Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Oil drops more toward $60 on ample supply
Tue Oct 3, 2006 7:09am ET
LONDON (Reuters) - Oil fell further toward $60 a barrel on Tuesday, extending Monday's steep drop on forecasts of a further increase in fuel inventories in top oil consumer the United States.
U.S. distillates stocks, which include heating oil, probably rose last week, analysts polled by Reuters said. As oil slips further from a July peak, traders are watching for signs OPEC may act to support prices.
"Given comfortable middle distillate stocks, it's hard to see a real supply worry in the winter," said Mike Wittner, analyst at Calyon investment bank. "If the price comes off another couple of dollars, we'll see more action out of OPEC."
U.S. crude <CLc1> lost 67 cents to $60.36 a barrel by 1053 GMT, after falling as low as $60.22, the lowest since September 27. London Brent <LCOc1> dropped 65 cents to $59.80.
Further easing prices, the U.S. Energy Department told Reuters on Monday it would delay buying some 11 million barrels of crude for the nation's emergency reserve through the winter to keep more supply on the market.
Moves by OPEC members Nigeria and Venezuela to trim output have yet to stem the slide. The measure will have little impact unless larger Organization of the Petroleum Countries producers follow, analysts say.
Nigeria and Venezuela last week pledged to cut supply from October 1 by about 170,000 barrels per day, less than 1 percent of OPEC's total output.
"The Nigerian and Venezuelan announcements are significant, but they don't remove a lot of oil from the market," Wittner said. "Saudi Arabia has been conspicuous by its silence
OPEC's second-largest producer Iran on Sunday backed any move by the 11-member group to bolster the market, while stopping short of saying it would trim its own output.
Oil has lost more than 20 percent since July's peak of $78.40 due to healthy U.S. heating fuel supplies, forecasts for a mild winter and signs of slower economic growth in the world's largest economy.
"We continue to see oil prices as having overshot to the downside from a fundamental perspective, but acknowledge that in the short term at least there is risk of further moves to the downside," Barclays Capital said in a report.
Analysts expect U.S. stocks of distillates, already at a seven-year high, to rise 1.3 million barrels in the week to September 29. The U.S. government's latest supply report is due out on Wednesday.
Gasoline stocks are forecast to rise by 900,000 barrels and crude inventories to fall by 700,000 barrels. <EIA/S>
Wall St Week Ahead: Dow may test highs; jobs report looms
Sun Oct 1, 2006 11:25am ET
Market View
By Emily Chasan
NEW YORK, Oct 1 (Reuters) - U.S. stocks may test record highs this week as muted oil prices take center stage. But the September jobs report on Friday could keep traders cautious and upend a rally.
Though the Dow Jones industrial average <.DJI> made a run at its all-time closing high last week, the week ahead may offer the blue-chip stock gauge its chance to close above its record highs, analysts said.
With the all-important jobs data coming late in the week, traders will keep watch on crude oil prices for clues about how energy costs will impact consumer spending in the coming holiday season. On Friday, oil settled below $63 a barrel -- off about 20 percent from a NYMEX record of $78.40 in July.
"Interestingly enough, all our technical signals are still pointing higher," said Bruce Zaro, chief technical analyst at Delta Global Advisors in Plymouth, Massachusetts. "The direction still looks like it is going to be up."
Volume is likely to be light on Monday, with the observance of Yom Kippur, the most somber day on the Jewish calendar.
FLYING HIGH
The Dow Jones industrial average <.DJI> blew past its all- time closing high in intraday trading several times last week. At one point, the Dow came within less than 10 points of its record intraday high of 11,750.28.
But the benchmark average of 30 blue-chip stocks finished on Friday at 11,679.07, failing to end above its all-time closing high of 11,722.98. That suggested to some traders that the Dow is still testing these levels and has more work to do to break out to new highs.
"The advance has been narrow -- meaning less and less stocks are participating -- so that tends to raise a caution flag," said Barry Ritholtz, fund manager at Ritholtz Capital Partners, in New York.
"The Dow has done much better than the broader market, and, historically, when you see people rotate away from small-cap to big-cap, that tends to be a late-stage defensive maneuver by professional investors."
U.S. stocks just finished the best September since 1998, with the S&P 500 Index up about 2.5 percent for the month. But some investors may be cautious as they head into October, known as "the jinx month," according to the Stock Trader's Almanac, because of stock market crashes in 1929 and 1987.
Despite Friday's modest decline as traders consolidated quarter-end positions, all three stock indexes finished the week with gains: The Dow was up 1.49 percent, while the Standard & Poor's 500 Index <.SPX> was up 1.60 percent and the Nasdaq Composite Index <.IXIC> shot up 1.78 percent.
For the quarter, the Dow rose 4.74 percent, the S&P 500 jumped 5.17 percent -- its biggest third-quarter advance since 1997 -- and the Nasdaq climbed 3.97 percent.
For the year so far, the Dow is up 9 percent, the S&P 500 is up 7 percent and the Nasdaq is up 2.4 percent.
TRACKING OIL AND CONSUMERS
"The key right now is what is going to happen to the economy," said Neil Wolfson, president of Wilmington Trust Investment Management in New York. "This rally has partially been due to the fact that oil prices have declined, and the view is that it might prevent us from going into recession."
Oil prices will be particularly important this week, Wolfson said, as investors try to assess the strength of the consumer before the key holiday shopping season.
The November-to-December holiday shopping season is the most important period for U.S. retailers, generating anywhere from 25 percent to 40 percent of their annual sales.
"As we get close to the earnings season, the market direction will be more based on individual company forecasts and reports, (or) speculation," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.
