White House Signals Deepwater Drilling Ban to End Soon

Top Obama administration officials signaled Tuesday that a moratorium on deepwater oil drilling could end "very soon," but it's unclear how quickly idled oil rigs could go back to work in the Gulf of Mexico. The Interior Department scheduled a 1 p.m. EDT news conference to discuss what it said would be an announcement on "the current suspensions on deepwater drilling." White House Press Secretary Robert Gibbs told reporters Tuesday that the Interior Department will lift its moratorium on deep water oil drilling in the Gulf of Mexico "very soon," likely this week. Asked if he was saying the ban will be lifted this week, Gibbs said: "I do."

But the government's top offshore drilling regulator, Michael Bromwich, separately told reporters during an event across town that it is unlikely companies could resume drilling immediately, even when the moratorium is lifted. Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, said his agency will need to time to carefully vet companies' applications to ensure they comply with new safety and environmental regulations established since the April 20 explosion of the Deepwater Horizon oil rig and the subsequent oil spill in the Gulf of Mexico. He emphasized that the pace of approvals will depend on......Read the entire article.


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Phil Flynn: After The Fireworks

Now that the fireworks are over, the question becomes can oil rebound from the low seventies. The oil market is trying to get up off the mat after a very disappointing jobs report last week. So if the oil market comes back, does that mean the economy is not so bad? What does the government need to do to get the private sector moving again or maybe is it time that they get out of the way? Non farm payrolls fell by 125,000 as the census, the best job stimulus the government had going for it, cut 225,000 temporary workers.

Yet at the same time the jobless rate fell to 9.5 percent from 9.7 percent as the labor force shrank. This does not bode too well for oil from the demand side of the equation yet from the price side of the equation it is not too clear. The economy is still so weak that the Fed will keep their foot on the economic accelerator creating some demand for oil but even more a weak dollar thereby keeping oil bulls from getting totally annihilated.It appears that this anemic job growth is making the dollar look like it is running out of steam. It has been dollar strength that has pulled oil back down into the low seventies from the mid-eighties.

Now it appears that because our job situation is so bleak not even the bad news in Europe can keep us supported.What did he know and when did he know it. Apparently Obama knew a lot more than he was letting on. According to the Wall Street Journal, “Less than four months after President Barack Obama took office, his new administration received a forceful warning about the dangers of offshore oil drilling. The alarm was rung by a federal appeals court in Washington, D.C., which found that the government was unprepared for a major spill at sea, relying on an "irrational" environmental analysis of the risks of offshore drilling. The April 2009 ruling stunned both the administration and the oil industry, and threatened to delay or cancel dozens of offshore projects in Alaska and the Gulf of Mexico.

Despite its pro-environment pledges, the Obama administration urged the court to revisit the decision. Politically, it needed to push ahead with conventional oil production while it expanded support for renewable energy.” “Another reason: money. In its arguments to the court, the government said that the loss of royalties on the oil, estimated at almost $10 billion, may have significant financial consequences for the federal government." The U.S. Court of Appeals reversed its decision and allowed drilling in the Gulf to proceed—including on BP PLC's now-infamous Macondo well, 50 miles off the Louisiana coast.

The Obama administration's actions in the court case exemplify the dilemma the White House faced in developing its energy policy. In his presidential campaign, President Obama criticized the Bush administration for being too soft on the oil industry and vowed to support greener energy forms.” So much for change!

Phil can be reached at pflynn@pfgbest.com and don't forget to catch him every day on the Fox Business Network.


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Deepwater Drilling Ban Lifted by New Orleans Federal Judge

A New Orleans federal judge lifted the six-month moratorium on deepwater drilling imposed by President Barack Obama following the largest oil spill in U.S. history. Drilling services shares jumped on the news.

Obama temporarily halted all drilling in waters deeper than 500 feet on May 27 to give a presidential commission time to study improvements in the safety of offshore operations. More than a dozen Louisiana offshore service and supply companies sued U.S. regulators to lift the ban. The U.S. said it will appeal the decision.

U.S. District Judge Martin Feldman today granted a preliminary injunction, halting the moratorium. He also “immediately prohibited” the U.S. from enforcing the ban. Government lawyers told Feldman that ban was based on findings in a U.S. report following the sinking of the Deepwater Horizon rig off the Louisiana coast in April.

“The court is unable to divine or fathom a relationship between the findings and the immense scope of the moratorium,” Feldman said in his 22-page decision. “The blanket moratorium, with no parameters, seems to assume that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger”.....Read the entire article.


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Phil Flynn: BP Means Bad Policy

Bashing BP is in. While Obama is trying to figure out whose "ass to kick", politicians are acting like jilted lovers falling all over themselves to try to lash out and hurt BP while our global reputation as the world’s best and most fair place to do business is at risk. This goes far beyond BP and what they could have or should have to avoid this disaster or how they are handling the aftermath but really comes down to the credibility of this country in the global market place.

