Tag: crude oil
Obama Moves Ahead with Oil Sanctions as Gas Prices Climb
Before Congress headed home for spring recess, the Senate, with a rate vote of 100, approved President Obama’s new round of sanctions designed to deter Iran’s nuclear ambitions. The president’s decision was based on an analysis of current oil supply and the likely effect of further sanctions on prices. The Senate also shot down the president’s bid to reduce subsidies to oil producers.
Oil prices have climbed this year amid lingering tensions with Iran, with the price of gas now averaging around $3.92 a gallon—and experts are warning more increases are on the way. The U.S., France and other nations are considering the release of some emergency oil supplies to stop further rises in prices. Experts are skeptical about the impact tapping the U.S. Strategic Petroleum Reserve would have on prices. Reuters reports that with this decision, timing is everything.
Back home in their districts, legislators are using oil prices to fuel campaign rhetoric. Rep. Bobby Schilling, R-Colona, is finding photo ops at the pump, pumping $100 into his Chevy Suburban. Meanwhile, La Tarndra Strong, who manages a trucking company in North Carolina, said high fuel prices are slicing her razor-thin margin.
Officials Eye Cap-and-Trade Revenues for Transit
In California, some officials are eyeing revenues from the state’s cap-and-trade system to get drivers out of their cars. The cap is envisioned as a financial backstop to the state’s high-speed rail plan. Gov. Jerry Brown’s budget indicates that cap-and-trade could provide up to $1 billion in revenue. Building high-speed rail up and down the Golden State could be just one plan for cap-and-trade monies. Former Assembly Speaker Fabian Núñez advocates using revenues to boost clean tech, while State Sen. Kevin de León wants to see at least 10 percent of the revenues be put toward greenhouse gas reduction projects in disadvantaged communities. Some farm groups, meanwhile, are vying for funds to go to supporting agricultural practices that cut greenhouse gases.
Further north, Washington State Gov. Christine Gregoire signed legislation helping to shield drivers from liability who lend their cars as part of the nation’s burgeoning car share movement. Whereas some companies such as Zipcar and Car2go provide fleets for sharing, person-to-person programs use software to link individuals who want to rent out their cars to people who need a short-term lift. But most automobile insurance companies currently cancel the policies of drivers who are part of this growing “collaborative consumption” movement.
Nuclear Worries Continue as Wind Farms Appear on Horizon
Federal investigators have kept a troubled Southern California nuclear reactor closed as they investigate why tubes carrying radioactive water are decaying rapidly. Concern is mounting in nearby coastal cities—fueled by Fukushima fears—prompting some to call for the plant’s permanent closure. Germany accelerated its timetable for moving off nuclear in response to last year’s tragedy in Japan. Two plants to be built in Britain are the latest to fizzle. But phasing out nuclear may not boost renewables.
The U.K.’s Shetland Island could be home to the world’s most productive wind farm after receiving approval to move ahead with construction Wednesday. In the U.S., an offshore wind turbine in Virginia may be the first in the country. Five states have reached an agreement to speed the approval process for offshore wind farms in the Great Lakes.
Apple unveiled plans for the nation’s largest private fuel cell energy project. The project will power a data center using hydrogen extracted from natural gas.
Scientists Dissect Causes of “Weather Weirding”
The National Oceanic and Atmospheric Administration found that March’s “meteorological madness” with record-setting highs was due mostly to freakishly random factors, with only a small assist from human-induced climate change. IPS calls this “extreme weather” the new normal, and there may be more crazy weather in our future. The changes are causing some scientists to look to the ice.
A paper now out in Nature shows how increased CO2 in the atmosphere led to a series of sudden and extreme global warming events that occurred between about 55.5 and 52 million years ago.
Stopping climate change would cost consumers pennies per day, a new U.K. study concludes.
The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.
Oil Prices Are Mortal but $4 Gas Still Not Vulnerable
NEW YORK (TheStreet) — When the Big Three Detroit automakers reported monthly sales earlier this week, there were two interesting footnotes related to this country’s so-called addiction to oil. First, sales of General Motors(GM) trucks were a standout, and one of the drivers has been the domestic oil and gas drilling boom.
“Domestic oil and gas activity is fueling truck sales,” said a GM official on a conference call with Wall Street analysts.
At the same time, the Big Three are selling more fuel-efficient cars and as gas prices hover near $4 nationally, the plug-in hybrid Chevy Volt just had its best sales month on record.
A big build of crude inventory in the U.S. does not mean we are driving less; $4 gas is still going to be reality.