"We're also getting closer to the beginning of the holiday season and that starts to put a more positive spin on retailers, who undoubtedly will be optimistic."
On the New York Mercantile Exchange, crude oil for November delivery <CLX6> settled on Friday at $62.91 per barrel -- up 4 percent for the week.
There have been few pre-announcements about the upcoming earnings season, which kicks off Oct. 10, when Alcoa Inc. (AA.N: Quote, Profile, Research) reports results. Any confessions about earnings or sales shortfalls this week could influence investors, who are worried about corporate profits.
The earnings calendar is light, but investors will try to glean some information about the consumer from beverage company earnings reports. Pepsi Bottling Group Inc. (PBG.N: Quote, Profile, Research) is due to report earnings on Tuesday and beverage importer Constellation Brands Inc. (STZ.N: Quote, Profile, Research) will give its quarterly report on Thursday.
Hotel chain Marriott International Inc. (MAR.N: Quote, Profile, Research) and contract electronics manufacturer Solectron Corp. (SLR.N: Quote, Profile, Research) also are due to report quarterly results on Thursday.
PUNCHING THE CLOCK
This week's economic data could help investors assess the likely magnitude of the economic slowdown.
On Friday, the Labor Department will release its September nonfarm payrolls report. Economists polled by Reuters expect that the U.S. economy added 125,000 jobs in September, compared with 128,000 in August. They see the U.S. unemployment rate holding steady at 4.7 percent.
"We're at or close to full employment with the unemployment rate being as low as it's been," Wolfson said. "But the question is what will happen with wages and wage inflation."
Average hourly earnings are expected to have gone up 0.3 percent in September, the Reuters poll showed, after gaining 0.1 percent in August.
The week's data calendar will kick off on Monday with the Institute for Supply Management's September index of U.S. manufacturing activity. The forecast: 53.5 in September, compared with 54.5 in August.
On Tuesday, domestic car and truck sales will be released, with economists expecting an uptick in both.
On Wednesday, the ISM's index of U.S. non-manufacturing activity will shed some light on the strength of the services sector. The forecast: 56.0 in September vs. 57.0 in August.
Investors also may get a better picture of the manufacturing sector's health on Wednesday, when August factory orders and revised August data on durable goods orders will be released. Investors have been worried about the pace of U.S. manufacturing after conflicting reports on business activity from the Federal Reserve's district banks in Philadelphia, Richmond and Chicago in the last two weeks.
Oil $62.30 May Rise as OPEC Considers Cuts to Bolster Prices (Update1)
By Mark Shenk
Sept. 29 (Bloomberg) -- Crude oil may rise on speculation members of the Organization of Petroleum Exporting Countries will join Nigeria and reduce output to counter a 20 percent decline in prices during the past two months.
Seventeen of 42 analysts, traders and brokers, or 40 percent, said prices will rise next week, according to a Bloomberg News survey. Fourteen forecast prices will fall and 11 predicted little change. A week ago, 56 percent of respondents said futures would decline.
Nigeria will cut exports 5 percent next month, the Nigerian National Petroleum Corp. announced yesterday. OPEC members are cutting output on a ``voluntary basis,'' acting Secretary- General Mohammed Barkindo said yesterday. Oil has plunged because of higher U.S. fuel supplies and reduced concern that conflict will disrupt Middle East shipments.
``OPEC has made some hawkish comments over the last week, which shows a commitment by them to protect the price,'' said Katherine Spector, an energy strategist at JPMorgan Chase & Co. in New York.
Crude oil for November delivery has risen $1.80, or 3 percent, so far this week to trade at $62.35 a barrel today on the New York Mercantile Exchange at 8:23 a.m. London time
Futures are down 5.9 percent from a year ago. Oil reached a record $78.40 a barrel on July 14 on concern that fighting in Lebanon between Israel and Islamic militia Hezbollah would spread through the Middle East.
The 11 members of OPEC, which produce about 40 percent of world oil, kept their output target at 28 million barrels a day at their Sept. 11 meeting. Ministers from Nigeria, Iran and Algeria said they were concerned about falling prices. OPEC's next scheduled meeting is on Dec. 14 in Abuja, Nigeria.
Nigeria's Output
Nigeria pumped 2.2 million barrels of oil a day in August, making it OPEC's-sixth biggest producer, according to a Bloomberg News survey of companies, producers and analysts. Nigeria was the fifth-biggest source of U.S. oil imports during the first seven months of 2006, Energy Department figures show.
Still, OPEC isn't considering an emergency meeting over the current oil price because ``prices are still at a good level,'' Saudi Oil Minister Ali al-Naimi told reporters at an energy and environment conference in Riyadh on Sept. 19. Saudi Arabia is the world's biggest oil exporter.
``A cut by OPEC depends on the Saudi position once WTI's current-month price approaches the mid-$50s a barrel,'' said Mordechai Abir, director of energy research at Burnham Securities Inc. in New York. ``To the best of my knowledge this would still provide Riyadh with sufficient revenue.''
West Texas Intermediate, or WTI, crude oil is the U.S. benchmark and can be delivered against New York futures.
Speculators Buy
Prices surged the most in six months on Sept. 27, as speculators who had sold contracts in a bet that prices would fall bought them back when futures failed to break through $60 a barrel in New York.
``After plunging from the peaks above $70, oil has settled into a trading band of within the low- to mid-$60s,'' said Gerard Burg, energy and minerals economist at National Australia Bank Ltd. in Melbourne. ``Without a clear direction from market fundamentals or external factors, crude prices are likely to fluctuate within this range until seasonal demand recovers toward winter.''
