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Crude Oil Market Summary 7/19/2010 to 07/23/2010

July 24, 2010 By Chuck Leave a Comment

Guest post provided by James at Oilprice.com

Oil Prices Show Little Momentum for Breaking Through $80 Barrier

Prices of crude oil futures slumped below $79 a barrel on Friday despite a stock market rally and the rise of Tropical Storm Bonnie in the Gulf of Mexico.

The downward turn on Friday followed a sharp gain Thursday amid positive corporate earnings reports that some saw as a signal of economic recovery and the brewing tropical storm.

Technical analysts noted that oil prices have encountered resistance as they approach the $80 a barrel threshold. There appears to be little momentum for breaking through that barrier, they said. Other analysts said that market fundamentals were failing to provide any “guidance” for prices.

The reaction of markets Friday to the report from European regulators that only seven out of 91 banks subjected to a “stress test” would need to add capital, and only a modest amount slightly under $5 billion, was mixed. Some participants expressed relief that the exercise was over while others were skeptical that the tests had been stressful enough to be meaningful.

The euro regained ground against the dollar after a slight dip when the stress test results came out.

The benchmark West Texas Intermediate contract settled at $78.98 a barrel on Friday, after surging to $79.30 on Thursday. It finished last week at $76.01 a barrel.

Oil prices had been tracking the stock market fairly consistently the past few weeks, so analysts were surprised that oil futures parted ways with stocks. The Dow Jones Industrial Average closed up 102 points Friday, at 10,424.62 points, gaining 3.2% on the week.

The threat of disruption of production in the Gulf of Mexico from the advent of a new tropical storm, which should have been bullish for oil prices, also failed to halt the decline on Friday. Weather forecasters predicted Bonnie would not reach hurricane force before making landfall on Sunday.

Earlier in the week, an unexpected increase in oil inventories and a gloomy economic forecast from Federal Reserve chairman Ben Bernanke cut short an incipient rally, with prices surging above $78 a barrel on Wednesday before closing below $77.

“The economic outlook remains unusually uncertain,” Bernanke said in congressional testimony. The Fed is ready to jump either way, he indicated, depending on whether the economy shows signs of a more robust recovery or a renewed slide into negative growth.

Source: http://oilprice.com/Energy/Oil-Prices/Oil-Prices-Show-Little-Momentum-for-Breaking-Through-$80-Barrier.html

By. Darrell Delamaide for OilPrice.com who offer detailed analysis on Oil, alternative Energy, Commodities, Finance and Geopolitics. They also provide free Geopolitical intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

Filed Under: Market Updates Tagged With:

Don’t Start Those Drilling Rigs Just Yet

June 22, 2010 By Chuck Leave a Comment

The Obama administration has reached for its boxing gloves in preparation for an appeals battle following the overturning of the Presidents moratorium on deepwater drilling by a federal judge earlier today.

But it won’t stop there, now the Obama administration will issue a ‘new’ ban on drilling…

From the AP

WASHINGTON (AP) – Interior Secretary Ken Salazar says he will issue a new order imposing a moratorium on deepwater drilling after a federal judge struck down the existing one.

Salazar said in a statement Tuesday evening that the new order will contain additional information making clear why the six-month drilling pause was necessary in the wake of the Gulf oil spill. The judge in New Orleans who struck down the moratorium earlier in the day complained there wasn’t enough justification for it.

Salazar pointed to indications of inadequate safety precautions by industry on deepwater wells. He said he would issue a new order in the coming days showing that a moratorium is needed.

The White House also is appealing the judge’s ruling.

Start drilling, no stop, wait, go ahead, no stop again….

Companies in the middle of this yo-yo action:

(RIG, DVN, KWK, MMR, MRO, APC, RDC, PXD, NE, HP, HOS, NHP, RDS.A, HERO,  OIH, USO, UNG, SD, CXO )

All of this takes on a new twist following the article issued today by Wayne Madson of Oilprice.com:

Obama Administration Knew About Deepwater Horizon 35,000 Feet Well Bore

President Obama and Secretary of Interior Ken Salazar, Secretary of Energy Steven Chu, and Defense Secretary Robert Gates were informed that BP would drill an unprecedented 35,000 feet well bore at the Macondo site off the coast of Louisiana. In September 2009, the Deepwater Horizon successfully sunk a well bore at a depth of 35,055 below sea level at the Tiber Prospect in the Keathley Canyon block 102 in the Gulf of Mexico, southeast of Houston.

