OIL FUTURES: Crude Pushes Above $93/bbl

--U.S. crude oil adds gains as Middle East keeps traders on edge
--Nymex oil recently up 99 cents to $93.38/bbl
--Iran, Syria worries trump OPEC warning on demand slowdown

 
   By Jerry A. DiColo 
 

NEW YORK--U.S. crude-oil futures pushed higher Wednesday, adding to a $3 rally Tuesday as investors stay focused on renewed tensions in the Middle East.
Light, sweet crude oil for November delivery recently traded 99 cents, or 1.1%, higher at $93.38 a barrel on the New York Mercantile Exchange. Brent crude oil on the ICE futures exchange traded up 77 cents to $115.27 a barrel.
Oil prices rose Wednesday as concerns about Turkey and Syria continued to mount, after Turkey's top military commander warned that the country would take tougher action if Syrian shells continued to land on Turkish territory.
While Turkey and Syria aren't major oil producers, the possibility of expanded military activity highlights the threat that Syria's civil war could devolve into a regional conflict. Turkey is also an important oil-transportation route, and fears have grown that the 400,000 barrels a day of Iraqi oil piped to the Turkish port of Ceyhan could become a target.
"Elevated tensions and military activity along the Syria-Turkey border are reminders that isolated incidents could quickly spread," analysts at JP Morgan said in a note to clients.
On Tuesday, prices rose more than $3 a barrel as Israeli Prime Minister Benjamin Netanyahu called parliamentary elections for early 2013, a move seen by some as a way to shore up his political base ahead of possible military action against Iran.
The latest worries about oil supplies from the Middle East has trumped several reports this week suggesting global oil demand growth will stall.
The Organization of Petroleum Exporting Countries said Wednesday oil supplies will remain comfortable in the coming year, lowered its forecast for global demand growth this year and predicted a continued slowdown in 2013.
"Right now the market is undecided on the next move," said Phil Flynn, an energy analyst at Price Futures Group. "Weaker demand should mean lower prices but, in a world hellbent on keeping the economy afloat with stimulus, and the rising geopolitical risk, supply and demand won't matter."
Oil prices have seen big swings in recent days, but have still remained close to the level of $90 a barrel since falling from near $100 a barrel in mid-September.
In its monthly oil-market report, OPEC said oil-demand growth will fall to 800,000 barrels a day this year, down 100,000 barrels a day from its previous estimate. But the group warned that next year's demand faces "considerable uncertainties" that could lower its 2013 estimate by as much as 20%.
The OPEC report followed a report from the International Monetary Fund earlier this week suggesting that the risk of a global recession has risen, raising worries about oil demand even as Middle East tensions keep traders on edge.
Front-month November reformulated gasoline blendstock, or RBOB, recently traded 2.07 cents higher at $2.9794 a gallon. November heating oil recently traded 2.64 cent higher at $3.2296 a gallon.
--Ben Winkley contributed to this report.
Write to Jerry A. DiColo at jerry.dicolo@dowjones.com.

Oil prices rebound; Brent jumps above $113

WORLD oil futures have recovered on Middle East tensions according to analysts, helping to offset Saudi Arabia's pledge to satisfy global energy markets and "moderate" prices. 
 
Brent North Sea crude for delivery in November jumped $1.65 to $US113.46 ($A111.84) a barrel in late London deals.
New York's main contract, light sweet crude for November, gained $1.99 to $91.32 a barrel.
"Crude oil prices rebounded on Tuesday, as renewed concerns about Middle East tensions provided some upside momentum to the oil market," said Sucden Financial Research analyst Myrto Sokou.
NATO head Anders Fogh Rasmussen on Tuesday warned against the dangers of the conflict in Syria escalating, saying alliance member Turkey had shown commendable restraint in response to shelling of its border area.
Syrian shells last week killed five people in a Turkish border village, sparking a series of retaliatory strikes.