Global fuel consumption peaks during the Northern Hemisphere winter, when homeowners and businesses purchase heating oil.
Supplies of distillate fuel, a category that includes heating oil, were 22 percent higher last week than the five-year average for the period, the U.S. Energy Department said on Sept. 27. Crude oil inventories were up 12 percent and gasoline stockpiles are up 6.3 percent from the average.
Prices May Fall
``Both crude and product fundamentals are outright bearish,'' said Antonio Szabo, chief executive officer of Houston-based consultant Stone Bond Technologies. ``Crude prices should fall. In fact our belief is that they are heading to $58 a barrel in the near future, perhaps even next week.''
Talks yesterday between Iran and the European Union aimed at breaking the deadlock over Iran's atomic program produced some progress, the country's chief nuclear negotiator Ali Larijani said. Iran has the second-biggest proved oil reserves and almost a quarter of the world's oil flows through the Strait of Hormuz, a narrow waterway between Iran and Oman.
Oil should ``decline to the $50s a barrel,'' Burnham's Abir said. ``Weather was disappointing to price hawks and the Iran conflict is and was never serious. Demand is slowly declining while global proven production capacity, including that of Saudi Arabia, is gradually increasing.''
Oil platforms in the Gulf of Mexico have escaped damage this Atlantic hurricane season. Last year all platforms were shut when Hurricane Rita moved through the Gulf. The Atlantic hurricane season runs from June through November.
The survey has correctly predicted the direction of prices 52 percent of the time since it was introduced.
Bloomberg's survey of oil analysts and traders, conducted
each Thursday, asks for an assessment of whether crude oil
futures are likely to rise, fall or remain neutral in the coming
week. The results were:
RISE NEUTRAL FALL
17 11 14
Oil $61 Little Changed After Falling on Signs U.S. Supplies Rising
By Gavin Evans
Sept. 27 (Bloomberg) -- Crude oil was little changed in New York after falling yesterday on speculation a government report today will show fuel stockpiles in the U.S., the world's biggest consumer, extended more than a month of gains.
An Energy Department report will probably show gasoline supplies climbed for a sixth time last week, rising 700,000 barrels, according to the median of 11 estimates in a Bloomberg News survey of analysts. Supplies of distillates, including heating oil and diesel, probably gained another 2.5 million barrels, according to the survey.
``I'm betting that we'll see a little build across the board,'' said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California. ``We do have high stockpiles. As long as they remain around 11 and 12 percent above average, that's going to put a cap on prices.''
Crude oil for November delivery was at $61.11 a barrel, up 10 cents, in after-hours electronic trading on the New York Mercantile Exchange at 8:15 a.m. in Singapore.
The contract fell 44 cents, or 0.7 percent, to $61.01 a barrel yesterday on the New York Mercantile Exchange. Oil reached a six-month low of $59.52 on Sept. 25 and has closed within 66 cents of $61 each of the past five sessions.
``We've seen prices for a week relatively range-bound,'' Jason Schenker, an economist with Wachovia Corp. in Charlotte, North Carolina, said yesterday. ``None of the major fundamentals have changed. Inventories remain lush.''
U.S. Stockpiles
U.S. crude oil stockpiles held 327.7 million barrels on Sept 8, 11.7 percent above the five-year average for the period, according to Energy Department records. Inventories slipped to 324.9 million barrels on Sept. 15 and probably declined by a further 1.7 million barrels last week, according to the median estimate from a Bloomberg News survey of 11 analysts.
U.S. distillate inventories have risen for six straight weeks and held 148.7 million barrels on Sept. 15. Stockpiles the week before were 12 percent above the five-year average, the department said Sept. 13.
World oil demand peaks in the fourth quarter when refiners make heating fuel for the northern hemisphere winter. Demand in the quarter will average 85.6 million barrels a day, up 2.2 percent from a year earlier, the Organization of Petroleum Exporting Countries said in a Sept. 15 forecast.
Oil reached a record $78.40 a barrel on July 14. It has fallen 22 percent since then as U.S. stockpiles rose and a United Nations deadline for Iran to stop its nuclear research passed without sanctions being imposed.
Direction
Oil remains in a bull market even though it has retreated from recent highs, Excel's Waggoner said. Further declines will be limited and oil is likely to trade between $60 and $67 a barrel for the remainder of the year.
``At $60 there's going to be some incentive for OPEC to cap the production again,'' he said. ``Demand remains reasonably strong'' and it is still unclear how cold winter will be, he said.
Daily U.S. demand, as measured by deliveries of all oil products, fell the past four weeks to average 20.76 million barrels a day in the week ended Sept. 15, matching the average so far this year. Consumption averaged 20.7 million barrels through 2005, according to Energy Department data.
A weak El Nino weather pattern is likely to bring warmer- than-normal weather to the western U.S. from October through December, government forecasters said Sept. 21. There is an equal chance of above- or below-normal temperatures in the east, the U.S. Climate Prediction Center said.
The U.S. Northeast accounts for about 80 percent of the nation's domestic heating oil consumption.
US says will pull Alaska wetlands from oil drilling
Sat Sep 23, 2006 9:47pm ET
http://today.reuters.com/news/articlenews.aspx?type=domesticNews&storyID=2006-09-24T014702Z_01_N...
WASHINGTON (Reuters) - In a win for environmentalists, the U.S. Interior Department says it is willing to withdraw sensitive wetlands from a large area in Alaska's western Arctic region that it wanted to open next week to oil and natural gas drilling.
The U.S. District Court of Alaska earlier this month blocked the department's plan to allow energy development on lands around Teshekpuk Lake in the National Petroleum Reserve, saying the government's assumptions about the environmental impact of drilling in the area were faulty.
