Oil and Gold Investing - oil price

Oil prices end day above $115

admin — Sun, 07 Sep 2008 07:00:32 +0000

Light, sweet crude for October delivery rose 52 cents to settle at $115.11 a barrel on the New York Mercantile Exchange after earlier falling as low as $113.68. Trading was light heading into the Labour Day holiday now a week away, adding to the volatility that has characterized the market in recent days, including a $12 price swing between Thursday and Friday.

At the pump in the United States, a gallon of regular gasoline shed almost a penny overnight to a national average of $3.681, according to auto club AAA, the Oil Price Information Service and Wright Express. Gas prices have dropped 15 cents a gallon in the last two weeks, according to the Lundberg Survey of 7,000 gas stations nationwide.

In Canada, the price averaged C$1.30066 per litre, according to price-watching website Gasbuddy.

com Crude traded erratically most of the day in lockstep with a wavering U.S. dollar, which has become the focal point for investors trying to figure out whether crude is going higher or lower. The greenback gained ground against the euro earlier Monday, fell back, then gained again in a span of a few hours.

A stronger U.S. dollar typically makes oil less attractive to investors who buy commodities as a hedge against inflation and weakness in the U.S. currency. But prices were supported by fears that Gustav could threaten oil and natural gas production in the Gulf of Mexico. The storm was heading for the Dominican Republic and Haiti with maximum sustained winds of near 100 kilometres per hour.

“The dollar wants to pull oil lower and the storm wants to pull it higher. It’s a bit of a tug-ofwar right now," said Phil Flynn, analyst at Alaron Trading Corp. in Chicago.

“We continue to see little chance for oil to be used by Russia as a bargaining tool," said Olivier Jakob of Petromatrix in Switzerland. “Oil is the weapon of last resort, not of first resort . . . and it would make no sense for Russia to limit exports of crude or products to European countries."

In other Nymex trading, heating oil futures rose 2.57 cents to $3.1568 a gallon, while gasoline prices rose 1.59 cents to $2.8845 a gallon. Natural gas futures fell 3.3 cents to $7.81 per 1,000 cubic feet.

In London, October Brent crude rose 33 cents to $114.25 on the ICE Futures exchange.

Oil’s uncertainty Monday followed a round of hyper-volatile trading last week. On Friday, crude fell US$6.59, or 5.4 per cent, to $114.59 a barrel. It was crude’s largest single-day price drop in percentage terms since Dec. 27, 2004.

That decline wiped out gains from an almost $6 rally on Thursday. Analysts said the market’s inability to rally in the face of bullish news such as threats to energy supplies from a conflict between Russia and Georgia and another tropical stor m suggests that crude remains in a downward trend. Crude oil has dropped about $30, or 25 per cent, from record trading levels above $147 a barrel reached last month.

“From the Caribbean to the Caspian, we’ve had one bullish headline after another and the market cannot generate a (sustained) rally," said Stephen Schork, an analyst and oil trader in Villanova, Pa. “It certainly doesn’t bode well for anyone who owns commodities."

Still, unresolved tensions between the U.S. and Russia over the conflict in Georgia could rekindle supply worries and send prices higher.

Russia pulled the bulk of its troops and tanks out Friday under a ceasefire agreement, but built up its forces in and around South Ossetia and Abkhazia, both separatist regions.

A U.S. navy destroyer loaded with humanitarian aid reached Georgia’s Black Sea port of Batumi on Sunday, a development that a Russian general suggested would worsen tensions between the former Cold War foes. A Monday vote by Russian lawmakers unanimously asking President Dmitry Medvedev to recognize the independence of Georgia’s two rebel provinces added to the concerns of energy markets.

Despite the conflict, some analysts said energy flows from Russia to the West were safe.

Oil prices at lowest level in months

admin — Sun, 07 Sep 2008 06:59:38 +0000

Oil prices closed at their lowest level in five months as a lower-than-expected drop in US gasoline stockpiles gave traders more reason to believe that a cooling economy is forcing Americans to drive less.

Light, sweet crude for October delivery fell $US1.46 to settle at $US107.89 a barrel on the New York Mercantile Exchange. It was the lowest settlement price for a front-month contract since April 4.