Yet this week there was a huge build in U.S. crude oil inventory — to 9 million barrels versus an estimate of 2.5 million barrels. It’s the kind of crude build headline that should lead to a knee-jerk bearish reaction from the market, according to Summit Energy commodities analyst Matt Smith. The reaction was just that, but it’s far from clear that the reaction will be lasting.
The news from the Big Three suggests that weakness in oil prices doesn’t mean gasoline will be getting any cheaper, or that the reality of the oil market has changed as consumers look for less expensive tanks to fill up and U.S. drillers search for ever more domestic sources of black gold; demand is still high and supply still tight. Market traders, too, are waiting for the right moment to buy oil before it heads higher.
“Even though people are buying more fuel efficient cars, in real numbers, people are driving more and buying more cars,” said Carl Larry, president of Oil Outlooks and Opinions.
It was likely the timing of the latest crude inventory data that mattered most, coming on the same day the Federal Reserve’s “no new quantitative easing” lip reading made for a stronger dollar and Spanish debt yields spiked, reminding investors that the global economy has no shortage of pressure points even as central banks get stricter with loose money policy.
VIEW: Oil Prices Hostage to Geopolitics
(Source Michael J. Economides Asia News Network (MCT) — Oil prices and oil supply unambiguously tie China and the United States together, as both nations are heavy importers of oil. The United States imports about 65 per cent of its oil and oil products, while China imports about 56 per cent of its needs, which will undoubtedly increase over the next few years.
The rising trend in oil prices over the past three years has by no means been a classic recession response and the climbing price of crude oil may undo the US’ fragile economic recovery and will certainly slow China’s economic growth.
In response to the rising price of crude, the Chinese government recently raised the price of gasoline to 9,980 yuan (US$1,584) per metric tonne and the price of diesel to 9,130 per metric tonne, the second rise in a year. In the US the price for regular gasoline has climbed to an historic $4 per gallon in at least six states, which translates to 8,700 yuan per metric tonne. In many places diesel retails at a price equivalent to more than 9,500 yuan per metric tonne. In the market-driven US these are unprecedented prices. There has even been some speculation that gasoline prices might soar to $5 per gallon by the end of the summer.
What is going on?
Geopolitics is what is going on. Geopolitics was the reason for the price of crude oil rising to $150 a barrel in 2008, and it is the reason prices are inexorably climbing toward a repeat of that figure unless something dramatic happens to defuse the situation in the Middle East, where the Iranian crisis is clearly the source of the current rise in oil prices.
The crisis with Iran is moving towards a climax, as Israel is making it increasingly clear it will act to stop Iran gaining nuclear weapons capability. Iran’s neighbours in the Middle East are acting as though they believe confrontation is inevitable and are quickly revealing where their true loyalties lie and it isn’t with Teheran.
Meanwhile, and this is very important, Iran’s oil power is already declining.
Speaking at the biennial International Energy Forum conference in Kuwait in mid-March, the Saudi Arabian Minister of Petroleum and Mineral Resources Ali Al-Naimi offered this commitment over Iranian oil exports, Saudi Arabia and others remain poised to make good any shortfall, perceived or real, in crude oil supply.
It is clear that Shiite Iran does not actually have any real Sunni Arab friends.
OPEC is not likely to be cajoled into another 1973-style oil embargo should Iran be attacked. OPEC members understand well enough that such an action would more than likely trigger a political re-appraisal over energy in the West; one that would see Western public opinion swing behind fast-tracking the use of domestic shale gas and oil, where new technology, new discoveries and the high price of oil are making them increasing commercially viable.
According to the World Energy Council, there are 4.8 trillion barrels of proven global reserves of shale oil around a 150 years of oil at current usage rates and around 6 trillion barrels more of sand oil, although this includes both producible and non-producible oil.
And the threat to OPEC is not just from shale gas and oil, according to the World Energy Council there were around 1.2 trillion barrels of natural gas liquids and crude oil stood at in 2010, enough for around four decades at current usage.
But unfortunately for China, other than shale gas, almost all of this bonanza will be in foreign countries.
For China, politics aside, the path is obvious. Because the vast majority of oil goes to transportation in the form of gasoline, diesel and jet fuel, it must focus on developing alternative fuels. However, learning from the experience of developed countries, this must be done intelligently and avoid the wrong choices, such as corn-based ethanol which often has a negative energy balance and affects food prices in a highly undesirable way.