The department told the court on Thursday it would pull the wetlands in dispute so the matter could be studied further, but it asked for energy exploration to continue on the other lands in the planned lease sale on Wednesday.
In its filing with the court, the department said, "The ability to go forward with some leasing in the (petroleum reserve) is in the public interest."
The department's Bureau of Land Management initially wanted to offer energy companies the opportunity to search for crude oil and natural gas on about 8 million acres (3.2 million hectares) in the petroleum reserve.
Environmentalists were concerned because 373,000 acres
north of the reserve's Teshekpuk Lake were also being put up for lease for the first time.
The reserve is estimated to hold between 5.9 billion and 13.2 billion barrels of recoverable oil and 39 trillion to 83 trillion cubic feet of natural gas. Two billion barrels of oil may be around Teshekpuk Lake alone, the BLM said
Oil recovers further toward $62 after 6-week dive
Fri Sep 22, 2006 2:25am ET
TABLE-FirstFed Financial Q2 earnings rise
More Company News... Email This Article | Print This Article | Reprints [-] Text [+] By Maryelle Demongeot
SINGAPORE (Reuters) - Oil prices rose for a second day on Friday after a brief mid-week dip below $60 a barrel, as investors bet a six-week slump driven by rising U.S. inventories and easing Iran tensions could be coming to an end.
The tumble of more than 20 percent since early August has raised expectations that OPEC, which decided two weeks ago to maintain production for the time being, will curb output to limit further losses.
U.S. light crude for November delivery <CLc1> rose 29 cents to $61.88 by 0555 GMT, having reached an intraday high of $62.02 -- adding to a 85-cent gain on Thursday. London Brent crude <LCOc1> was up 28 cents at $61.62.
Oil has lost about $15 over the past six weeks in a steady slide interrupted by a handful of temporary rallies, but the exodus of investment funds that has deepened losses is seen as likely to end soon given the approach of winter demand and OPEC cuts.
"You have had a very big sell-off. Continued downside momentum would require a continued flow of bad news, which I don't think we are going to get," said Michael Coleman, a partner with Singapore-based hedge fund Aisling Analytics.
"We think prices have got potential to stabilize and consolidate. Stocks are high but we are also going into winter. Geopolitical tensions are easing, but they are as easy as they are going to be," he added.
In a comment seen signaling a possible shift from the world's biggest exporter, Saudi oil minister Ali al-Naimi said on Tuesday that prices were "reasonable", a break from the past year when he has consistently said that prices are too high.
Rising fuel inventories in the United States have fed an increasingly bearish sentiment ahead of winter.
Distillates stocks, which include heating oil, stand at their highest level since January 1999, while crude inventories are also in their upper range for this time of the year.
Domestic gas inventories also stand at record-high levels for this time of year, standing at 356 billion cubic feet, or 13 percent above last year, after having risen by 93 bcf in the past week, the U.S. Energy Information Administration said on Thursday.
A surprise drop in regional factory activity reported on Thursday suggested that the U.S. economy may be losing momentum faster than most economists anticipated.
The Philadelphia Federal Reserve Bank said its business activity index tumbled to minus 0.4 in September from 18.5 in August, the first time the index had fallen below zero since April 2003, and indicating a decline in manufacturing.
Further easing supply risks, Iranian President Mahmoud Ahmadinejad said on Thursday his country was prepared to negotiate a suspension of its most sensitive nuclear work if it received fair guarantees in talks with major powers.
This was the most explicit public statement by an Iranian leader that Tehran is considering complying with the key condition for talks on broad co-operation with the West.
"We have said that under fair conditions and just conditions we will negotiate about it," the president said.
Oil $($61.50) , Gasoline Plunge with stockpiles & Bush Gives Diplomacy a Chance With Iran
By Mark Shenk
Sept. 19 (Bloomberg) -- Crude oil and gasoline fell to the lowest in almost six months after U.S. President George W. Bush said he will give diplomacy a chance to end a dispute with Iran, the fourth-biggest oil producer, over the country's nuclear program.
Bush said today that members of the European Union will continue negotiations with Iran on suspending enrichment. Once Iran halts uranium processing, ``the United States will come to the table,'' he said.
``The Bush speech was tame relative to what a lot of us expected,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``He didn't take as aggressive a tone as he could have with Iran and appears to have moved to the European position.''
Hedge funds are selling futures after losing money on bets in the energy market, analysts said. Prices also fell on speculation that a government report tomorrow will show that the U.S. has ample fuel supplies before the heating season.
Crude oil for October delivery fell $2.14, or 3.4 percent, to $61.66 a barrel on the New York Mercantile Exchange, the lowest close since March 21. It was the biggest one-day decline since May 15. Futures have plunged 21 percent from a record $78.40 a barrel on July 14 as tensions in the Middle East eased.
Amaranth Advisors LLC, a hedge-fund manager overseeing about $9.5 billion, told investors that its two main funds fell an estimated 50 percent this month because of a plunge in natural-gas prices.
Hedge Fund Bets
Hedge-fund managers and other large speculators last week reduced their bets on higher oil prices, according to the Commodity Futures Trading Commission. Speculative long positions, or bets prices will rise, outnumbered short positions by 37,020 contracts in New York in the week ended Sept. 12, the Washington- based commission said on Sept. 15. That was down 22 percent, from a week earlier.
``These funds can go short as quickly as they went long,'' said Jason Schenker, an economist with Wachovia Corp. in Charlotte, North Carolina. ``I think the most important thing at the moment is how lush product inventories are.'' Shorts are bets that prices will fall.