During the September drilling operations, the Deepwater Horizon drill penetrated a massive undersea oil deposit but BP’s priorities changed when the Macondo site in the Mississippi Canyon off the coast of Louisiana was found to contain some 3-4 billion barrels of oil in an underground cavern estimated to be about the size of Mount Everest. It was as a result of another 35,000 feet well bore sank by the Deepwater Horizon at the Macondo site that the catastrophic explosion occurred on April 20.

According to the Wayne Madsen Report (WMR) sources within the U.S. Army Corps of Engineers and the Federal Emergency Management Agency (FEMA), the Pentagon and Interior and Energy Departments told the Obama Administration that the newly-discovered estimated 3-4 billion barrels of oil in the Gulf of Mexico would cover America’s oil needs for up to eight months if there was a military attack on Iran that resulted in the bottling up of the Strait of Hormuz to oil tanker traffic, resulting in a cut-off of oil to the United States from the Persian Gulf.

Obama, Salazar, Chu, and Gates green-lighted the risky Macondo drilling operation from the outset, according to WMR’s government sources.

WMR learned that BP was able to have several safety checks waved because of the high-level interest by the White House and Pentagon in tapping the Gulf of Mexico bonanza find in order to plan a military attack on Iran without having to be concerned about an oil and natural gas shortage from the Persian Gulf after an outbreak of hostilities with Iran.

BP still has an ongoing operation to drill down to 40,000 feet below sea level at the Liberty field off the north coast of Alaska.

Source: http://oilprice.com/Energy/Energy-General/Obama-Administration-Knew-About-Deepwater-Horizon-35000-Feet-Well-Bore.html

By. Wayne Madsen for Oilprice.com who offer detailed analysis on Oil, alternative Energy, Commodities, Finance and Geopolitics. They also provide free Geopolitical intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

Filed Under: Market Updates Tagged With: , ,

Oil Drilling Moratorium Overturned By Federal Judge

June 22, 2010 By Chuck Leave a Comment

A number of oil drilling companies sought to have President Obama’s six month moratorium on deepwater drilling in the Gulf of Mexico overturned. Moments ago a federal judge has ruled in favor of the oil drillers and has overturned the President’s order.

FEDERAL DISTRICT COURT JUDGE RULES AGAINST OBAMA ADMINISTRATION’s 6 MONTH MORATORIUM ON DEEPWATER DRILLING
Moments after the judge overturned the Presidents order the White House issued a statement that they will appeal the decision. I guess this will end up in the Supreme Court.
Related companies - (RIG, DVN, KWK, MMR, MRO, APC, RDC, PXD, NE, HP, HOS, NHP, RDS.A, HERO,  OIH, USO, UNG, SD, CXO )
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Filed Under: Market Updates Tagged With: ,

Crude Oil Market Summary for Week Ending June 18 2010 – Guest Post

June 19, 2010 By Chuck Leave a Comment

Crude Oil Holds on to Week’s Gains After High Inventories Threaten Rally

Crude oil futures held on to strong gains for the week in lackluster Friday trading, after higher-than-expected inventories earlier in the week threatened to cut short the rally.

At the same time, with the front-month July contract set to expire on Tuesday, analysts didn’t see much incentive for prices to move above current levels next week.

The benchmark West Texas Intermediate contract settled at $77.18 a barrel on Friday, locking in a gain of 4.6% for the week, compared with $73.78 a week earlier. The August contract, which becomes the benchmark on Wednesday, settled at $78.26 a barrel.

The weekly inventory report from the Energy Information Administration on Wednesday showed crude stocks increased 1.69 million barrels in the week ended June 11, compared with the consensus forecast for a decline of 1.3 million barrels.