Infrastructure is a curse for the US but a blessing to China, this is because the US has trillions of dollars of existing infrastructure, while China is still developing its infrastructure. Meanwhile, there are 600 private vehicles per 1,000 people in the US, adding commercial vehicles rises to more than 1 vehicle per person. China has about 65 cars per 1,000 people. Clearly, China is a country where compressed natural gas, and methanol and ethanol cars, the last two from coal- or natural-gas-to-liquids processes, can be effectively developed.
Geopolitics are not going away anytime soon and oil prices will be at their mercy, China should concentrate on the full throttle development of alternative transport fuels.
The author is a professor at Cullen College of Engineering, University of Houston and editor-in-chief of Energy Tribune.
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©2012 the Asia News Network (Hamburg, Germany)
Visit the Asia News Network (Hamburg, Germany) at www.asianewsnet.net/home/
Distributed by MCT Information Services
Source Michael J. Economides Asia News Network (MCT)
Oil, gold likely to hit new highs: Sector
LONDON |
LONDON (Reuters) – Oil and gold prices are likely to hit record highs later this year due to instability in the Middle East and recurring sovereign debt problems, a London-based fund manager said.
Angelos Damaskos, the chief executive of Sector Investment Managers, said its Junior Oils fund has been up by 35 percent so far this year.
“We are very optimistic about the oil fund given the performance of the first quarter. We think the rest of the year could continue with further re-rating,” Damaskos said.
The fund, which specifically invests in small- to mid-caps in the upstream oil sector, fell 42 percent in 2011 along with a broader decline of share markets in the fourth quarter.
This year oil prices have risen to record highs in euros and pounds, exceeding 2008 highs, which has led to weak consumer demand for auto fuels, especially in the euro zone and the UK.
However, continuing instability in the oil-rich Middle East including Iran and Syria will keep oil prices high, while China’s economy is still growing at a robust pace, and its policy to build strategic oil reserves will also support prices, Damaskos said.
He added that there was still room for oil stocks to catch up with the higher prices.
Brent crude was trading between $122 and $123 a barrel on Thursday.
“We think the range of Brent prices in the next 12 months will be somewhere between $110 and $150 a barrel again, depending on this Middle East situation,” he said.
Industry demand for oil, including for power generation since the Fukushima nuclear disaster last year, will remain strong, Damaskos added.
His oil fund has about 51 million pounds ($81 million) of assets under management, including about 2 percent in cash. its share holdings include Premier Oil, Cooper Energy, Dragon Oil and Parex Resources.
Sector Investment’s other fund, Junior Gold, has about 30 million pounds under management, with a weighting of about 20 percent in silver producers.
The gold fund has been down by 10 percent so far this year.
Spot gold was trading just above $1,600 an ounce on Thursday, far below its record high above $1,900 last year.
“It is a very good entry point. We think for the rest of the year we will see a very strong rebound,” Damaskos said.
He expected gold prices to rise to $2,000 per ounce due partly to slow economic growth in industrialized countries and to a return in investors’ focus to the euro zone’s sovereign debt problems later this year. But it is unlikely to see a new peak for silver, he said.
“That is not very positive for the market but positive for gold. We still see gold keeping a fairly strong level at just under $1,700. Despite all this highlighted volatility and uncertainty, we still think gold is a preferred save haven asset,” he added.
The holdings of the Junior Gold funds include Focus Minerals, Allied Nevada Gold Group and Spanish Mountain Gold Ltd. ($1 = 0.6300 British pounds)
(Reporting by Ikuko Kurahone, editing by Jane Baird)
Gas prices to keep rising
Gasoline prices, already near record highs of $1.40 per litre this week, could rise further if Middle East tensions escalate, further dampening the economic outlook.
“Especially if the situation in the Middle East were to worsen, we could see $1.60 per litre,” said Sal Guatieri, vice-president and senior economist at Bank of Montreal. “Under that scenario our economy would slow meaningfully and our unemployment rate would go up.”
Oil prices are expected to remain relatively steady at about US$100 per barrel for the next year, which Mr. Guatieri said would either stabilize gas prices or even cause them to decline a little. However, he cautioned there was a “not insignificant” risk of the cost jumping another 25% (a 30% cumulative increase from last year) if tensions between the West and Iran continue to escalate.
A disruption in shipments through the Strait of Hormuz could push oil prices back up to their 2008 record highs of US$147 per barrel. Coupled with widespread refinery closures along the U.S. East Coast – more than one-third of refining capacity in the region has gone offline in recent months and Sunoco Inc. has threatened to close its massive Philadelphia facility this summer – and Mr. Guatieri believes Canada’s economic growth could slow to about 1.5% between this year and next, a full percentage point below BMO’s previous 2.5% growth forecast.