An Energy Department report tomorrow is expected to show that U.S. supplies of distillate fuel, a category that includes heating oil and diesel, and gasoline rose last week, according to the median of responses in a Bloomberg News survey. Crude oil, distillate and gasoline supplies in the week ended Sept. 8 were above the five-year average, the department said last week.
Gasoline for October delivery fell 7.58 cents, or 4.8 percent, to $1.5038 a gallon, the lowest close since Feb. 22. Pump prices have followed futures lower. Regular gasoline, averaged nationwide, is down 11 percent from a year ago, the AAA, the nation's largest motorist organization, said. Gasoline fell 0.8 cent yesterday to an average $2.487 a gallon.
Bush's Speech
``Iran must abandon its nuclear weapons ambitions,'' Bush said in an address to the United Nations General Assembly in New York today. Directing remarks to the Iranian people, he said, ``Despite what the regime tells you, we have no objection to Iran's pursuing of a truly peaceful nuclear power program. We are working toward a diplomatic solution to this crisis.''
Asked about French President Jacques Chirac's suggestion that sanctions be taken off the table temporarily as an incentive to get Iran back to negotiations, Bush said the U.S. and France agree on a strategy while warning Iran that ``time is of the essence.'' Iran missed an Aug. 31 United Nations deadline for suspending its uranium enrichment program.
Brent crude oil for November settlement fell $1.88, or 2.9 percent, to close at $62.17 a barrel on the London-based ICE Futures exchange.
Playing the field for oil profits-Barron's Online
From the "Weekday Trader" section: The storm that has blown energy prices back from their recent peak has created a new opportunity in the oil-field-services sector. Crude oil prices have tumbled about 20% from their mid-July high to near $62 per barrel. The result scared away some speculative energy investors, but the earnings cycle has not ended for large services-and-drilling companies with long-term, deepwater projects that continue even if oil prices fall below $50. Among them are driller Transocean (RIG), whose shares have fallen 8% since mid-July, and big equipment-and-services provider Weatherford International (WFT), whose stock has fallen more than 17% in that period. These companies are being paid by major international explorers to get oil and gas out of the ground. And those projects are budgeted to be profitable with oil prices well below the six-month $65 average projected by the futures market. Of course, if oil prices fall more, the prices of these stocks could feel more pain. But with the world still begging for more oil, large oil-field-services names with good prospects and valuations could prove to be the valuable seashell the oil-price storm left on the beach. :theflyonthewall
Algeria Oil Minister sees oil over $50 but watching US growth
Sun Sep 17, 2006 4:26 PM GMT
ALGERIA (Reuters) - Oil prices are expected to stay above $50 a barrel in coming months, but producers are watching the U.S. economy closely as the possibility of a recession there cannot be ruled out, Algeria's energy minister said on Sunday.
Asked by reporters for his price outlook for coming months, Energy and Mines Minister Chakib Khelil replied: "I think prices will still remain above $50. The indications on the futures market are above $50 for the coming years."
But he added: "Now everything depends on world economic growth. If there really is a recession in the U.S., at that moment demand could be affected fairly rapidly. We would find a lot of supply on the market and a lot of crude in competition."
"We cannot exclude this possibility. We count a lot on the wisdom of the chairman of the Federal Reserve to take good decisions on interest rates, as well as on the European Central Bank, to encourage economic growth."
Khelil reiterated that OPEC President Edmund Daukoru had the authority to convene another meeting in advance of its next scheduled gathering in Nigeria in December to enable OPEC to stabilise the market if he felt it necessary.
"We are coming into a period where there is the possibility of recession in the U.S. economy," said Khelil, who becomes alternate president of the oil exporting club from Jan 1, 2007.
"There are signs of recession. It's not clear that there will be a recession. But we are watching that," he added.
"We are following this (U.S. economic growth) with a lot of attention, because this element is critical for petroleum demand in the next few years."
Petroleum Inventory Preview
Petroleum inventory data is due at 10:30 E.T, according to Bloomberg survey, analysts believe distillate fuel inventories rose 2.0 mln during the week ending Sept 9th; 14 analyst expectations range from inventories being unchanged to a build of 3.0 mln; last year saw a 1.105 mln draw in distillate fuel inventories during this period; 4 week avg is a build of 1.88 mln barrels... Analysts believe that gasoline inventories rose 200K barrels; expectations range from a draw of 2.0 mln to a build of 2.0 mln (Analysts are split down the middle with 7 expecting a draw and 7 a build; prior year was a build of 1.892 mln)... Analysts believe crude oil inventories fell 2.0 mln; analyst estimates range from a draw of 3.4 mln barrels to a build of 1.1 mln (12 of the 15 analysts expecting a draw with the 1.1 mln build estimate being an outlier). Bloomberg expects capacity utilization to be approx 93.6%, compared to 87.3% from year ago (lower capacity utilization was due to Katrina)... Briefing.com note: Focus will start to switch from gasoline to distillate fuel as the summer driving season comes to an end and the winter heating season looms closer. September and October also tend to be big maintenance months for refiners as they try and take advantage of the period between gasoline and heating oil demand.
Stocks advance as Oil Prices Fall
By JOE BEL BRUNO , 09.11.2006, 05:19 PM
Wall Street inched higher Monday as a broad retreat in commodities prompted investors to shift money out of oil and raw materials-based companies and into other stock sectors.
Falling prices for petroleum and metals led to declines in shares of commodities producers; Exxon Mobil Corp. and Alcoa Inc., both Dow Jones industrials, were among the session's biggest decliners.
The six-day slide in crude prices, which closed under $66 per barrel Monday, was welcomed by Wall Street as a sign inflation will be kept under control. Cheaper oil also could help boost consumer spending, as well as corporate profits.
