Oil Falls for 2nd Day as Refiners Idle Units, Fuel Supply Gains

Crude oil fell for a second day as refineries idle units for maintenance and on speculation that U.S. fuel stockpiles will climb as consumption declines.

U.S. refiners perform repairs and upgrades in September and October as gasoline demand falls and before heating oil use rises. U.S. supplies of distillate fuel, a category that includes heating oil and diesel, climbed to their highest level since 1983, an Energy Department report showed last week.

“The fundamentals for oil are bearish,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “The driving season is over, heating oil demand has yet to pick up and refineries are going into turnarounds, which means a lot of demand for crude oil will be offline. If there is a correction, it’s going to happen now”.....Read the entire article

Petrobras to Hire Up to 28 New Rigs for Ultra-Deepwater Exploration

Petrobras' Executive Board has approved the strategy to hire up to 28 new drilling rigs to be built in Brazil, with increasing national content, and to be used for ultra deepwater exploration, including the fields located in the pre-salt layer. The rigs are slated to be delivered between 2013 and 2018. A first phase foresees the hiring of a minimum lot of 9 rigs. Of this first lot, seven vessel type units will be built, based on consolidated technologies widely used in the global market, and constructed in a single shipyard. Contracting these seven rigs from a same shipyard will allow the winning bidder to make the investments that are required in order for it to construct the needed infrastructure and to achieve the necessary economies of scale. The two other units, which may be either vessel.....Read the entire story

Oil Falls for Second Day on Doubts Over Pace of Demand Recovery

Crude oil fell for a second day as higher U.S. fuel stockpiles raised concern gains in prices may have outpaced the recovery in the global economy. Oil slipped to its lowest in nearly a week before a report tomorrow in the U.S., the world’s largest energy consumer, which may show retail spending barely changed in August if gasoline and autos were excluded. The country’s stockpiles of distillate have climbed to their highest levels since 1983, according to Energy Department data last week. “Crude oil is just following weak fundamentals,” said Ken Hasegawa, a commodity derivative sales manager at broker Newedge in Tokyo. “If the price goes down below $68, then it’s possible to go down to $66”.....Read the entire story

Consolidation in Crude Oil will Continue in Coming Months

Commodity prices rose modestly last week amid weakness in USD. Reuters/Jefferies CRB Index added +1.4% while USD Index plunged almost -2% to 76.6, the lowest close in a year. Commodities normally trade in opposite direction with the dollar. The generation low interest rate in the US (Fed funds rate: 0-0.25%) has caused massive selloff in USD. Against the euro, the greenback plunged for 4 out of 5 trading days and closed -1.9% lower at 1.457, the lowest level in 9 months, for the week. Against the pound, USD also slid -1.6% to 1.6655, a 1-month low, last week. There were 3 central bank meetings last week. All of the RBNZ, BOE and BOC left interest rates unchanged at 2.5%, 0.5% and 0.25% respectively during the meetings but policymakers indicated brighter economic outlooks for 2H09 and 2010. In the coming week, the BOJ and SNB will decide on rates. We believe both banks will leave policy rates unchanged at 0.1% and 0.25% respectively.
Crude Oil
After spiking to 72.9, crude oil tumbled to as low as 68.8. The October contract plunged -3.9% to settle at 69.12 Friday, leaving this week's gain to +1.2% only. The black gold's decline Friday was accompanied by the dollar's weakness and strong US economic data. These were in contrary to the usual inverse relationship between commodities and USD.....Read the entire article

Natural Gas Fund to Offer Limited Sale of New Shares

U.S. Natural Gas Fund, the world’s largest exchange traded fund in the fuel, will begin selling new shares under “limited circumstances” beginning Sept. 28, the fund said today in a regulatory filing. The fund, which ran out of new shares on July 7, may condition the creation and sale of new shares on a purchaser’s ability to sell to the fund investments that track the price of natural gas, including over the counter swaps, the fund said in its filing to the Securities and Exchange Commission. The Commodity Futures Trading Commission has moved to curb energy speculation and imposed limits on natural gas trading. That has forced the fund to halt new share creation while it looks for alternative natural gas investments, it said in an Aug. 12 filing with the SEC.....Read the entire article

Analyst Phil Flynn on Gold and the Oil Markets

While the media focuses on OPEC, one analyst says the price of oil is really driven by gold. Phil Flynn of PFG Best Research joins the Energy Report from the Chicago Board of Trade.

Oil Can't Sustain This Week's Rally, Natural Gas Falls Again

After rallying for four days, the price of oil fell more than $2 in trading on the New York Mercantile Exchange Friday. While initially, the price of oil made gains to threaten $73, crude oil eventually fell below $70 a barrel. The price of crude oil fell $2.55 on the NYMEX Friday to settle at $69.29 a barrel and erase the gains made during the week's rally. "Oil was rallying, once again, for reasons other than supply and demand," said Phil Flynn, vice president in charge of research for PFG Best in Chicago. "Earlier in the week, you had all this market momentum: The stock market was rallying every day; the dollar was getting slammed; and oil was rallying really reluctantly all week." The price of oil has been propped up beyond what the underlying fundamentals can support by positive economic data that points to an end to the global recession and an increase in energy demand.....Read the entire article

Trade Triangle Buy Signal Issued For Gold

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Mexico's Fading Oil Output Squeezes Exports, Spending

Mexico's oil output is falling faster than expected, increasing the chance that the country will lose its status as a major oil exporter in coming years and face a worsening budget shortfall. Output at state owned oil monopoly Petroleos Mexicanos's offshore field Cantarell, once the world's second largest oil field, has plunged to 500,000 barrels a day from its peak of 2.1 million in 2005. "I don't recall seeing anything in the industry as dramatic as Cantarell," says Mark Thurber, assistant director for research at the Program on Energy and Sustainable Development at Stanford University.....Read the entire article

Total CEO Says Oil Prices Could Hit $145 by 2014

Total's Chief Executive Christophe de Margerie foresees the price per barrel of crude oil surpassing $145 in the near future, reports Dow Jones Newswires. In an interview with Le Parisien published Friday, the head of the French oil major said, "We risk to face a new oil crisis at a time when demand will surpass supply in 2014/15."

"It is urgent that we invest," Margerie added. Margerie revealed that Total has bank accounts in "tax havens," and should a decision be made at an international level, the company would be prepared to withdraw the money, Dow Jones reported.

From the staff at Rigzone