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Fuel Freedom Staff

Oil makes biggest monthly jump since 2009

Source: Reuters
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Reuters reports that crude oil rose sharply on the last trading session of February, posting its first monthly gain since June.

Brent crude LCOc1 rose $2.53 to $62.58 a barrel. February’s 18 percent gain was the biggest monthly percentage rise since May 2009.

The Wall Street Journal reports that the oil-field services company Baker Hughes saw its rig count fall by 33 this week, to 986, dropping below 1,000 for the first time since 2011. The count is off 31 percent from the same time a year ago.

And yet:

… analysts caution a reduction in the number of U.S. oil rigs in use doesn’t immediately translate to a fall in output, which is currently running at a multiyear high of 9.3 million barrels a day.

Fuel Freedom Staff

Oil has jumped $9 in the past four trading sessions

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It might not yet be the “snap-back” we’ve been talking about for some time — that inevitable climb back upward after a seven-month downward spiral — but the price of oil has shot up 19 percent across the last four trading sessions.

So maybe start preparing to say goodbye to those savings you’ve been pocketing at the pump every week or two.

Brent crude LCOc1, the international benchmark, rose $3.16 (about 6 percent) to $57.91, and U.S. crude CLc1, West Texas Intermediate, rose $3.48 (7 percent) to $53.05.

The four-day surge is the biggest such gain since January 2009.

As Reuters reports:

The rally began on Friday, when oil services firm Baker Hughes said the number of U.S. oil drilling rigs had its biggest weekly decline in nearly 30 years.

Of course, that could mean further job losses in the U.S. oil-production sector. Baker Hughes last month announced plans to layoff 7,000 employees, or 11 percent of its workforce, because a global oversupply of oil pushed down prices and made expensive-to-extract American oil less profitable.

Fuel Freedom has argued that American workers, as well as consumers, need cheap fuel prices for the long-term, instead of the job-killing rollercoaster of volatility that’s inherent in the oil market. The solution is to displace some of the oil we consume with cleaner-burning, cheaper fuels like ethanol and methanol.

John Hofmeister, the former president of Shell Oil and a star of the documentary PUMP, has said that the oil price plunge is an “anomaly,” and has warned of a price “snap-back” based on the reduction in U.S. drilling. Last month he told CNBC: “The more consumers enjoy the price production, the sooner we’ll be headed back to higher crude-oil prices. That’s the reality.”

As Reuters explained, oil didn’t just spike in a vacuum. Tuesday’s jump came after the dollar fell about 1 percent against other currencies, the dollar’s biggest one-day drop since October 2013. This had the effect of elevating the value of oil and other commodities.

Despite the four-day rally, some traders doubt that the selloff in oil was over, citing last week’s build in U.S. crude stockpiles as evidence. A U.S. refineries strike also stretched into its third day on Tuesday, weakening the picture for crude.

The Wall Street Journal reported that “few investors and analysts are willing to call a bottom to a downdraft that began in July, the magnitude of which caught many market experts by surprise.”

 

Fuel Freedom Staff

Oil prices surge in final half-hour of trading

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Oil prices climbed took off in the final 30 minutes of Tuesday’s trading session, and analysts wondered whether the surge represented a temporary blip or the start of a comeback from a 7-month-long losing streak.

As Reuters noted, for most of the day oil was flat or slightly lower, owing to “data showing that U.S. crude oil stockpiles rose far more than expected last week.”

But Brent and U.S. crude each soared $2 late in the session. Brent, for February deliver, settled up $2.10 (4.5 percent), to $48.69 a barrel. That’s the biggest one-day advance since June 2012.

U.S. crude rose $1.01 (5.6 percent), to $48.48, the biggest one-day jump since August 2012.

Reuters added:

Most dealers saw the late-day rebound as a temporary correction in the seven-month slump that wiped more than 60 percent off of oil prices, reluctant to call the bottom of a rout that has repeatedly defied forecasts of a floor.

“(With the) velocity of the downward trend that we’ve been in, you can expect to see violent snapbacks,” said Tariq Zahir of Tyche Capital.

Even so, there were growing signs that low prices were finally beginning to slow the unrelenting growth in U.S. oil production, a key factor for markets as OPEC powerhouse Saudi Arabia refrains from cutting output despite a growing glut.

North Dakota’s chief oil regulator said he expects production to be steady until mid-year and could decline in the third quarter.

The late rally was attributed to many traders holding expiring options, leading them to scramble to square their positions. As Oliver Sloup, director of managed futures at iitrader.com LLC, put it:

“A lot of shorts are so deep into their put options, the only way to exit their position is to buy back futures.”