Futures markets initially shrugged off the report, and, spurred by a rising stock market, pushed prices up on Wednesday to a $77.67 high for the week. Doubts set in again on Thursday, and the price fell below $77 a barrel before recouping some of the ground on Friday.

A new report put out under the aegis of the Organisation for Economic Co-operation and Development, the Paris-based grouping of industrial countries, purported to establish that increased trading by index funds did not contribute to price volatility in futures markets.

The report was authored by two Illinois university professors, Scott Irwin and Dwight Sanders, who have build an academic career on debunking the notion that speculation causes volatility. Not surprisingly, they found once again in their new study that there was “no evidence” to establish a link between large inflows of capital into commodity investment funds and increased volatility in crude oil prices.

The report comes as a conference committee in the U.S. Congress is putting the final touches on regulatory reform legislation that will impose limits on most futures positions.

The authors analyzed data from the Commodity Futures Trading Commission from 2006 to 2009 – a period in which crude oil prices shot up to $147 a barrel and then fell to $33 a barrel.

Even Gary Gensler, the CFTC chairman, expressed the opinion in congressional testimony during his confirmation hearings last year that the rapid growth of commodity index funds and increased hedge fund allocation to commodity assets contributed to the “bubble in commodities prices that peaked in mid-2008.”

Source: http://oilprice.com/Energy/Oil-Prices/Crude-Oil-Holds-on-to-Weeks-Gains-After-High-Inventories-Threaten-Rally.html

By. Darrell Delamaide for Oilprice.com who offer detailed analysis on Oil, alternative Energy, Commodities, Finance and Geopolitics. They also provide free Geopolitical intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

Filed Under: Market Updates Tagged With:

Will BP Survive the Gulf Oil Spill Disaster? – Guest Post

June 4, 2010 By Chuck

BP’s Continued Existence Seen Coming Under Threat as Gulf Oil Spill Continues

The continued failure of BP’s efforts to stop the Gulf oil spill and mounting political pressure are putting the very future of the British-based oil giant in question.

BP shares plunged again on Tuesday, wiping $17 billion off the market capitalization of the company. Premiums on credit default swaps to insure the company’s debt soared 75% to $178,000 for $10 million as analysts began to question whether the company can survive the financial and reputational costs of the Deepwater Horizon catastrophe.

A former Clinton cabinet member, ex-Labor Secretary Robert Reich, now an economist at Berkeley, went so far as to urge the nationalization of BP by the U.S. government so that authorities could take direct control of the efforts to stop the spill and clean up the damage to the environment.

The existential threat to one of the largest companies in the world hits a company whose origins date back to the discovery of oil in the Middle East. BP began life in 1908 as the Anglo-Persian Oil Company to exploit oil fields discovered in what later became Iran.

When Iran nationalized its oil industry following World War II, the British government supported a CIA coup in that country that brought the shah to power and restored partial ownership of Iran’s oil revenue to the British company, now called British Petroleum.

After a series of mergers in the 1980s and 1990s, including the acquisition of Amoco, the company adopted its present name, BP plc. Its advertising slogan in recent years has been “Beyond Petroleum,” playing on that abbreviation. But now, say analysts, the company will have difficulty in the face of civil and potentially criminal liability, shaking the damage to its reputation from the Deepwater Horizon accident and ensuing oil spill.

The failure of the company’s latest effort to stem the flow of oil into the Gulf – the so-called “top-kill” bombardment with mud – made it likelier that only the drilling of a relief well would stop the flow. But that solution could take until August, with the risk that the shares and balance sheet of the company could continue to be hammered in the interval. A weakened BP could be the target for a takeover or even bankruptcy, analysts suggested.

Source: http://oilprice.com/Energy/Energy-General/BPs-Continued-Existence-Seen-Coming-Under-Threat-as-Gulf-Oil-Spill-Continues.html

By. Darrell Delamaide for Oilprice.com who offers detailed analysis on Oil, Geopolitics, Gold and most other Commodities. They also provide free political and economic intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

Filed Under: Market Updates Tagged With: , ,

Top Kill Fails – BP Confirms Efforts to Stop Oil Leak Have Failed

May 29, 2010 By Chuck

BP’s efforts to stop the oil well leak 5,000 feet below the the surface of the water have failed. After three days of pumping substances down into the well in a process called “top kill” officials have declared it a failure.