Oil prices meanwhile held onto their gains on Tuesday despite bearish comments by Saudi Oil Minister Ali al-Naimi.
"We will provide the markets with what they need," Naimi told reporters on the sidelines of a ministerial meeting in Riyadh. "We will work to moderate prices."
Addressing fellow ministers, Naimi warned that rising oil prices would affect economic growth across the globe, mainly in developing economies.
"Oil prices rose in March to levels not seen since 2008, which may adversely affect the global economy, particularly the economies of developing nations and emerging countries, as well as negatively impact global oil demand," he said.
Crude futures had fallen on Monday as the International Monetary Fund and World Bank slashed their 2012 growth forecasts.
The IMF cut its forecast for Chinese economic growth this year to 7.8 per cent, while the World Bank said it expected the world's second-largest economy to grow at a slower-than-expected 7.7 per cent.
The brokerage Phillip Futures said in a note to clients that "China's economic growth and demand for petroleum have been key supports for oil prices since global energy demand was hit by recession after the financial crisis."

Oil prices rebound; Brent jumps above $113

WORLD oil futures have recovered on Middle East tensions according to analysts, helping to offset Saudi Arabia's pledge to satisfy global energy markets and "moderate" prices. 
 
Brent North Sea crude for delivery in November jumped $1.65 to $US113.46 ($A111.84) a barrel in late London deals.
New York's main contract, light sweet crude for November, gained $1.99 to $91.32 a barrel.
"Crude oil prices rebounded on Tuesday, as renewed concerns about Middle East tensions provided some upside momentum to the oil market," said Sucden Financial Research analyst Myrto Sokou.
NATO head Anders Fogh Rasmussen on Tuesday warned against the dangers of the conflict in Syria escalating, saying alliance member Turkey had shown commendable restraint in response to shelling of its border area.
Syrian shells last week killed five people in a Turkish border village, sparking a series of retaliatory strikes.

Oil prices meanwhile held onto their gains on Tuesday despite bearish comments by Saudi Oil Minister Ali al-Naimi.
"We will provide the markets with what they need," Naimi told reporters on the sidelines of a ministerial meeting in Riyadh. "We will work to moderate prices."
Addressing fellow ministers, Naimi warned that rising oil prices would affect economic growth across the globe, mainly in developing economies.
"Oil prices rose in March to levels not seen since 2008, which may adversely affect the global economy, particularly the economies of developing nations and emerging countries, as well as negatively impact global oil demand," he said.
Crude futures had fallen on Monday as the International Monetary Fund and World Bank slashed their 2012 growth forecasts.
The IMF cut its forecast for Chinese economic growth this year to 7.8 per cent, while the World Bank said it expected the world's second-largest economy to grow at a slower-than-expected 7.7 per cent.
The brokerage Phillip Futures said in a note to clients that "China's economic growth and demand for petroleum have been key supports for oil prices since global energy demand was hit by recession after the financial crisis."

Natural gas futures drop with warm weather in focus

Natural gas futures came under pressure during U.S. morning trade on Tuesday, as forecasts calling for warmer-than-normal autumn temperatures weighed on future demand expectations for the heating fuel.

Traders also looked ahead to Thursday’s closely watched U.S. government report on natural gas supplies.

On the New York Mercantile Exchange, natural gas futures for delivery in November traded at USD3.349 per million British thermal units during U.S. morning trade, dropping 1.6%.     

It earlier fell by as much as 1.65% to trade at a session low of USD3.348 per million British thermal units.

Updated weather forecasts released Monday showed warmer-than-normal temperatures were expected across much of the U.S. Midwest and East Coast over the next two weeks, dampening early-Autumn heating demand for natural gas.

According to the Commodity Weather Group, spikes of "much-above-normal temperatures" in the Midwest are expected in the next six-to-10 days, while the East Coast will see similar weather patterns in the next 11-to-15 days.

Natural gas futures often reach a seasonal low in October, when mild weather reduces demand, before recovering in the winter, when heating-fuel use peaks.

Ongoing concerns over bloated U.S. inventory levels also added to the selling pressure. Total U.S. gas supplies stood at 3.653 trillion cubic feet, 8.3% above the five-year average level for the week.

Early injection estimates for this week’s storage data range from 76 billion cubic feet to 98 billion cubic feet, compared to last year's build of 108 billion cubic feet. The five-year average change for the week is an increase of 84 billion cubic feet.

