Crude Oil Fluctuates Near $80 a Barrel on Total Strike and Dollar's Increase

Oil fluctuated near $80 a barrel as strikes at Total SA refineries and depots in France supported prices of refined products such as gasoline and the dollar strengthened against the euro. Oil rose to a five week high after gasoline futures gained as much as 2 percent amid union calls on Total workers to extend walkouts. The dollar’s advance makes oil and other commodities less attractive as an alternative investment.

“Once you get up to the $80 level, it’s just having trouble maintaining that,” said Kyle Cooper, a managing director at energy consultant IAF Advisors in Houston. Demand from industrialized countries “just doesn’t support it. I think we’re stuck in a very broad range of $70 to $80 until something decisive happens.”

Crude oil for March delivery increased 27 cents to $80.08 a barrel at 1:46 p.m. on the New York Mercantile Exchange. Earlier it touched $80.51, the highest price since Jan. 13. The March contract expires at the close of trading today. The more-active April contract gained 27 cents to $80.33.

Workers at Total’s six French oil-processing plants and six of its 31 storage depots have been on strike since Feb. 16 to protest against the permanent shutdown of refining at its Flanders plant in northern France. The strike comes as weak demand has curtailed refinery production worldwide.

“When you have that coupled with the situation in the U.S. with the low run rates, it’s constructive for the overall market,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy commodities.....Read the entire article.

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Oil Rises to Five Week High on Fed Rate Gain, French Strike

Crude oil climbed to a five week high after the Federal Reserve’s discount rate increase signaled an extended economic recovery and as a strike at Total SA refineries in France cut fuel output. Oil gained 0.9 percent after the central bank said the decision is a “normalization” of lending. The Fed raised the rate for direct loans to banks by a quarter point to 0.75 percent yesterday. Striking French workers began shutting oil processing operations today and warned of fuel shortages.

“The Fed’s increase of the discount rate shows that they expect further improvement of the U.S. economy,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas based energy consultant. “It’s a signal that more growth is in the cards and the fundamentals will improve.” Crude oil for March delivery increased 75 cents to $79.81 a barrel on the New York Mercantile Exchange, the highest settlement price since Jan. 12. Prices rose 7.7 percent this week, the biggest gain since October.

The increase in the discount rate is the first since June 2006. U.S. central bankers closed four emergency lending facilities this month and are preparing to reverse or neutralize the more than $1 trillion in excess bank reserves they have pumped into the banking system. “The Fed’s action is recognition that the economy is picking up,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy commodities. “This signals that we may see the end of the lousy fuel demand numbers”.....Read the entire article.


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Gasoline Extends Rally to 10 Days, Longest Since at Least 2005

Gasoline futures rose a 10th straight day, the longest rally in the history of the contract, on refinery shutdowns and a weaker dollar, which increases the investment appeal of commodities. Total SA has shut units at its 240,000 barrel a day refinery in Port Arthur, Texas. The dollar fell as low as $1.4298 per euro, the lowest level since June 3. “It seems as if all of a sudden the gasoline market is leading the way and it looks as if nothing is really stopping the rally,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.....Complete Story


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