"The drop in oil prices is becoming a catalyst, as is other commodities, and giving people confidence to put money into areas that have somewhat been lagging such as technology," said Scott Fullman, director of investment strategy for Hapoalim Securities.
Investors have been looking for any direction about the state of the economy, but have also traded with relatively little conviction ahead of the Federal Reserve's next meeting Sept. 20. St. Louis Fed President William Poole said in a speech Monday that inflation is "pretty well controlled," but offered little else about the economy.
The Dow Jones industrial average rose 4.73, or 0.04 percent, to 11,396.84, after moving in and out of positive territory during erratic afternoon trading. The Dow slipped 0.63 percent last week.
Broader stock indicators also closed higher. The Standard & Poor's 500 index added 0.62, or 0.05 percent, to 1,299.54, and the Nasdaq composite index rose 7.46, or 0.34 percent, to 2,173.25.
Trading volume, while moving above the light summer levels seen last week, still remained sluggish with little corporate or economic news to start the week with. Some direction about the economy might come with retail sales figures due Thursday.
Bonds edged lower, with the yield on the benchmark 10-year Treasury note rising to 4.80 percent from 4.78 percent on Friday. The dollar was mixed against other major currencies, while gold prices fell below $600 an ounce for the first time in more than two months.
Oil fell again Monday as OPEC said it would continue pumping crude at high rates to extend global supplies. The price of light sweet crude fell 64 cents to $65.61 per barrel on the New York Mercantile Exchange, marking the sixth-straight day of declines.
Exxon Mobil fell $1.87, or 2.8 percent, to $64.94, while Alcoa declined $1.52, or 5.3 percent, to $27.16.
"We'd love to see the energy sector take a time out because we think if oil prices are up, that is a market negative," said Jim Russell, director of core equity strategy for Fifth-Third Asset Management in Cincinnati. "We don't mind at all oil stocks are trading down, all things being equal, that has been one of the inflationary signs everyone's been watching."
Fullman said he expects a continued migration from commodity-based stocks to other sectors "unless it's given a reason to reverse that trend, like if energy prices begin to rise again." Excluding that, he expects oil companies - which have been rich with profits during the past year and has had among Wall Street's most steady stock returns - will continue to decline.
Tech stocks were among the beneficiaries of the migration away from oil and metals. Freescale Semiconductor Inc. led the advancers after confirming it's in talks about a possible deal. The stock jumped $6.31, or 21 percent, to $37.06.
The bounce in tech shares also helped Dell Inc. recover some of its losses after the computer maker said it would delay a quarterly filing with the Securities and Exchange Commission amid questions about its accounting. The stock fell 46 cents, or 2.1 percent, to $21.19.
Bank of America Corp. fell 48 cents, or 0.9 percent, to $51.18 after securities firm UBS downgraded the nation's largest retail bank on signs of weakening credit and eroding deposit trends. BofA announced it would acquire healthcare technology company HeathLogic Systems Corp. for an undisclosed sum.
Canadian steelmaker Ipsco Inc. said it will acquire NS Group Inc. for about $1.46 billion in cash. Ipsco dropped $6, or 6.4 percent, to $87.20; NS surged $18.16, or 39 percent, to $64.31.
Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume came to 1.68 billion shares, compared to 1.32 million traded at the same time Friday.
The Russell 2000 index of smaller companies declined 1.10, or 0.16 percent, to 707.44.
Overseas, Japan's Nikkei stock average closed lower by 1.78 percent. At the close, Britain's FTSE 100 dropped 0.48 percent, Germany's DAX index rose 0.06 percent, and France's CAC-40 was shed 0.30 percent.
OPEC Will Probably Keep Oil Above $65 Current Production Level,
By Stephen Voss
Sept. 8 (Bloomberg) -- OPEC, the producer of 40 percent of the world's oil, is likely to keep production at current levels when its members meet next week, increasing the chances crude will stay above $65 a barrel for the rest of the year.
That's the unanimous view of 18 oil traders, brokers and analysts surveyed on Aug. 31, who predicted oil ministers will vote to keep quotas when they meet in Vienna. Officials from Iran and Nigeria said in the past three weeks that OPEC members, apart from Iraq, should keep their target of 28 million barrels a day.
The Sept. 11 meeting of the Organization of Petroleum Exporting Countries comes as high oil prices curb consumer spending from Australia to the U.S., prompting calls by politicians to reduce reliance on OPEC crude. Iran, Venezuela, Nigeria and Indonesia are all failing to produce as much oil as planned.
``OPEC will look at the market, they'll be happy with what's going on,' said Leo Drollas, deputy executive director of the London-based Centre for Global Energy Studies. ``Prices are high and their revenues are soaring. They feel the prices aren't affecting the world economy so there's no need to change anything, including production quotas.'
Output for the 10 members outside of Iraq was 27.9 million barrels a day in August, below the planned 28 million a day, according to data compiled by Bloomberg. Members last surpassed the target in February.
Oil in New York touched a record $78.40 a barrel on July 14, fueled by concern that fighting in Lebanon between Israeli and Hezbollah forces would spread in the Middle East, the source of 30 percent of the world's crude. Supply disruptions in Nigeria because of militant attacks and a dispute with Iran over its nuclear program also bolstered prices.
OPEC's Struggles
``OPEC still has the capacity to influence the market, but not on all occasions,' said Sadek Boussena, a former OPEC president who is now an adviser to French bank Societe Generale SA. ``The unpredictable factor is geopolitics. We can't predict what can happen in Nigeria, Iraq and Iran.'