Inventory did not top the 3.4-trillion cubic feet level in 2011 until October 5, with stocks peaking at a record 3.852 trillion cubic feet in November of last year.

Market analysts have warned that without strong demand through the early-Autumn shoulder season, gas inventories will reach the limits of available capacity later this year.

The shoulder season is the period in autumn when gas demand typically slackens and prices fall.

Elsewhere on the NYMEX, light sweet crude oil futures for delivery in November rallied 2.2% to trade at USD91.29 a barrel, while heating oil for November delivery rose 1.05% to trade at USD3.177 per gallon.

forexpros.com

US GAS : Futures Sell Off Ahead Of Inventory Report

NEW YORK (Dow Jones) --Natural gas futures sank Thursday ahead of a weekly report expected to show an unusually large build in U.S. inventories, amid weak demand.

Natural gas for May delivery recently fell 3.8 cents, or 1.6%, to $2.244 a million British thermal units on the New York Mercantile Exchange.

The even-cheaper April contract expired Wednesday at a fresh 10-year low of $2.191 million British thermal units.

The Energy Information Administration's weekly survey is expected to show natural gas inventories last week rose 46 billion cubic feet, sharply topping the year-ago level and the five-year average for the week.

If the survey is correct, the data would put inventories at 2.426 trillion cubic feet, 50% higher than a year ago and a record high for the week. Inventories would be 47% above the five-year average for this time of year.

Last year this week, inventories rose just 7 billion cubic feet.

"We feel that odds heavily favor additional selling following release of today's weekly EIA storage report," according to Jim Ritterbusch, head of the trading advisory firm Ritterbusch and Associates.

The sizeable build is expected amid weak demand for natural gas in the face of near-record production. The unusually mild winter and early spring has clobbered demand for natural gas used to heat homes and offices, leaving natural gas stores brimming and prices at their lowest levels in 10 years.

The unusually large spring inventory builds has raised fears among market observers that stockpiles could reach capacity when inventories peak in the autumn. Such an event would send prices sliding even further, as buyers disappear amid an absence of locations to store gas, according to analysts.

Front-month natural gas prices have already fallen 25% this year.

The mild temperatures are likely to persist for the foreseeable future, according to weather forecasts, suggesting that heating demand is unlikely to see a significant return this season. Commodity Weather Group said it sees above-average temperatures on the gas-consuming East Coast through the next two weeks.

Natural gas for next-day delivery at the benchmark Henry Hub in Louisiana recently traded at $2.02/MMBtu, according to IntercontinentalExchange, compared with Wednesday's average of $2.0482/MMBtu. Natural gas for next-day delivery at Transcontinental Zone 6 in New York traded at $2.19/MMBtu, down from $2.2056/MMBtu.

The good news behind high crude oil prices

WASHINGTON ( commodity news world ) : Rising oil prices often are the death knell for economic recovery. This time around the surge in crude oil is looking more like a harbinger of better days.

Political tensions over Iran's nuclear ambitions have pushed crude oil prices up 11 percent over the past month to around $123 a barrel, stoking concerns a violent confrontation that reduced supplies could send Brent crude above $150 a barrel.

Oil at that level could undermine a gradual strengthening of the world economy. Even at current levels, it could shave 0.2 percentage point from growth, analysts said.

Just as Europe's sovereign debt problems have started to ease, oil has emerged as a new headwind.

But the Iran-driven spike masks a broader underlying trend, and as long as military strikes are avoided, it appears to pose only a limited risk. In other words, there is a good news story.

Crude oil prices have been climbing in fits and starts since early October in line with slowly improving economic data, especially in the United States.

Equity prices have risen in lockstep with oil's advance. When the two rise together, it usually indicates a broad-based economic expansion. The Standard and Poor's 500 index is up 17 percent since the beginning of October, and MSCI's global equity index has recouped all its losses since the U.S. debt debacle last summer.

