US oil falls, Brent steady ($66.60/bbl)

Reuters ^ | September 5, 2005

[RWR8189]

SINGAPORE (Reuters) - U.S. oil prices slid in post-holiday trade on Tuesday, while Brent crude was steady as industrialised countries began to release oil from emergency stocks to make up for U.S. output disrupted by Hurricane Katrina.

Fears that the aftermath of the storm could dent consumer confidence and trim U.S. economic growth also weighed on prices, while battered Gulf of Mexico refineries began to restart.

U.S. light crude fell $1.03, or 1.5 percent, to $66.54 a barrel by 0508 GMT, following London Brent crude's $1.22 losses on Monday when U.S. trade was closed for a holiday. Brent crude edged up 15 cents to $65.00 a barrel in electronic trade.

Japan, the world's No. 3 oil consumer, said its 7.3 million barrel stock release would begin on Wednesday and come from private commercial inventories. It has relaxed the mandatory minimum stock level by 3 days to encourage the draw.

That is part of the International Energy Agency's (IEA) total release of 2 million barrels per day (bpd) over the next 30 days meant to ease supply shortages in top consumer the United States.

"In the short-term it's a bit bearish as it looks like the whole world is going to move cargoes to the U.S.," said Colin Tang, an oil trader at investment bank Calyon in Singapore.

The U.S., expected to release half of the total in crude from its Strategic Petroleum Reserve (SPR), began an auction on Monday for refiners struggling for feedstock after Katrina shut down most Gulf of Mexico production and closed major pipelines.

REFINED PRODUCTS SHORTFALL

It is still not clear how much of the IEA release will comprise oil products such as gasoline, as U.S. retail price increases worry motorists and businesses.

"Crude oil was the one thing not in short supply," said Barclays Capital in a report. "What the U.S. lacks is oil products, especially gasoline, and it lacks the spare capacity to refine more crude."

A tightly stretched global refining system amid growing world demand for transport fuels has helped drive oil's 53 percent rally this year. No new refineries have been built in the U.S. for nearly 30 years.

Katrina knocked out a tenth of U.S. refining output, although five of the eight storm-hit refineries have relit their flares, indicating restarts are underway, adding to the sell-off on oil markets.

Even as the U.S. count the costs of the devastation wreaked by Katrina and began recovery works, Tropical Storm Nate -- the 14th tropical storm of the already ferocious Atlantic hurricane season that runs through November 30. -- formed in the Atlantic Ocean on Monday and was forecast to edge toward Bermuda.

Gasoline futures in New York were 3.6 percent lower at $2.105 a gallon, after leaping to a record of nearly $3.00 a gallon last week, a day after the traditional end of peak summer driving demand in the northern hemisphere.

[RWR8189]

Light, Sweet Crude Oil

9/5/2005 Session Contract Detail for Oct 2005

	Last				66.60
	Open High				0.00
	Open Low				0.00
	High				66.75
	Low				66.26
	Settle				0.00
	Change				-.97
	Open Interest				0.00
	Volume				0.00
	Last Updated				9/6/2005 01:38:21

Unleaded Gasoline

9/5/2005 Session Contract Detail for Oct 2005

	Last				2.1200
	Open High				0.00
	Open Low				0.00
	High				2.1300
	Low				2.0705
	Settle				0.00
	Change				-.0637
	Open Interest				0.00
	Volume				0.00
	Last Updated				9/6/2005 01:38:35

[Porterville]

Oil will eventually drop to 30 bucks a barrel after everybody switches technologies to put the nail into the SOBs that control the system like some psuedo-Debeers wannabees.

[BurbankKarl]

I say give the shaft to the specualtors....unleaded dropped 4 cents to 2.95 in my area.....from 2.99 high.

[Thinkin' Gal]

$66.60/bbl

Barrel of the beast ping.

[trubluolyguy]

Oil falling huh? So we can expect lower gas prices right along with them right?



LMAO.

[RWR8189]

Around here, in the Chicago suburbs, gas went down from $3.20/gallon to about $2.99 this weekend.

[BoBToMatoE]

I say give the shaft to the specualtors.... --- Preach it! Speculation is fine. I dont care if you do it.. but when they are ruining the economy like they are by speculating on emergency oil supply like the past three years, it is different. This is one time I hope congress embarrasses their fannies and rakes them over the coals.

[trubluolyguy]

Here in the PNW, $3.03 and holding.


I think 2.50 would be perfect. Keeping the economy going and still high enough to keep demand at a reasonable level.

[coconutt2000]

Congress really isn't the entity which should bring the speculators to heel. Asking Congress to stick their nose into this would be asking for trouble.

Really, all that needs doing is for people to cut back on their gasoline consumption, and for people to actively seek out the lower priced gasoline.