Doug Suttles, BP’s chief operating officer for exploration and production, said at a news conference that the engineers would try once again to solve the problem with a containment valve and that it could take four to seven days for the device to be in place.

“After three full days of attempting top kill, we now believe it is time to move on to the next of our options,” Mr. Suttles said.

It would appear that the only long term fix to this catastrophe is the drilling of new wells that will serve as a relief well for the now almost unstoppable leaking one. But that will still take another two months to complete, even two months is considered an aggressive time frame.

BP has claimed they are doing everything possible to clean up the oil now impacting the Gulf region. But are they really? In what can only be dubbed a PR stunt BP used busses to bring in 400 cleanup workers just for the day when President Obama visited the region on Friday.

Officials from Jefferson Parish claim BP bused 400 cleanup workers into Grand Isle on Friday in time for a visit from President Barack Obama.

Jefferson Parish Councilman John Young said the workers were brought in to clean oil off Grand Isle’s beaches.

The extra workers were brought in for Friday only, at a rate of $12 an hour, officials told WDSU. They were mostly from Terrebonne and Lafourche parishes.

Jefferson Parish Councilman Chris Roberts didn’t buy into the cleanup effort.

“They must think we’re all fools,” he said.

Roberts called BP’s efforts “shameful.”{…} WDSU-TV

BP busses in day workers to give the TV audience, and the President, the illusion that BP is doing everything possible. I call BP out here and say bullshit. Any company that busses in workers for just one day for the TV audience is a company that has no morals whatsoever.

In all of the years I have been involved with the financial markets and an observer of business in those financial markets I can say that BP is among the absolute worst when it comes to ethics and responsibility. Images of the 2005 BP refinery disaster in Texas City are still ingrained in the memories of many families who lost friends and family, and to which from all accounts could have been prevented had safety violations been corrected.

I fully realize that oil exploration and processing is an inherently dangerous occupation. But when companies continue to cut budgets, fail to correct safety issues due to the high costs, and cut staff in order to meet the quarterly earnings expectations then those actions are not just cost saving attempts, they are criminal.

Filed Under: Market Updates Tagged With: ,

Gulf Oil Spill – Top Kill Procedure and What it Is

May 26, 2010 By Chuck

As the topic of the Gulf oil spill is on the minds of many, including traders for its day to day impact on oil prices I thought you might want to see what the public relations team at BP is saying.

In the video below, a PR employee at BP attempts to explain how the Top Kill process will work, or not work.

BP is sure rolling out the public relations entourage in an attempt to save their good name. Wait a minute, they had a good name before this?

Note: At this time the Top Kill process is well underway and can be viewed at the link following the video.

 

Live video feed from the sea floor:

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Gulf Oil Spill and The Future of the US Energy Bill – Guest Post

May 25, 2010 By Chuck

Gulf Spill Puts US Energy Bill on Slippery Slope

With energy, Senate Democrats find themselves between a rock and two hard places. Nonetheless, Sen. John Kerry, D-Mass., and Sen. Joe Lieberman, I-Conn., have introduced their climate and energy bill.

Its timing is awful. Its fate is uncertain. Yet its sponsors felt it had to be done now.

While the Gulf of Mexico is being damaged by a runaway well, spewing millions of gallons of oil-like bile from hell, any energy bill has the chance that it will be amended to become an anti-energy bill and will fail when hoped-for Republican support evaporates.

At present there is fairly wide industry support for the Kerry-Lieberman bill, particularly from the electric utility industry. Leaders of the industry and its affiliated groups, like the Nuclear Energy Institute, were in on the writing of the bill. Tom Kuhn, president of the Edison Electric Institute, and Jim Rogers, president of Duke Energy, stood shoulder to shoulder with Kerry and Lieberman when they announced their bill.

The three pressure sources driving the bill are:

• The November elections and the desire of endangered Democrats to show that they have done something about climate change and have tackled long-term energy problems.

[Read more...]

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Filed Under: Crude Oil, Market Updates Tagged With:
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