This suggests that roughly half of the 25 percent gain in the price of Brent crude since early October reflects a strengthening of global demand, economists said. The world's factories are churning out goods at a faster pace, a key indication of the economy's strength, meaning it is in better shape to handle a supply shock from Iran than a year ago.

"We think that crude oil prices have risen more because of improving sentiment regarding global growth than because of geopolitical risk concerns," Deutsche Bank told clients.

WAGES CUSHION THE BLOW

A sterner test will be whether consumers can absorb the higher costs at the gasoline pump, since their spending accounts for about two-thirds of all economic activity in developed economies. And that will depend upon wage gains.

So far, the news here is reasonably encouraging too. American wages and salaries have risen at a 5.7 percent annual rate in the seven months through January. Average hourly earnings, to be reported on Friday as part of the government's monthly jobs report, are expected to have advanced by 0.2 percent in February from the prior month.

U.S. gasoline costs have accelerated at an even faster pace. They are up by 10 percent from their lows late last year and in California have topped the psychologically important $4 a gallon level. But so far the hit to the American wallet has been less severe than during the Arab spring a year ago.

A warm winter and a 30 percent plunge over the past three months in prices for natural gas, the fuel used to heat most American homes, have cut the average household energy bill. And more people have jobs today, providing more of a cushion to absorb costlier gasoline.

"So far there is no sign that these higher prices are getting in the way of an improving trend in U.S. consumer confidence currently supported by a better labor market," said Jacques Cailloux, chief European economist at Royal Bank of Scotland.

The U.S. jobs report for February due out on Friday is expected to show 210,000 new jobs were added outside the farm sector, the third month in a row of gains above 200,000. Tom Porcelli, chief U.S. economist at Royal Bank of Canada, said he will watch closely for signs of growth in higher-paying sectors, which would provide further support to consumer spending.

Otherwise, rising gasoline costs could start to bite. Porcelli said three to six months above $4 a gallon could shave half a percentage point off U.S. GDP, which economists currently see expanding around a 2.2 percent rate in 2012.

INFLATION RISKS

The dent could be even larger in Europe, where wages are lagging. Adjusted for inflation, the Organization for Economic Cooperation and Development estimates that wages in the euro zone this year will expand on average by 0.4 percent, and even less for Germany, Europe's biggest economy.

Deutsche Bank reckons that if oil were to rise by 50 percent from its baseline, twice the advance so far, it would rob 0.4 percentage point from euro zone GDP in the first year. The region already is expected to contract slightly in 2012.

In Asia, the picture is more mixed and inflation the primary concern.

Many Asian economies have fuel subsidies, which would cushion the blow to households. But if governments start to pass on the energy costs, as Deutsche expects in India and Indonesia, inflation could rise sharply.

Inflationary pressures would complicate the role of central banks, possibly quashing prospects for further monetary support for the recovery.

But for now, rising oil prices largely are a growth story.

India's energy demand may slow down to 4.5% by 2030

NEW DELHI (Commodity news world ): India's energy demand may slow down to 4.5% per annum by 2030 on improvements in energy efficiency, according to global energy giant BP plc.

According to the report, India's energy imports will jump drastically by 2030 to meet the domestic needs. The country's gas imports will jump 47%, crude oil by 91% and coal will jump 40%.

India's share of industry will continues to grow, as infrastructure development and manufacturing gains and manufacturing expands to absorb a growing labour force.

Meanwhile, according to the report, China and India will be the world’s largest and third largest economies, jointly accounting for about 35% of global population, GDP and energy demand.

India is expected to consume half the total energy consumed by China in 2030.

By 2020, coal will remain the commercial source of energy.

In 1999-2010, India’s annual energy demand growth accounted for 5.5% per annum.

Crude oil prices fall; gas prices make gains

HOUSTON, Dec. 9
By Sam Fletcher
OGJ Senior Writer

Stock market and oil prices fell Dec. 8, with crude closing below $99/bbl in New York, as pessimistic markets shrugged off interest rates reductions by the European Central Bank (ECB) and a US government report of the lowest number of initial claims for unemployment benefits in 9 months.