Americans don't typically apply "shopping smart" to gasoline. People fill up where it is convenient, rather than where it is cheapest. If everybody bought only from the cheapest provider in the area, then that would reward the lower priced provider with business while not rewarding the other gas stations.

I fill up my tank at Costco because they're always cheaper than everywhere else. Sometimes by as much as 10 cents/gal.

The solution to the speculation premium on gasoline is in the application of smart shopping habits. Thinking Congress is the solution is the way Democrats want us to think.

[M. Espinola]

If the U.S. does not begin building enough new refineries to meet demand, energy costs will remain high. The far too many varieties of unleaded gasoline should be reduced back to three. Regular, Plus & High Test (with far higher octane).

[BoBToMatoE]

Asking Congress to stick their nose into this would be asking for trouble.

---

I know it isnt, but I dont know what else will rattle the speculators. Forbes was on early today talking about how the market is so out of whack and not going by the fundamentals of supply and demend. I dont think we will see $25.00 a barrell oil like he does, but if the right pressure is applied (through market or other forces), speculators hopefully will see the light.

We only increased our intake last year by 1%. While China and India's use is growing, it is not growing at the rate which the speculators are pushing the market to.

My gut feeling is that you have a group of people trying to get gas "to where it is adjusted to inflation" instead of what the market can bear - and what is based on supply.

The unfortunate thing is that oil prices may very will kill off our strong economy. All because of a few irresponsible speculators.

[SAJ]

When you know what you're talking about, speak right up.

Your post indicates that you should try to get a clue, first, because you evidently haven't one.

The spike last week in RFG II was due to precisely two factors: 1) the hurricane, which introduces uncertainty into the mkts, and invariably pushes the affected mkts higher, and 2) the unfortunate, probably media-generated, paranoia about gasoline ''shortages'', which rumours impel some fraction of the citizenry (likely, I'd say, including you) to keep topping up their automobile's tank for fear of not being able to buy gasoline at some (wildly unspecified) future time, thus artificially increasing immediate demand.

You has done met the enemy, son, and it IS you.

Cheer up, though. Even notwithstanding your, er, paranoiac conspiratorial view of energy mkts and, likely enough, your irrational fear of not being able to purchase all the gasoline you want when you want, the price of unleaded will be falling shortly. If not necessarily tomorrow, then w/in 2 weeks' time for certain.

Y'see, there are 130 MM bbls of non-spec gasoline en route from Europe, right this very minute. The first cargo should reach a terminal (likely) Wednesday. I shan't even mention that 3 shutdown refineries will start up again before the coming weekend, nor shall I mention that 5 (possibly 6) crackers that have been running at reduced rates have been increasing production day-on-day since Thursday. What do these facts matter to such as you, who KNOW it's all some vast conspiracy.

Two weeks hence, we're going to be swimming in unleaded, figuratively speaking of course.

Now, I've never tried this, but it's possible that actually swimming in unleaded is a cure for paranoia.

You might consider the notion.

[SAJ]

Thank you. I always like to see people on these threads who think speculators are running the energy mkts.

Such views make it so much easier to turn a profit in these rather spooky mkts.

Look up the open interest, mate -- the COMMERCIAL portion of the energy mkts absolutely dwarfs the spec portion. What's happened this year is that the commercials, ordinarily big sell hedgers, are much more reluctant to hedge as much as they historically would be doing. Therefore, in addition to hurricanes and production threats (Nigeria, Venezuela, Iran, take your pick(s)), there's an additional upward pressure on energy prices -- fewer sellers for more or less the same number of buyers as in years past.

[coconutt2000]

A severe drop in the demand of oil for production of consumer products like gasoline will force speculators out of the market.

I'm predicting $58/bbl by December's end. I also think this Holiday season is going to be pretty big. The American spirit will be depressed for a little bit, but nothing raises spirits better than a spending spree. I wonder if church attendance is going o rise over the next 5 months. That could have some interesting repercussions on the stock market... j/k

[NaughtiusMaximus]

In the meantime, state governors can boost their constituent's spirits by abrogating state gas taxes. In order to keep the porkbarrel full (for those who deem it necessary), I suggest an additional 20% sales tax on any product which contains the words "Health" or "Healthy" in its advertising or on its label.

[Pro-Bush]

[quantfive]

Based on these numbers, we should see the price fall to $2.60 a gallon by the end of next week. I specualte we will see oil also drop down to $55 a barrel and hover there for a long time to come. New Refinement should be built alright, but they should now be biofuels instead of gasoline.

[quantfive]

"The unfortunate thing is that oil prices may very will kill off our strong economy. All because of a few irresponsible speculators."

Killing our economic growth is going to be a reality. It's not all the fault of speculators, it is an entire system of greed and power that has kept oil as our main fuel source for almost a century.

[AdamSelene235]