In London, October Brent crude fell $US1.76 to settle at $US106.30 a barrel on the ICE Futures exchange.

Crude prices have fallen for five straight sessions, extending an almost two-month slide as traders shift their attention away from supply-threatening storms and back toward a stronger dollar and evidence of falling demand.

In its weekly inventory report, the Energy Department's EIA said US gasoline stocks fell by one million barrels to 194.4 million barrels for the week ending August 29, less than the 1.8 million-barrel drop analysts surveyed by energy research firm had Platts expected.

In other Nymex trading, heating oil futures fell 5.51 cents to settle at $US3.0237 a gallon, while gasoline futures fell 2.64 cents to settle at $US2.7404 a gallon. Natural gas futures rose 5.8 cents to settle at $US7.322 per 1,000 cubic feet.

COMEX

Gold fell for the fourth straight day as the euro weakened against the dollar, eroding the appeal of the precious metal as an alternative investment. Silver was little changed.

Gold futures for December delivery fell $US5, or 0.6 per cent, to $US803.20 an ounce on the Comex division of the New York Mercantile Exchange. The metal has dropped 4.1 per cent since August 28.

Silver futures for December delivery fell 0.7 cent to $US12.94 an ounce on the Comex. Silver has fallen 13 per cent this year, while gold dropped 4.2 per cent.

The euro fell as much as 1.2 per cent against the dollar after the European Central Bank kept the benchmark rate at a seven-year high and said risks to growth remain. Gold reached a record in March as the euro headed toward an all-time high in July.

Oil price could spur China industry restructuring

admin — Sun, 07 Sep 2008 06:58:54 +0000

CHANGCHUN, Sept. 5 (Xinhua) -- Concern over surging oil prices could mean the restructuring and upgrading of China's industries, according to a United Nations Conference on Trade and Development (UNCTAD) official here on Friday.

"Commodity price hikes have severely affected the Chinese economy, but they also occurred as China faces industrial restructuring challenges," Li Yuefen, the UNCTAD Debt and Development Finance Branch head, said.

Rising commodity prices and wages have made it increasingly difficult for China to sustain a competitive export edge, she added.

A slow global economy is another challenge.

The Geneva-based agency released its annual Trade and Development Report (TDR) in Changchun, the northeastern Jilin Province capital. The world economy is forecast to grow 2.9 percent this year, 0.9 percentage point less than last year, according to the report.

"In mid-2008, the global economy is teetering on the brink of recession," Li said. The downturn after four years of relatively fast growth was due to a number of factors.

These included the ongoing financial crisis, high commodity prices and tight monetary policies in several countries. China also faced a weak and volatile stock market.

Despite a slowdown, output growth in China this year was expected to expand about 10 percent, said Detlef Kotte, an UNCTAD Macroeconomic and Development Policies Branch official. That growth is dependent on oil prices and might lead policy makers to restructure Chinese industries.

Li recommended cutting oil use and upgrading manufacturing technology.

The full TDR report is at www.unctad.org.

The report's release took place amid the 4th Northeast Asia Investment and Trade Expo here.

Nobel economics prize winner Robert Mundell told a forum that China's economic growth would not stay at 11 percent for long, but it was destined to be 8 percent for the next 15 to 20 years.

China's GDP growth rate was 11.4 percent last year. GDP grew by10.4 percent in the first half, down 1.8 percentage points year-on-year.

Mundell predicted that China's GDP would overtake that of Japan by 2012, surpass Europe in 2030 and exceed that of the United States in 2050.

Asked about the economic impact of the Olympics, Kotte said it would be reflected in a boost from infrastructure projects. There would not be a post-Olympics slowdown as some infrastructure projects were still under way and China was a large economy, Kotte added.

He said the Games would "also help foster a positive image" of China around the world, which would attract investment and tourism.

Oil prices decline

admin — Sun, 07 Sep 2008 06:58:11 +0000

Speaking to Shana on the verge of the 149th OPEC meeting which is slated for Sept. 9 in Vienna, Gholam-Hossein Nozari said that “Oil prices have dropped by some 36 dollars. This is while the oil exporting countries have undergone a 25-30 percent rise in production costs.”

