NEW YORK — Following is a summary of top stories in the energy sector Friday afternoon.
Dollar Droops, Oil and Gasoline Rise
Retail gasoline prices surged to a new record, and crude oil prices jumped more than $2 a barrel after a dismal employment report sent the dollar lower.
At the pump, gas prices rose 1.4 cents overnight to a national average of $3.303 a gallon, according to AAA and the Oil Price Information Service. That is about 60 cents higher than a year ago.
Oil futures rose after the Labor Department said employers cut 80,000 jobs from payrolls last month, much more than economists expected. That sent the dollar lower and pushed light, sweet crude for May delivery up $2.40 to settle at $106.23 a barrel on the New York Mercantile Exchange. Gasoline futures for May delivery rose 3.24 cents to settle at $2.7567 a gallon.
May heating oil futures rose 6.93 cents to settle at $2.9921 a gallon. Natural gas lost 9.5 cents to settle at $9.322 per 1,000 cubic feet on the Nymex.
Jefferies Sees Crude Oil Averaging Around $100
Jefferies & Co. boosted its crude oil price forecast. "We are raising our 2008 WTI crude oil price forecast to a range of $90 to $100 from $77 and introducing our 2009 estimate of $80-90," analyst Stephen D. Gengaro wrote in a note to investors. "We are also implementing a longer-term normalized oil price of $75 based largely on the marginal cost of production plus a fair return for producers."
Gengaro said oil demand should remain tight at least over the next two years. "China accounted for 42 percent of demand growth in 2006 and 2007, respectively, and is expected to represent 39.6 percent in 2008," the analyst said. "We anticipate robust non-OECD demand growth over the next several years led by burgeoning economic activity in China and India."
The OECD or Organization for Economic Cooperation and Development is an international organization made up primarily of industrialized countries such as the U.S. and nations of Western Europe.
EIA Expects More Gasoline This Year
The Energy Department's Energy Information Administration (EIA) says gasoline supplies should not be as tight in the first of this year as they were in the same period of 2007.
"Demand growth, which varies seasonally and depends on economic factors, is expected to slow," the EIA said. "Given lower planned outages (at refineries) and assuming the return of unplanned outages to more typical levels, including the return of BP's Texas City refinery to full operation, gasoline production could increase between 100 and 200 thousand barrels per day over last year's level."
That does not mean prices will come down at the pump soon. EIA expects retail gasoline prices to peak around $3.50 a gallon for regular this spring. Some analysts think it will be closer to $4.
China Buys Into Total
A Chinese sovereign wealth fund has bought a stake in Total SA, according to published reports. The Financial Times says China's State Administration of Foreign Exchange bought a 1.6 percent interest, worth nearly $3.14 billion, in the French oil company.
Total is France's biggest company by market value.
ING analyst Jason Kenney kept his buy rating on Total and said that the investment could provide benefits for China and Total, according to Dow Jones Newswires.
He said China could benefit from more oil exploration and production and increased liquefied natural gas capacity. Total stands to gain better access to markets in China.
Sovereign wealth funds are government-owned investment funds. While the value of assets under management held by these funds approaches $2.5 trillion, they are nonetheless dwarfed by the world's institutional investments _ including pension funds, mutual funds and insurance investments _ which total around $75 trillion.
According to Financial Services London, the largest sovereign wealth fund is the Abu Dhabi Investment Authority with about $875 billion. Norway and Kuwait also have sizable funds from their oil and gas wealth, as do Russia, Qatar, Libya, Brunei and Alaska.
Rig Numbers Rise
The number of rigs actively exploring for oil and natural gas in the U.S. this week rose by 22 from last week to 1,830.
Baker Hughes Inc., which tabulates the weekly count, says 1,458 are exploring for natural gas and 362 for oil. Ten are listed as "miscellaneous." Offshore, 64 rigs are operating, up three from a week ago.
A year ago, the U.S. rig count stood at 1,726.
In Canada, the rig count this week dropped by 45 from last week to 1,032. The number is unchanged from a year ago.
Coal Shares Take Off on Massey Outlook
Word that Massey Energy Co. raised its outlook for coal prices and boosted its capital spending budget for this year sent the company's shares soaring to a new high.
Massey now expects an average price per ton this year of $61 to $63, up from a previous estimate of $54 to $56 per ton.
The company said it will invest about $310 million to expand its mining operations in Central Appalachia, a $90 million increase over what it originally planned to spend this year. Combined with maintenance and replenishment expenses, total capital spending should reach $550 million.
Massey Energy shares hit $48.61 in Friday trading before easing back to $47.58, up $7.70 or 19.2 percent in afternoon trading.
Massey's higher pricing and an Energy Department report that said coal production last week increased 18 percent from year-ago levels drove shares of other coal producers up as well. Consol Energy rose $4.24, or 5.8 percent, to $76.90. Arch Coal added $3.20, or 7 percent, at $49.11. Peabody Energy gained $2.14, or 3.9 percent, at $57.33.
Report Says Petrobras Offered $1B for Exxon Mobil Stations
A Brazilian newspaper _ Folha de Sao Paulo _ says state-run oil company Petrobras offered $1 billion for Exxon Mobil's 1,800 service stations in the country.
Neither Exxon Mobil nor Petrobras had any comment. Petrobras has said it is interested in the stations, and might buy Exxon Mobil's gas stations in Argentina, Chile and Uruguay as well.
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