” That essentially is a growth recession where the unemployment rate increases rather than decreases and it could mean our unemployment rate could climb back towards 8%,” Mr. Guatieri said.
His warning comes two weeks after the International Monetary Fund said crude oil prices could spike as much as 30% if Iranian supplies were disrupted as the standoff between the Islamic Republic and the United States over Iran’s nuclear program were to intensify.
The IMF said the consequences of such a disruption would be “serious” and the International Energy Agency estimates it could remove as much as one million barrels per day from the global market, though Mr. Guatieri stressed such a result would be a worst case scenario.
“Without oil prices going up further it is hard to see gasoline prices moving up meaningfully on a sustained basis,” he said. “What we have been seeing recently is just a lag response from a previous increase in oil prices for gas prices. Except for the geopolitical risk, demand and supply factors are actually quite encouraging for energy prices. In fact, they could suggest that oil prices could come down.”
Often confusing to consumers is how gas prices can continue rising even as the price of oil falls. Economists explain the contrast by pointing to the long supply chain process that oil must follow to get from the ground to the gas pump.
The process can take months, experts say, so the price consumers pay at the pump is based on what producers paid for oil months before and Mr. Guatieri noted the process has become even more constrained by logistical impediments.
“There is no shortage of oil, there is a lot of oil and it is just difficult to get the oil to the gasoline refineries in the northeast because of pipeline constraints,” he said.
There is a silver lining to the otherwise negative effects rising gas prices can have on the economy. Growing demand for more fuel-efficient cars pushed automotive sales up 3% year-over-year in March for the sixth consecutive month, Bank of Nova Scotia analyst Carlos Gomes said in a report Wednesday.
David Detomasi, a business professor at Queen’s University in Kingston, Ont., said in a release should gas prices continue climbing without a visible increase on world oil prices then there will be increasing pressure on politicians from the public to act.
jberkow@nationalpost.com
Oil prices rose above $102 a barrel Thursday in Asia, rebounding from a two … – WKYC
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SINGAPORE — Oil prices rose above $102 a barrel Thursday in Asia, rebounding from a two-day sell-off fueled by a jump in U.S. crude supplies and speculation the Federal Reserve won’t implement another round of monetary stimulus to boost economic growth.
Benchmark oil for May delivery was up 83 cents to $102.30 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $2.54 to settle at $101.47 per barrel in New York on Wednesday.
Brent crude for May delivery was down 4 cents at $124.82 per barrel in London.
On Wednesday, the Energy Department’s Energy Information Administration said crude inventories surged last week by 9 million barrels, or 2.5 percent, to their highest level since June.
The supply jump was the largest on record for that week of the year, energy trader and consultant The Schork Group said in a report.
“The report strikes us as bearish for crude in the short term,” Schork said. “Is the $100 mark next?”
Crude had mostly traded between $104 and $109 since February until this week, when investors eyed minutes from the Fed’s last meeting in March that suggested the economy is gradually improving enough so a third round of Treasury purchases, known as quantitative easing, could be unnecessary.
Global stock markets, which oil traders look to as an overall measure of investor sentiment, also dropped.
The Dow Jones industrial average fell 1 percent Wednesday while most Asian stock markets slid Thursday.
Energy consultant Ritterbusch and Associates said over time oil could fall below $100 and then to around $94 to $95 a barrel.
The global oil market will be closed Friday for the Good Friday holiday.
In other energy trading, heating oil was up 2.6 cents at $3.19 per gallon and gasoline futures added 1.1 cents at $3.34 per gallon. Natural gas fell 0.7 cent at $2.13 per 1,000 cubic feet.
By ALEX KENNEDY, Associated Press
The Associated Press
Cooking-Oil Imports by India Surge on Local Prices, Tax Concern
Cooking-oil imports by India, the
world’s biggest palm oil buyer, probably more than doubled in
March as high domestic prices and speculation that taxes will be
increased in the annual budget spurred buying.
Purchases climbed to 900,000 metric tons from 435,735 tons
a year earlier, according to the median estimate of five
processors and brokers surveyed by Bloomberg News. Imports of
crude and refined palm oil surged to 650,000 tons from 253,727
tons, the survey showed. The Solvent Extractors’ Association of
India is scheduled to release the data on April 13.