OPEC should discuss the ways to curb oversupply in the upcoming meeting, the minister said.

Crude has tumbled from a record high of $147 in July and was trading on Friday at below $107

Oil prices hurt GDP

admin — Sun, 07 Sep 2008 06:57:16 +0000

A permanent increase to $150 per oil barrel by the end of 2008 could have a “significant negative effect” on the rate of gross domestic product, according to an analysis released Thursday from the Federal Reserve Bank of St. Louis.

Nearly all post-World War II recessions in the United States were preceded or accompanied by an increase in oil prices, which is why oil price shocks, or unexpected increases that affect firms’ and households’ economic decisions, are viewed with alarm, said Kevin Kliesen, an economist with the St. Louis Fed.

Kliesen found that an additional $50-per-barrel increase in the price of crude oil would cut real GDP growth by about 0.25 percentage points in 2008, although by only 0.1 percentage points in 2009. He also predicted that a permanent increase in crude oil prices to $150 per barrel would cause overall and core personal consumption expenditures price index inflation to rise to 4 percent in 2009.

An oil price increase may lower real GDP through several ways: It raises uncertainty about future oil prices, causing delays in business investment; and induces "resource reallocation,” such as automakers switching production from trucks and SUVs to smaller cars and hybrids, he said.

"If correct, these results suggest that policymakers may need to be more vigilant if oil prices rise to limits that were thought to be unlikely by most analysts,” he said.

The Federal Reserve Bank of St. Louis serves the Eighth Federal Reserve District, which includes all of Arkansas, eastern Missouri, southern Indiana, southern Illinois, western Kentucky, western Tennessee and northern Mississippi.

Oil prices drop to be demand worries

admin — Sun, 07 Sep 2008 06:55:10 +0000

The Labor Department said the economy lost jobs in August for the eighth consecutive month — and at a faster-than-expected pace. The unemployment rate spiked to 6.1 percent from 5.7 percent in July, above the 5.8 percent rate that analysts forecast.

"There's been a terrific amount of growing concern about the outlook for demand globally," said John Kilduff, senior vice president of risk management at MF Global LLC. "Today's employment report emboldened that concern."

Light, sweet crude for October delivery fell $1.66 to settle at $106.23 a barrel on the New York Mercantile Exchange — its lowest settlement since early April. During the session, it fell as low as $105.13.

Since surging to a record $147.27 a barrel on July 11, crude has tumbled by over $40, or more than 27 percent.

What could possibly stanch the drop is a cutback in production. Investors are waiting to see if OPEC decides to restrict oil output at its meeting next week in Vienna in response to the two-month plunge in prices. The Organization of the Petroleum Exporting Countries has indicated it may take action to defend the $100-a-barrel level for crude.

But with the dollar on the rebound, many analysts say even a production cutback could prove ineffectual in boosting oil prices.

The dollar weakened modestly against the euro and pound on Friday after the employment report, but rose against the yen. The dollar's recent comeback has helped accelerate oil's price decline. Commodities were bought by many funds to hedge against inflation and weakness in the U.S. currency, so when the dollar rebounded, funds unwound those hedges, thereby driving commodities prices lower.

The jump in the dollar and the decline in oil has also been driven by signs of economic weakness in developing countries around the world — particularly those in Western Europe.

"It's sort of a race to the bottom among the leading economies — Europe is ahead at the moment. That's pumping up the dollar, or making the dollar economy seem much less worse," Kilduff said.

Heating oil futures fell 4.09 cents to settle at $2.9828 a gallon on the Nymex, where gasoline prices dropped 5.43 cents to $2.6861 a gallon. Natural gas for October delivery rose 12.7 cents to $7.449 per 1,000 cubic feet.

In London, October Brent crude fell $2.21 to settle at $104.09 a barrel on the ICE Futures exchange.

In addition to economic indicators and OPEC, traders are keeping an eye on storms developing in the Atlantic. Forecasters do not expect Hanna, Ike or Josephine to head for key oil facilities in the Gulf of Mexico, but the hurricane season is not officially over until the end of November.

The Energy Department's weekly U.S. oil inventory report released Thursday showed a decline in gasoline inventories last week that was smaller than expected. But the report also showed surprising drops in stockpiles of crude and distillates, which include diesel fuel and heating oil; analysts had expected increases.