BP stock got hammered again in part because the Obama administration wants to make BP cover all the damages from the Gulf oil spill even the millions of dollars in salaries of the laid off oil industry workers let go because of their Federal moratorium on deepwater drilling. This is a concept that has no basis in our rule of law and is trying to change the law after the fact. In other words, they want BP to pay for their own bad policy. At the same time members of Congress are trying to retroactively lift the 75 million dollar liability cap on punitive damages and possibly have no cap at all.

Yet revenge and emotion always makes bad policy. The truth is that eliminating or raising the liability cap for oil companies will cost us thousands of jobs in the oil industry. Small oil companies and drillers will go out of business and insurance rates for companies will skyrocket faster than health care costs. US domestic oil and gas production would fall, maybe dramatically. It would add dollars to the cost of a gallon of gasoline and higher costs would prolong the recession. Higher energy costs would hurt small businesses across the country and would.....Read the entire article.





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Phil Flynn: Oil Prices Rise On Leaked Information

That is right! The jobs report was leaked causing a rally in the stock market! Who got their hands on this valuable inside information and leaked it to the marketplace at large? Well believe it or not it was Obama himself. What!? I know! Yet that is exactly what he did. Speaking at Carnegie Mellon University in Pittsburgh, the President said, “After losing an average of 750,000 jobs a month during the winter of last year, we have now added jobs for five of the last six months, and we expect to see strong job growth in Friday's report.” Ah ha!!!

Do you think he knows something? Now that is just one day after the Vice President Joe Biden said that the upcoming May employment report would show a much larger number of jobs created than in the previous month, when 290,000 jobs were added. Do you think he knows something? Ok, silly question. But of course the market took the President seriously anyway helping to drive stocks and the oil market higher.Why oil? Well based on improving US demand expectations on better US jobs outlook we might actually consume more oil.

That thought was enforced by some pretty strong auto sales data. It seems that in the Month of May while the stock market was tanking auto sales were soaring! Maybe some people were taking their stock profits to buy new cars. Ford, GM and Chrysler all saw double digit sales gains over May of a year ago according to the AP. The AP reported, “May marked the seventh straight month of year-over-year sales increases for the auto industry. Ford Motor Co., General Motors Co., and Chrysler Group L.L.C. saw double digit sales gains over the same month last year, when GM was headed into bankruptcy, joining Chrysler”.....Read the entire article.

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President Obama - New Wildcatter or Bait 'n Switcher?

On the last day of March, President Obama went to Andrews Air Force Base in Maryland to stand in front of an F-18 jet fighter called the Green Hornet, which is scheduled to fly powered by biofuel later this year, and announce he was recommending lifting offshore drilling curbs. The symbolism of pushing for more offshore drilling while highlighting biofuel for military jets was not lost on all observers. The announcement, when fully dissected, showed the administration made concessions in areas where they were destined to lose court cases, but they may actually be slowing down future offshore drilling. Yes, President Obama says he wants to open the East Coast waters from Delaware south to central Florida for offshore exploration, but ultimately it all depends on Congress signing on to the plan.

The administration made concessions in areas where they were destined to lose court cases, but they may actually be slowing down future offshore drilling. The staging symbolism was highlighted by the president's comments. In talking about his decision to open new coastal regions to offshore exploration, he said, "The bottom line is this: given our energy needs, in order to sustain economic growth we are going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable, homegrown energy."

In reality, the offshore drilling announcement was designed to win a few Republican senate votes for the potential energy bill being drafted by Senators John Kerry (D-MA), Lindsay Graham (R-SC) and Joseph Lieberman (I-CT). The legislation they are writing is designed to attack carbon emissions through cap-and-trade on a sector by sector basis rather than economy wide. That means the utility industry will have one set of regulations implemented on a certain date while refiners would have a slightly different set of regulations and a different date and manufacturers would have yet another set of regulations and implementation date.....Read the entire article.





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Crude Oil Futures Fluctuate Along With U.S. Equity Markets

Crude oil fluctuated along with equities as energy traders looked to stocks for signals of the strength of the economic recovery and fuel demand. Oil traded in a $1.66 range as stocks drifted between gains and losses after American International Group Inc. rose on the sale of a unit while drugmakers sank as President Barack Obama embarked on a final push to overhaul the health care system. An Energy Department report on March 10 will show that U.S. crude supplies climbed last week, a Bloomberg News survey showed.

“Until we get some solid statistics from the DOE on Wednesday, the market will look at equities for direction,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. Crude oil for April delivery rose 19 cents to $81.69 a barrel at 1:43 p.m. on the New York Mercantile Exchange. Futures touched $82.41, the highest level since Jan. 11. Prices are up 79 percent from a year earlier.