Oil has since slipped about 14 percent as concern eased about disruptions from Iran, the world's fourth-biggest producer, and as the fighting in Lebanon ended. German Chancellor Angela Merkel on Sept. 6 said the nation won't back a military strike on Iran.
A benign Atlantic hurricane season has damped concern that oil and natural gas from platforms in the Gulf of Mexico will be disrupted. By this time last year, six hurricanes had developed, including Katrina, which shuttered most oil and gas production in the Gulf.
Member Views
Iran's OPEC governor, Hossein Kazempour Ardebili, told the state-run Iranian Students News Agency Sept. 2 he expected quotas to remain unchanged.
``OPEC will continue its policy of supplying the market above demand for this organization to avoid accusations of driving prices higher,' he said.
Edmund Daukoru, OPEC president and the Nigerian oil minister, said on Aug. 17 in Brazil the group won't lower the target this year.
Some members, including Saudi Arabia, OPEC's largest producer, exceed their official quotas to make up for shortfalls by other nations. Saudi Arabia produced 9.38 million barrels a day in August, according to the Bloomberg data, surpassing its quota of about 9.1 million a day. Saudi production peaked at 9.78 million barrels a day in October 2004.
``Saudi Arabia has cut back some of its heavier crude production,' as has Iran, because they can't sell it, said Kevin Norrish, an energy analyst at Barclays Capital in London, who expects oil to cost $70 to $80 next year. ``That's a symptom of a lack of refining capacity to handle those grades.'
Iran Conflict
Algeria pumped 54 percent more than its quota in August, while Indonesia was 41 percent below, according to the data compiled by Bloomberg.
``The quotas don't really reflect the potential of various countries,' Drollas said.
Increasing demand in countries such as China has also been driving prices, while spare production capacity has declined because OPEC isn't investing enough, Drollas said.
Traders are divided on whether Iran would curb oil exports. United Nations members including the U.S. are considering sanctions in an effort to contain the country's nuclear ambitions. Iran, which last week defied a UN demand to halt uranium enrichment, said Sept. 6 it's ready to retaliate against any attack.
Even a ``symbolic cut' would push prices up, Norrish said.
A two-day energy seminar in Vienna will follow the formal OPEC meeting, with ministers and executives from companies including Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp. and Saudi Aramco scheduled to attend.
To contact the reporter on this story: Stephen Voss in London at sev@bloomberg.net
Oil slides to under $67 new five-month
By Ikuko Kao
TOKYO (Reuters) - Oil extended a week of losses to strike a new five-month low under $67 on Friday after U.S. distillate supplies rose sharply and BP said it might be able to restore its Alaskan oilfield sooner than expected.
U.S. light crude for October delivery was down 53 cents at $66.79 a barrel by 6:21 a.m. British time after hitting a low of $66.75 a barrel, briefly surpassed Thursday's trough. Prices were falling for a fifth day to stand at their lowest since April 7.
London Brent crude fell 49 cents to $66.04.
Energy giant BP Plc said its Prudhoe Bay oilfield in Alaska, partially shut since August due to pipeline corrosion, could return to full capacity above 400,000 barrels per day (bpd) by end-October -- several months earlier than many estimates -- if regulators approved its plan to bypass a corroded pipeline.
The field, which supplies 8 percent of U.S. oil, is running at about 220,000 bpd. It was not immediately clear when the U.S. government would make a decision on the matter.
BP's decision to shut down North America's biggest field sent oil prices soaring above $77 a month ago, but prices have since slumped as a thus-far mild Atlantic hurricane season and healthy global oil inventory levels soothe supply concerns.
The BP comment came after U.S. government data showed domestic oil stocks were building up more quickly than analysts expected in the first week of the shoulder season between peak summer and winter oil demand.
"Traders are comfortable selling oil for the first time in a while," Tobin Gorey, a commodity strategist at Commonwealth Bank of Australia, said in a research note.
"The U.S. inventory report last night points to comfortable supply conditions for now."
COMFORTABLE STOCKS
Distillate stocks, including winter heating oil, rose 3.1 million barrels to 139.9 million barrels in the week of September 1, much more than expected and the highest level since January 2002, the U.S. Energy Information Administration (EIA) said.
Commercial crude stocks fell by a larger-than-expected 2.2 million barrels last week, but supplies remain about 6 percent higher than a year earlier and OPEC boosted production last month to its highest level this year, a Reuters survey found.
Gasoline stocks rose by 700,000 barrels to 206.9 million barrels, against analysts' forecasts for a decline. S]
Oil prices have fallen almost 8 percent over the past two weeks and stand about $12 below record-highs above $78, with the breach of a key technical level potentially deepening losses.
On Thursday, U.S. crude settled below the 200-day moving average -- a major technical trigger for speculators -- for the first time since mid-March. It continued to trade below the average -- effective at $67.48 a barrel -- on Friday.
"That's done little except slow the rally over the past few years but there's always a first time," Gorey said.
Oil has breached the 200-day average several times since 2003, but has not remained below it for more than two weeks.
Analysts say prices have also shed much of the premium attached to concerns over Iran's nuclear row with the West as there is growing doubt over sanctions against the world's fourth-largest oil exporter.
Six world powers said after a meeting on Thursday there was growing opposition to U.S. calls for sanctions against Iran, although Tehran has failed to meet a U.N. Security Council demand that it suspend nuclear enrichment.
OPEC is expected to keep pumping at full capacity for the rest of 2006 despite ample supplies in key consumer nations. The group will meet to review its output policy on Monday in Vienna.
