regime must continue, the premier said today in a speech to his party in parliament. Turkey has doubts over whether military intervention is justified, he said.

NATO Debate

Both Britain and Italy supported giving leadership to NATO, which requires unanimous approval from its member countries, including Turkey. The Italian Foreign Ministry said in a statement yesterday that NATO should “take on the command and control” of military operations.

Complicating matters, Arab League countries, who called for the no-fly zone, may not want to operate under NATO’s leadership, U.S. Defense Secretary Robert Gates said at a news conference March 20.
U.S. Vice Admiral Bill Gortney said Spain, Belgium, Denmark and Qatar have joined the coalition. The U.S., the U.K., France, Italy and Canada have at least 25 ships off the coast of Libya, including the French aircraft carrier Charles de Gaulle and the Italian carrier Giuseppe Garibaldi
The U.K. and U.S. were angered by France’s decision to launch the first attack March 20 without fully consulting its allies, the London-based Financial Times reported today, citing unidentified diplomats.

[Oil and Gas Post] - Oil Slips From Two-Week High on Speculation Mideast Risk Limited to Libya

Oil Slips From Two-Week High on Speculation Mideast Risk Limited to Libya

By Grant Smith and Ann Koh - Mar 22, 2011 4:22 PM GMT+0700

Crude oil retreated from its highest price in almost two weeks amid speculation that supply disruptions from political unrest in North African and the Middle East may be confined to Libya.
Futures slipped after climbing as much as 0.3 percent as demonstrators in Yemen spent the night on streets to maintain pressure on President Ali Abdullah Saleh, who is facing a growing internal revolt. Tension in the region is adding a risk premium of $15 to $20 a barrel to Brent oil prices, according to Societe Generale SA.

“The unrest in Libya seems to be priced in almost completely by now,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said in an interview with Bloomberg television. “The price will stay at elevated levels of around $110 to $120 for several months and will drop back to $90 by the year-end.”

Crude for April delivery on the New York Mercantile Exchange was at $102.05 a barrel, down 28 cents, at 9:15 a.m. London time, after rising as high as $102.67. Yesterday, it gained $1.26 to $102.33, the highest settlement since March 10. The April contract expires today. The more-actively traded May futures were down 22 cents at $102.87 a barrel. Brent oil for May settlement was at $114.65, down 31 cents, on the ICE Futures Europe exchange in London after rising as much as 0.5 percent. The spread between the two May contracts narrowed to $11.80 a barrel from $11.87 yesterday.

Regional Unrest

Regional turmoil has toppled the leaders of Tunisia and Egypt and reached Yemen, Bahrain and Syria. Societe Generale raised its forecast for Brent by $11 to average $109 a barrel this year as political risks increased, analysts led by Michael Wittner said in a report dated yesterday.

Allied forces are expanding their air campaign over Libya in an effort to thwart Muammar Qaddafi’s fighters and enable rebels to control cities, such as the opposition capital of Benghazi, which had been under attack by troops loyal to the regime. The Libyan leader denounced the coalition allied against him, which includes the U.S., the U.K. and France, as “the party of Satan.”

Libyan output has fallen to fewer than 400,000 barrels a day, Shokri Ghanem, chairman of Libya’s National Oil Co., said on March 19. The country produced 1.59 million barrels a day in January, according to estimates compiled by Bloomberg. Exports may be halted for “many months” because of sanctions and damage to facilities, the International Energy Agency said.

Libyan oil production is likely to remain disrupted for the rest of this year, said Lawrence Eagles, head of commodities research at JPMorgan Chase & Co. in New York.

Protest in Yemen

Thousands of Yemenis spent the night on streets across the country to maintain pressure on President Ali Abdullah Saleh, who is facing a growing internal revolt by army leaders, ministers and diplomats. Yemen produced about 298,000 barrels of oil daily in 2009, according to BP Plc data.

Military officers including Ali Muhsin al-Ahmar, commander of the first armored division, and Mohammed Ali Muhssein, commander of the eastern region, abandoned the regime yesterday. Their move was a result of the crackdown three days ago that left dozens dead, said Mohammed al-Sabri, an opposition leader.

Bahrain’s government declared a three-month state of emergency on March 15 after troops from Saudi Arabia and other Arab Gulf states arrived to help in quelling more than a month of protests.

Japan is delivering more relief supplies in areas hardest hit by the March 11 earthquake as workers restored power to two reactors at a crippled Fukushima Dai-Ichi nuclear power plant yesterday, prompting Prime Minister Naoto Kan to say there was “light at the end of the tunnel.”

Short-Term Drop

“The recent tragic events in Japan will result in a sharp short-term drop in economic activity but is likely to be followed by a strong recovery driven by reconstruction and replacement of durables which would boost the demand for many commodities,” Societe Generale’s analysts said.

Japan was responsible for 5.2 percent of global oil demand in 2009, according to BP, which publishes its Statistical Review of World Energy each June. Japan is the third-biggest crude- consuming country, after the U.S. and China.

To contact the reporters on this story: Ann Koh in Singapore at akoh15@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net

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