The Standard & Poor’s 500 Index gained 1.76, or 0.2 percent to 1,140.46. The Dow Jones Industrial Average increased 0.68 point to 10,566.88. “We are bouncing around with equities,” said Addison Armstrong, a director of market research at Tradition Energy in Stamford, Connecticut. “Crude oil is very much a follower and not trading on its own fundamentals.” Supplies of crude oil increased 2 million barrels last week, according to the median of 10 estimates from analysts surveyed by Bloomberg News.

Prices will probably fall to $60 a barrel during the fourth quarter of the year, Adam Sieminski, the chief energy economist at Deutsche Bank AG in Washington, said on Bloomberg Television. “The second half of the year could be weak because inventories are high, demand is still relatively weak, there’s plenty of supply and lots of OPEC spare capacity.” Brent crude for April delivery rose 40 cents, or 0.5 percent, to $80.29 a barrel on the London based ICE Futures Europe exchange. Oil reached $80.92, the highest level since Jan. 11.

Reporter Mark Shenk can be contacted at mshenk1@bloomberg.net


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Obama Administration Misses Deadline for Offshore Drilling Study

The Obama administration failed to meet a deadline for submitting a court-ordered analysis of the environmental effects of offering new leases to drill in Alaskan coastal waters, the oil industry said Thursday.

A federal appeals court last year had invalidated the Interior Department's current five year plan for offering oil and gas leases, saying that the government hadn't conducted an adequate review of the environmental impact in the Beaufort, Bering and Chukchi seas off the Alaskan coast. The Interior Department's Minerals Management Service has been conducting such a review and is supposed to respond to the court.

"We are disappointed MMS has again missed a deadline to provide the court with the analysis it ordered last April," Jack Gerard, the chief executive of the American Petroleum Institute, said in a statement. "This will delay investment decisions, delay the production of much-needed oil and natural gas and delay the creation of much-needed jobs."

An Interior Department spokeswoman said that the federal government was working on an approach to drilling in the Outer Continental Shelf soon.

"The secretary expects to be making an announcement about a comprehensive approach on the OCS in the coming weeks," spokeswoman Kendra Barkoff said.

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Oil Rises for Second Day on Recovery Outlook, Iran Tensions

Crude oil rose for a second day on speculation the global economy’s gradual recovery will increase demand for fuel and energy. A Conference Board report tomorrow in the U.S., the world’s largest oil user, may show consumer confidence is at its highest in a year, according to economists surveyed by Bloomberg News. Prices also rose after Iran, the world’s fourth largest oil producer, conducted missile tests days before meeting with western officials over a previously secret nuclear facility.

Crude oil for November delivery gained as much as 47 cents, or 0.7 percent, to $66.49 a barrel in after hours electronic trading on the New York Mercantile Exchange. It was at $66.39 at 8:09 a.m. in Sydney. The contract rose 13 cents to $66.02 on Sept. 25, trimming its loss for the week to 8.9 percent. Prices climbed from $65.05, an eight week low, after U.S. President Barack Obama said a new nuclear plant Iran is building shows the Islamist nation is.....Read the entire article

Oil and Commodities Higher On Weakening Dollar, Petrobras Expects A Jump In Profits

"Crude Oil Advances as the Dollar Weakens, Increasing Appeal of Commodities"
Crude oil in New York rose as the U.S. dollar weakened against the euro, bolstering the appeal of commodities as an alternative investment....Complete Story

"Exxon CEO's Meetings with Obama Constructive"
ExxonMobil Chief Executive Rex Tillerson said Thursday that meetings with President Barack Obama and other government officials to discuss energy policy had been "cordial" and "constructive"....Complete Story

"Oil Might Reach $60 Should OPEC Cut Production, BlueGold Hedge Fund Says"
Oil may rise 35 percent to $60 a barrel should OPEC agree to cut production this month, according to BlueGold Capital Management LLP....Complete Story

"Nicaragua Inks New Offshore Exploration Deal"
Nicaragua has signed an exploration and production agreement with Infinity Energy Resources for two separate licenses in the Caribbean Sea....Complete Story

"Petrobras May Report a 24% Jump in Profit on Slumping Real, Survey Shows"
Petroleo Brasileiro SA, Brazil’s state-controlled oil company, may say fourth-quarter profit rose 24 percent to 6.26 billion reais ($2.64 billion) after a slumping real boosted the value of the company’s dollar assets....Complete Story

Crude Oil Industry Headline News

"Exxon Allowed to Drill on Contentious Alaska Oil Field"
Alaska officials gave ExxonMobil permission to proceed with drilling on a dormant North Slope oil and gas field that had been the subject of a legal battle....Complete Story

"Obama's Interior Secretary Voices Openness for Offshore Drilling"
Interior Secretary Ken Salazar indicated Tuesday that the Obama Administration could be open to expanded offshore drilling and is considering doing away with the controversial "royalty-in-kind" program....Complete Story

"ConocoPhillips Has Big Loss But Shares Up"
ConocoPhillips reported a massive fourth-quarter loss on Wednesday compared with a year-earlier profit, but the company's shares rose about 1% in premarket trading....Complete Story