(c) Reuters 2006. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
This article: http://business.scotsman.com/latest.cfm?id=1327602006
Last updated: 08-Sep-06 06:36 BST
Drilling for Opportunities in Oil Services
Options-Trading Strategies on Oil Services Stocks
9/1/2006 12:21 PM ET
By Jocelynn Drake (jdrake@sir-inc.com)
http://www.schaeffersresearch.com/commentary/premium/bgscommentary.aspx?id=17257
August proved to be an ugly month for crude oil, as the price per barrel slipped more than seven percent. I'll admit that I'm not complaining too loudly, considering I can skip down the block and buy a gallon of unleaded gasoline at $2.46 a gallon. If we can get back below $2 per gallon, we just might witness some dancing in the streets.
But I digress. My focus today drills down on the oil-services sector, which had its technical troubles well before the price of oil started its descent. In fact, it appears that when oil prices briefly stalled in May and June before bouncing back, this group never recovered. Since mid-May, the PHLX Oil Services Index (OSX) has battled resistance at its 10-week and 20-week moving averages. During this time frame, the index has closed only one week above this duo. Furthermore, August marked the index's first monthly close below its 10-month trendline since November 2003. While the index is still sitting on a year-to-date gain of six percent, OSX has shed more than 19 percent since tagging a near-term peak in May.
Despite the group's pullback during the past few months, sentiment remains wildly bullish. According to Zacks, 74 percent of the 199 analyst ratings offered up on OSX components come in at a "buy" or better. Should Wall Street begin to shed some of its optimism and issue downgrades, this sector could come under additional selling pressure.
Drilling down a little deeper, one company that catches my bearish eye is Noble Corp. (NE: sentiment, chart, options). The security has been guided lower under its 10-week and 20-week moving averages since mid-May, creating a series of lower highs and lower lows. It also didn't help that the company reported per-share earnings on July 20 of $1.30, a penny shy of the consensus estimate. By the close of that trading session, the equity had retreated nearly six percent.
Meanwhile, investors refuse to acknowledge that the shares may be having some problems. Short interest for the security plunged 17 percent in August, resulting in a short-interest ratio that is just two times the stock's average daily trading volume. This paltry accumulation of bearish bets leaves the equity low on potential short-covering support should it succeed in drumming up a little good news.
Options speculators are also optimistic when it comes to Noble. Peak call open interest in the September series rests at the out-of-the-money 70 strike with nearly 3,600 contracts, while peak put open interest in the front-month series comes in at the 60 strike with only 2,200 contracts. In fact, call open interest among near-term options nearly doubles put open interest.
This combination of optimistic sentiment against the stock's weakening technical backdrop leaves that shares primed for a bearish play. Investors should consider the stock's January 2007 65 or 70 put.
Weatherford International (WFT: sentiment, chart, options) is in much the same boat as Noble. The stock has broken what looked to be solid support at the 45 level and is retreating under pressure from its 10-week trendline. What's more, August marked the stock's first monthly close below its 10-month moving average since May 2005.
While short sellers are jumping on the bearish train, with short interest soaring 27 percent last month, Wall Street refuses to shed its bullish stand. Zacks reports that 11 of the 15 analysts following the company rate it a "buy" or better. Any downgrades from this group could spell trouble for the shares. A January 2007 45 put would allow speculators to capture some gains on a continued pullback in the shares.
One last bearish pick from this sector arrives in the form of Baker Hughes (BHI: sentiment, chart, options). The stock has tumbled more than 21 percent from its June high and has drifted lower under its 10-day and 20-day moving averages since late July. However, I'm a little wary of this security, as it is currently testing round-number support at the 70 level.
Furthermore, options players have grown somewhat skeptical of the shares, as they have loaded up on puts. On the other hand, short sellers have yet to jump on this security. The stock's short-interest ratio sits at a meager 2.2 days to cover. Wall Street is also deeply entrenched in the bulls' camp, with 71 percent of analyst ratings a "buy." Traders should consider the stock's January 2007 70 put. However, keep a tight stop-loss price on this position in the event that it succeeds in bouncing off support at the 70 level.
Of course, there are a handful of bullish opportunities sparkling within the sector. Smith International (SII: sentiment, chart, options) is currently perched on long-term support at its 10-month moving average. Cameron International (CAM: sentiment, chart, options) is also consolidating into support at its ascending 10-month trendline, which it has not finished a month below since April 2004.
NE to Present sept 5th @ LEHM CEO Energy Conference
Thursday August 31, 9:00 am ET
A live broadcast of the presentation and a replay will be publicly accessible through the company's website at http://www.noblecorp.com . Go to the "Investor Relations" link and select "Presentations". Participants are encouraged to log onto the site at least 15 minutes before the scheduled start of the presentation to ensure that minimum software requirements are met.
Noble Corporation is a leading provider of diversified services for the oil and gas industry. Contract drilling services are performed with the Company's fleet of 63 mobile offshore drilling units located in key markets worldwide. This fleet consists of 13 semisubmersibles, three dynamically positioned drillships, 44 jackups and three submersibles. The fleet count includes three F&G JU-2000E enhanced premium newbuild jackups under construction, with scheduled delivery of the first unit in the third quarter of 2007, the second unit in first quarter of 2008 and the third unit in the first quarter of 2009. As previously announced, these units have been contracted. Approximately 84 percent of the fleet is currently deployed in international markets, principally including the Middle East, Mexico, the North Sea, Brazil, West Africa and India. The Company provides technologically advanced drilling-related products and services designed to create value for our customers. The Company also provides labor contract drilling services, well site and project management services, and engineering services. The Company's ordinary shares are traded on the New York Stock Exchange under the symbol "NE".
Additional information on Noble Corporation is available via the worldwide web at http://www.noblecorp.com .