Fuel Freedom Staff

Oil dips again amid signs that export ban might be relaxed

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American crude and the international benchmark, Brent crude, met at the same price point Tuesday: about $46. West Texas Intermediate crude, the U.S. benchmark, briefly traded below Brent, the first time that’s happened in a year and a half.

Brent closed down 84 cents, to $46.59 a barrel. U.S. crude closed down 18 cents to $45.19. Read more in the Reuters story.

On average, Brent traded at $6.64 higher than WTI last year.

Bloomberg offers a reason why U.S. crude might be on the upswing: The news agency reports that the United States might be edging closer to relaxing the ban on oil exports.

The 40-year-old ban on most U.S. crude exports is set to be loosened after Petroleos Mexicanos, Mexico’s state-owned oil company, asked to import 100,000 barrels a day of light crude. Senator Ted Cruz, a Texas Republican, plans to propose an amendment to a bill approving the Keystone XL pipeline that would lift the export restrictions.

“WTI is relatively strong because it looks like exports will be rising,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. “The Mexican request could be the first of many.”

Cruz must know something the rest of Washington doesn’t yet know, since President Obama already has promised to veto the Keystone XL bill if Congress passes it.

Fuel Freedom Staff

Oil closes down again, lands just above $50 mark

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Whatever the floor is for oil, $50 doesn’t seem to be it.

Brent crude closed just a few barrel-drops within that threshold Friday, down 85 cents to $50.11. U.S. crude fell 43 cents to $48.36. The marks are the lowest for crude since April 2009, and represented the seventh straight week of losses.

However, prices recovered from even steeper losses during the day after Baker Hughes, the U.S. oilfield-services company, announced that the number of rigs drilling for oil domestically had fallen by 61 this week, the most during a week since 1991.

Read more in Reuters.

That contraction in supply has many observers believing that prices will find the bottom soon. Former Shell Oil President John Hofmeister, one of the experts quoted in PUMP the Movie, notes that the surplus of oil we keep hearing about only amounts to roughly 1 percent of global consumption, which is about 90 million barrels a day (The U.S. uses about 18 mbd). He thinks the current slide is an “anomaly,” and that prices will begin climbing again in the spring.

Here’s what he said on Bloomberg:

At some point … we have to reassess where are we, in terms of the supply-demand equilibrium. … I call this an anomaly, in terms of oil price, but I wouldn’t be surprised to see it bottoming out … and starting to go up again late in the spring. … It doesn’t take much to wipe out this anomaly.

Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York, told Reuters:

“In my opinion we have not stabilized out yet. I do think that after seven weeks of losses, you will see a bounceback at some point, and people are waiting for that to short into. I am.”

Fuel Freedom Staff

Oil prices have dropped nearly 10 percent in two days

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Oil analysts must be asking, Where’s the bottom of the oil-price plunge?

Crude dropped again Tuesday, as Brent was off $2.01, to $51.10 a barrel. In the first two trading sessions of the week, it’s down $5.32, or almost 10 percent.

More from Reuters.

U.S. crude closed down $2.11, or 4.2 percent, to $47.93.

By comparison, Brent was at $115 and U.S. crude at $107 last June.

Phillip Streible, a senior market strategist at RJO Futures in Chicago, told Reuters that “$46 to $45 is quite likely. … People, I think, are further understanding that the U.S. is becoming a powerhouse in creating crude oil and that’s not going to change anytime soon.”

But Saudi Arabia also shows no sign of reducing production quotas, an effort some OPEC members want to prop up prices. Forbes’ Nathan Vardi quoted a Saudi expert named F. Gregory Gause, a professor at Texas A&M University, who said:

“The most important thing for the Saudis is market share. They are not going to sacrifice it, they will play chicken with other producers, whether Iranian or American shale producers, in order not to lose market share and the only way they will cut production is if they get an agreement with a broad array of OPEC and non-OPEC producers to take a fair amount of oil off the market.”

CNN Money has a story about the thousands of workers supporting North Dakota’s oil boom who’ve been laid off in recent weeks, as drillers delay expansion because the cost of extracting oil from shale-rock formations is too steep compared with the going rate of crude.

Jeff Sharpe got the bad news 10 days before Thanksgiving. He and 21 coworkers at a rig in Wyoming were laid off due to depressed oil and natural gas prices.