Crude oil price drops below $105

admin — Sun, 07 Sep 2008 06:53:56 +0000

Oil prices have dipped below $105 as traders predicted that rising US unemployment would lead to consumers cutting back on petrol use.

US light, sweet crude fell as low as $105.16 a barrel before recovering to settle down $1.66 at $105.23. Brent crude dropped $2.21 to $104.09.

Prices have fallen from their record of more than $147 a barrel amid evidence of a looming recession in the US.

At the same time, a number of political and currency risks have also subsided.

And the failure of Hurricane Gustav to cause any major production disruption in the Gulf of Mexico also ensured the price stayed well below recent highs.

'Growing concern'

With economic growth slowing, and many people worried about their job prospects, observers say there is a good chance that consumer spending will slow, limiting demand for crude oil.

The outlook for the US economy became more grim as Labor department figures showed the unemployment rate in the US was at its highest level in nearly five years.

It also revised upwards job loss figures for each of the past two months.

"There's been a terrific amount of growing concern about the outlook for demand globally," said John Kilduff, senior vice president of risk management at MF Global LLC.

"Today's employment report emboldened that concern."

Markets still volatile

Next week the oil producer cartel Opec meets in Vienna with investors waiting to see whether it will indicate plans to cut production - something which would be likely to stem the price drop. The organisation has said it may act to defend the $100-a-barrel level for crude.

The dollar's recent resurgence has also helped speed up the decline in the price of oil.

Many investors bought commodities to hedge against inflation and weakness greenback.

But the dollar rebounded, investment funds rid themselves of the hedges, pushing commodities prices lower.

However, while the price of oil may be falling, analysts are keen to point out that markets remain volatile.

Earlier this year a number of well respected Wall Street firms and analysts predicted that oil could climb as high as $250 a barrel.

In the meantime, however, the drop in oil prices will bring some relief to consumers and governments who have been faced with accelerating price growth and more expensive fuel.

High Oil Prices Prove Mixed Bag In China

admin — Sun, 07 Sep 2008 06:52:51 +0000

High crude oil prices may hinder China's refiners but they benefit some of the country's oil producers. China's biggest offshore oil and gas producer posted a better-than-expected first-half profit, while its top two refiners saw first-half profit plummet by more than expected.

Beijing's regime of uneven price controls allows China National Offshore Oil Corp. (nyse: CEO - news - people ), or CNOOC, to sell crude at high market-set prices to refining giants PetroChina (nyse: PTR - news - people ) and Sinopec (nyse: SNP - news - people ), which sell finished oil products to domestic consumers at state-controlled prices. With current high global oil prices, "upstream" producers will earn more with higher production while "downstream" operators will lose money as they increase output.

CNOOC's first-half profit soared a record 89.3%, compared with last year's corresponding period, to hit 27.5 billion yuan ($4.0 billion), news that sent shares over 7% in New York. CNOOC boosted output and profited from crude prices up 63.0% compared with a year ago.

Meanwhile, PetroChina's first-half profit fell 35%, compared with last year's corresponding period, to 53.6 billion yuan ($7.8 billion). The half-year decline, also due to the high price of crude, is the firm's steepest since 2001. Sinopec earlier reported that first-half profit fell by 77% (See " Sinopec Keeps Chin Up Despite Grim Outlook").

CNOOC ramped up production by 8.3%, compared with last year's similar period, to 92.4 million barrels, and the average price fetched soared 74.3% to $102.49 a barrel. CNOOC aims to boost output by 18% this year.

Despite a production boost, PetroChina's refining business lost 59 billion yuan ($8.6 billion), as Beijing kept pump prices artificially low to combat inflation. Sinopec Chairman Su Shulin said Tuesday that "the worst is still not yet past," according to the Shanghai Securities News. Beijing hiked retail gas prices for the second half of the year and is likely to raise them further, giving a boost to refiners, but the government will also roll back subsidies to those same firms.

In early-afternoon trading in New York, CNOOC's American Depositary Receipts were up $10.80, or 7.41%, to $156.51. PetroChina's ADR's were up $1.91, or 1.50%, to $130.31.