However, natural gas rallied after the Energy Information Administration reported the withdrawal of 20 bcf from US underground storage during the week ended Dec. 2. That left 3.83 tcf of working gas in storage, up 102 bcf from a year ago and 307 bcf above the 5-year average.

Adam Sieminski, chief energy economist, Deutsche Bank AG, Washington, DC, said, “Despite a warm start to the heating season, the probability for the current La Nina event to continue through early spring (March-April) is higher than 50% according to forecasters at National Oceanic and Atmospheric Administration. This would introduce the potential of a more rapid storage drawdown this winter.”

Stock indexes turned around in early trading Dec. 9 after all 17 members of the Euro-zone agreed to a treaty that will provide more central authority over their individual budgets in response to the growing debt crisis in Europe. Another nine members of the European Union are considering signing the treaty that was hammered out in an all-night session. Only the UK turned it down.

Analysts remained skeptical of the latest European effort, however. “A pledge to regulate budgets is all well and good, but without a commitment from the ECB to print lots of euros, it doesn't address the immediate issue at hand,” said analysts in the Houston office of Raymond James & Associates Inc.

Despite their marathon overnight session, EU leaders failed to come up with a binding pact for all 27 nations represented and resorted instead “to intergovernmental treaties,” said Olivier Jakob at Petromatrix in Zug, Switzerland. “The text of the agreement is to be finalized by March, and after that we will still have to go through the ratification process for those countries that want to join in.”

Meanwhile, everyone is waiting to see if Standard & Poor’s follows through on its threat to downgrade credit ratings of 15 Euro-zone countries, including the strongest European economies of Germany and France, pending the outcome of the Dec. 9 summit (OGJ Online, Dec. 6, 2011).

“Given the poor political unity between the EU-27 members, we have to increase the risk assessment that the next step is to see some downgrade review materialize maybe even before the end of the year,” said Jakob. “[Although] the Italian 10-year bond yields were falling sharply at the beginning of the week, they are now surging back towards their previous peaks. The Italian-to-German bond spread is back over 5%, and the Italian 10-year bonds back above the 7% mark. Not good.”

Jakob said, “For weeks, global assets have been supported by all sorts of rumors that the ECB will become the buyer of last resort, but yesterday the head of the ECB poured some water on those hopes. The ECB will stick to its constitutional mandate and will not engage in any financial engineering scheme with the International Monetary Fund. The ECB did cut interest rates from 1.25% to 1%, but overall it did not come up with any [balm for the European economy].”

The European Banking Authority later increased its estimate of the European capital shortfall under the stress-test, “which will likely lead European banks to sell more assets by June,” said Jakob.

Sieminski said, “Commodity index returns remain positively correlated to the US equity market. The fact that the current episode of risk aversion is one of the longest in history as well as the tendency of the S&P 500 Index to rally in US presidential election years are encouraging signs for index returns heading into 2012, in our view. However, ultimately the performance of index returns will be determined by the extent to which a more pronounced downturn in economic activity can be averted.”

In other news, he said, “We believe China will add about 950,000 b/d of new refinery capacity over the course of 2012 and utilize it. This could add to the country's stockpiling requirements, which could mean that the 5.5% consensus for oil growth in China is too low.”

Energy prices

The January contract for benchmark US light, sweet crudes continued to fall, down $2.15 to $98.34/bbl Dec. 8 on the New York Mercantile Exchange. The February contract dropped $2.14 to $98.54/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., was down $2.15 to $98.34/bbl.

Heating oil for January delivery lost 5.26¢ to $2.93/gal on NYMEX. Reformulated stock for oxygenate blending for the same month declined 2.03¢ to $2.57/gal.

The January natural gas contract regained 3.6¢ to $3.46/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., gave back 1.1¢ to $3.43/MMbtu.

In London, the January IPE contract for North Sea Brent lost $1.42 to $108.11/bbl. Gas oil for December dropped $9 to $948.25/tonne.

The average price for the Organization of Petroleum Exporting Countries’ basket of 12 benchmark crudes was down $1.08 to $109.02/bbl.

Contact Sam Fletcher at samf@ogjonline.com.