“All my friends and family keep talking (positively) about low prices. When I say, ‘We’re all out of jobs now,’ they say ‘Oh,'” Sharpe, 32, told CNNMoney. “I don’t think they realize what’s going on in the big picture.”

Fuel Freedom Staff

Brent crude off 48 percent for the year, worst drubbing since ’08

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Hey, did you hear oil prices fell in 2014?

Now that the year in oil trading is officially over, traders are counting the damage, and it’s like monitoring the progress of a boulder rolling down a mountain:

Brent crude, the international benchmark, fell another 57 cents Wednesday to close the calendar at $57.33 a barrel. Brent, as well as gasoline futures, fell 48 percent during the course of the year, making them the worst-performing commodities among the 22 markets tracked by the Bloomberg Commodity Index.

U.S. oil futures were off 85 cents Wednesday, to $53.27, and were down 46 percent for the year.

Read more in The Wall Street Journal.

The report said the oil, gasoline and diesel markets posted their worst annual losses since 2008, the year markets plunged because of the financial crisis.

Oil, gasoline and diesel markets all posted their largest annual losses since the global recession in 2008.

Wednesday’s price drop marked a “poetic end to…what ended up being a difficult year for the oil and gas industry,” said Adam Wise, managing director at John Hancock Financial Services, who helps oversee about $7 billion in energy-related investments.

Fuel Freedom Staff

Not even a Libyan oil fire can stop price slide

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Oil prices briefly spiked Monday, in apparent reaction to a fire at the Libyan oil port of Es Sider the past few days.

But prices settled down again, to their lowest levels since May 2009, after the blaze was put out in three of the six oil tanks, Bloomberg reported.

Libya was pumping about 352,000 barrels of crude a day until a rocket attack at the port on Christmas Day reduced production to 128,000 barrels a day. In 2010, Libya was pumping about 1.6 million barrels a day, but that was before the overthrow and killing of longtime ruler Muammar Gaddafi in October 2011, an event that unleashed a civil war.

The attack at Es Sider was enough to prompt an early rally in the commodity Monday, but by the end of the trading session Brent crude was down $1.57, to $57.88. The U.S. benchmark, WTI, fell $1.12, to $53.61. That’s the lowest level since May 1, 2009.

Reuters reported:

The rally followed by the steep drop showed the market’s fears about oversupply are not going away, said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut. “Every time the market tries to pick itself up, it’s just another wave of selling,” he said.

Tim Evans, an energy analyst at Citi Futures Perspective in New York, told Bloomberg that neither the violence in Libya, nor the reduction in the growth rate of U.S. drilling, was enough to make a dent in the worldwide glut of oil. “We’re looking at a significant supply-demand surplus through the first half of 2015,” Evans said.

Bloomberg added:

“The loss of a couple hundred thousand barrels from Libya will have a minimal impact on the global supply balance,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by phone. “There’s about 2 million barrels a day of excess production right now, so this will just tighten things a little.”

Fuel Freedom Staff

Oil prices surge after taking a hit this week

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We’ve heard a lot about psychology in oil prices lately.

Some stories mention the “psychological” threshold of $60 a barrel. Well, many psyches were put on edge this week, as Brent crude closed below that mark on Tuesday and Thursday, territory it hadn’t seen since May 2009. But it surged $2.11 to $61.38 Friday, a gain of 3.4 percent.

U.S. crude (WTI, or West Texas Intermediate) rose $2.41, to $56.52, up 4.5 percent.

Has oil started to climb back up again after hitting the ceiling? According to Reuters:

While some traders may be betting that $60 a barrel Brent represents a likely floor for the market, others remain unconvinced. With uncertainty high, demand for options has surged this week, with the CBOE crude oil volatility index soaring to its highest since 2011.

“This is a surprisingly forceful run up as fundamentally nothing’s changed in this market in terms of supply-demand,” said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.

“I think the switch in WTI’s front-month and the second short-covering act for the week kind of got overblown.”

 

Fuel Freedom Staff

Crude falls again, IEA cuts outlook for demand growth

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The price of oil continued falling Friday: Brent crude, the international standard, dropped nearly $2, to $62. U.S. WTI crude dropped $2.14, to $57.81, its lowest price since May 2009.

A story by Reuters and CNBC notes that the International Energy Agency is predicting further downward pressure, owing to slack demand:

The IEA, which coordinates the energy policies of industrialized countries, cut its outlook for global oil demand growth for 2015 by 230,000 barrels per day (bpd) to 900,000 bpd on expectations of lower fuel consumption in Russia and other oil-exporting countries.