The increase in Indian imports for a second month may help
palm oil in Kuala Lumpur extend a rally from the highest price
in more than a year, boosting profits for producers including
Sime Darby Bhd. (SIME) Futures rallied 12 percent this year on concern
that global cooking-oil supplies may decline as drought curbs
soybean output in Brazil and Argentina.
“The main reason for the increase in imports is that our
local crops have not been very good,” said Sandeep Bajoria,
chief executive officer of Sunvin Group, a Mumbai-based
commodities trader. “The rapeseed crop is lower and local
prices are higher than the global prices.”
India’s oilseeds production may drop to 30.5 million tons
in the year ending June 30 from 32.48 million tons a year
earlier, according to India’s farm ministry. That may boost
vegetable-oil imports as much as 9.5 million tons in the year
ending Oct. 31, he said. The country bought 8.7 million tons
last year, according to the extractors’ association.
Malaysia, Indonesia
Purchases may average 850,000 tons to 950,000 tons a month
until October, Bajoria said. Imports increased 59 percent in
February to 875,649 tons, the extractors’ association said on
March 14. Imports of palm oil from Indonesia and Malaysia make
up almost 80 percent of India’s cooking-oil purchases.
Palm oil for June delivery ended the morning session little
changed at 3,560 ringgit ($1,162) per ton on the Malaysia
Derivatives Exchange. Futures rose 5 percent in March, touching
3,574 ringgit yesterday, the highest price since March 2011.
“Imports of edible oil are rising as crushing has been low
in India because the price on commodity exchanges is much higher
than the spot prices,” said Atul Chaturvedi, chief executive
officer of Adani Wilmar Ltd.
India barred commodity exchanges from offering new
contracts in soybeans to curb speculation after futures had the
biggest monthly gain in more than three years in March. Futures
jumped 24 percent on the National Commodity Derivatives
Exchange Ltd. in Mumbai this year, more than the 18 percent gain
in Chicago.
Tax Concerns
Imports were also fueled by concerns that the government
may raise taxes, Ashok Sethia, executive director at Sethia Oils
Ltd., said by phone from Kolkata. Finance Minister Pranab
Mukherjee left the import duty on refined oils unchanged at 7.5
percent in his annual budget speech on March 16.
Refined cooking oils bought overseas were about $30 a ton
cheaper than domestic supplies, Sunvin’s Bajoria said.
Soybean oil imports rose to 150,000 tons in March from
81,131 tons a year earlier, while sunflower oil purchases
climbed to 100,000 tons from 76,230 tons, the survey showed.
Stockpiles at Indian ports fell to about 650,000 tons as of
April 1 from about 840,000 tons in March, Bajoria said.
To contact the reporter on this story:
Swansy Afonso in Mumbai at
safonso2@bloomberg.net
To contact the editor responsible for this story:
James Poole at
jpoole4@bloomberg.net
Oil rises above $102 in Asia after sell-off
SINGAPORE — Oil prices rose above $102 a barrel Thursday in Asia, rebounding from a two-day sell-off fueled by a jump in U.S. crude supplies and speculation the Federal Reserve won’t implement another round of monetary stimulus to boost economic growth.
Benchmark oil for May delivery was up 82 cents to $102.29 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $2.54 to settle at $101.47 per barrel in New York on Wednesday.
Brent crude for May delivery was down 4 cents at $124.82 per barrel in London.
On Wednesday, the Energy Department’s Energy Information Administration said crude inventories surged last week by 9 million barrels, or 2.5 percent, to their highest level since June. The supply jump was the largest on record for that week of the year, energy trader and consultant The Schork Group said in a report.
“The report strikes us as bearish for crude in the short term,” Schork said. “Is the $100 mark next?”
Crude had mostly traded between $104 and $109 since February until this week, when investors eyed minutes from the Fed’s last meeting in March that suggested the economy is gradually improving enough so a third round of Treasury purchases, known as quantitative easing, could be unnecessary.
Global stock markets, which oil traders look to as an overall measure of investor sentiment, also dropped. The Dow Jones industrial average fell 1 percent Wednesday while most Asian stock market slid Thursday.
Energy consultant Ritterbusch and Associates said over time oil could fall below $100 and then to around $94 to $95 a barrel.
The global oil market will be closed Friday for the Good Friday holiday.
In other energy trading, heating oil was up 2.5 cents at $3.19 per gallon and gasoline futures added 0.1 cent at $3.33 per gallon. Natural gas fell 0.5 cent at $2.14 per 1,000 cubic feet.