Oil prices dive on hurricane, strong dollar going on

admin — Sun, 07 Sep 2008 06:49:16 +0000

Grains and soya: Grains and soya prices dropped as rain fell in the United States, boosting crop growth, dealers said.

By Friday on the Chicago Board of Trade, maize for December delivery was down to $5.49 per bushel from $5.85 the previous week. November-dated soyabean meal — used in animal feed — dropped to $11.90 from $13.24.

LONDON: Crude oil prices plunged this week as Hurricane Gustav spared US energy facilities in the Gulf of Mexico, traders said. Commodities futures, notably oil and metals, were also pushed lower by a strong dollar and concerns about falling demand for raw materials amid a global economic slowdown, they added.

Oil: Oil prices tumbled by about 10 percent in value to five-month lows close to $104 early in the week as it appeared that Gustav had spared damage to US refineries and platforms.

They soon recovered to just under $110 but resumed their fall as the US government decided to release crude stocks from its strategic reserve after Gustav had nevertheless halted energy production in the Gulf of Mexico.

Oil prices again fell below $105 Friday on concerns over slowing energy demand and a strong US currency, while the market awaited next week’s OPEC meeting on crude output levels.

The dollar struck a near 11-month high versus the euro Friday on news of slumping industrial output in Germany, Europe’s biggest economy, and as the market awaited key US jobs data, traders said.

Precious metals: Gold slid below $800 an ounce before rebounding back above the psychological level as the dollar took a knock from weak US jobs figures on Friday. Silver, platinum and palladium futures all fell in gold’s wake.

On the London Bullion Market, gold dropped to $808.50 per ounce at Friday’s late fixing from $833 a week earlier. Silver decreased to $12.72 per ounce from $13.78.

On the London Platinum and Palladium Market, platinum retreated to $1,387 per ounce at the late fixing on Friday from $1,479. Palladium slipped to $277 per ounce from $302.

Base metals: Base metals prices dropped on concerns over weakening demand amid a slowdown to the global economy. They also fell because of strong supplies and as investors prepared to invest in a resurgent dollar.

Copper futures tumbled below $7,000 a tonne on Friday for the first time since February.

By Friday, copper for delivery in three months slumped to $6,889 per tonne on the London Metal Exchange from $7,509 a week earlier. Three-month aluminium slid to $2,595 per tonne from $2,714. Three-month lead dropped to $1,936 per tonne from $1,975. Three-month zinc fell to $1,780 per tonne from $1,812. Three-month tin slipped to $19,425 per tonne from $20,000. Three-month nickel declined to $18,600 per tonne from $20,226.

Sugar: Sugar prices headed south as oil prices slid. Sugar is used in the production of ethanol, a cheaper alternative to motor fuel which is refined from crude oil.

By Friday on LIFFE, the price per tonne of white sugar for October delivery retreated to 388.60 pounds from 408 pounds the previous week. On NYBOT, the price of unrefined sugar for October delivery slipped to 12.77 US cents per pound from 13.23 cents.

The euro fell to $1.4196 in midday London trade — the lowest level since October 24, 2007. It later recovered to above $1.42 after poorly-received US jobs figures.

A strong US currency makes dollar-priced commodities more expensive for buyers holding weaker currencies, dampening demand for the raw materials, which is already falling because of a global economic slowdown.

As well as pushing the euro lower, the dollar also struck 2.5-year highs versus sterling this week as the market anticipated recession in Britain as well as across the eurozone.

The Organization of the Petroleum Exporting Countries (OPEC) meets next week in Vienna, home to the cartel’s headquarters, amid speculation that the group which produces 40 percent of the world’s oil may decide to cut output as prices slide toward $100.

Crude oil, which hit a record high $147.27 on July 11 in New York, has lost nearly $40 in less than two months.

Oil prices had broken through $100 a barrel for the first time at the start of January on geo-political concerns, notably surrounding the ongoing nuclear dispute between the West and Iran, which is a major producer and exporter of crude oil.

By Friday, New York’s main oil futures contract, light sweet crude for delivery in October, was trading at $106.93 a barrel, down from $117.41 a week earlier. Brent North Sea crude for October slumped to $105.33 a barrel from $115.65.