Crude Oil Rises on Increasing U.S. Consumer Sentiment, European Accord

Oil climbed the most in more than a week after a report showed that confidence among U.S. consumers rose to a six-month high and as European leaders agreed to boost the region’s rescue fund and tighten budget rules.

Futures gained 1.1 percent after Thomson Reuters/University of Michigan preliminary index of consumer sentiment increased to 67.7 in December from 64.1 at the end of last month. European countries announced steps to ease the area’s debt crisis without forging an accord among all European Union members.

“The consumer confidence number is another positive signal about the U.S. economy,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We seesawed earlier today as people tried to get a handle on the results of the European summit. The agreement is starting to give the market some reassurance.”

Crude oil for January delivery advanced $1.07 to settle at $99.41 a barrel on the New York Mercantile Exchange. It was the biggest gain since Nov. 29. Futures have increased 8.8 percent this year. Prices decreased 1.5 percent this week because of rising U.S. stockpiles and concerns about the debt crisis.

Brent oil for January settlement increased 51 cents, or 0.5 percent, to end the session at $108.62 a barrel on the London- based ICE Futures Europe exchange.

The U.S. consumer confidence reading was projected to rise to 65.8, according to the median estimate of 73 economists surveyed by Bloomberg News.

The U.S. was the world’s biggest oil-consuming country in 2010, responsible for 22 percent of global oil demand, according to BP Plc’s Statistical Review of World Energy released on June 8. The 17 countries using the euro accounted for about 12 percent of world demand last year, BP figures show.
Debt Rules



The European countries enshrined debt rules in a new treaty that leaves out the U.K. instead of amending EU agreements that date back to the 1950s.

European Central Bank President Mario Draghi hailed a “very good outcome” a day after he damped expectations that a deal would prompt the ECB to step up its bond-buying.

The agreement added 200 billion euros ($267 billion) to the region’s war chest and tightened rules to curb future debts. The leaders sped the start of a 500 billion-euro rescue fund to next year and diluted a demand that bondholders shoulder losses in rescues.
Market Driver

The Standard & Poor’s 500 Index (SPX) gained 1.7 percent, and the Dow Jones Industrial Average advanced 1.5 percent at 3:06 p.m. in New York on the rescue fund and the U.S. confidence figure.

“The oil market is being driven for the most part by what’s happening in equities,” said Kyle Cooper, director of research for IAF Advisors in Houston. “We could open a dollar higher or lower Monday based on the weekend headlines from Europe.”

Oil may fall next week on concern that the summit won’t ease concerns about the spread of the debt crisis, a Bloomberg News survey showed. Eleven of 27 analysts and traders, or 41 percent, forecast oil will decrease through Dec. 16. Nine respondents, or 33 percent, predicted futures will increase and seven estimated there will be little change.

EU governments are also considering imposing stiffer sanctions on Iran, OPEC’s second-largest oil producer after Saudi Arabia, amid “serious and deepening concerns” over the country’s nuclear program, according to a draft EU summit statement. Foreign ministers will decide on the next set of sanctions Jan. 30, the statement showed.

Japan issued new sanctions against Iran over the country’s suspected nuclear weapons program, the Trade Ministry said in a statement today in Tokyo.
Iranian Output

Iran pumped about 5 percent of the world’s crude last year, based on BP’s data. The country is on the Strait of Hormuz, through which about a fifth of global oil supply is transported, according to the U.S. Energy Department.


The Organization of Petroleum Exporting Countries may set a new collective production quota at its meeting in Vienna on Dec. 14 without setting individual country allocations, according to consultant PFC Energy. The group has not changed output targets since 2008.

Nymex will cut the margin requirement on crude and heating oil futures from the close of business Dec. 12, CME Group Inc., the exchange’s parent company, said yesterday. The margin for light sweet crude will be $7,560 per contract, 6.7 percent lower than the current level. The exchange last reduced the margin to $8,100 from $8,437.50 in May.

Oil volume in electronic trading on the Nymex was 555,760 contracts as of 3:06 p.m. in New York. Volume totaled 647,193 contracts yesterday, 1.8 percent below the three-month average. Open interest was 1.33 million contracts.


To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net