Oil and Gas Journal Market Watch article
Dixon Ranch
Link to article is above and the article is below:
There is a place on the Oil and Gas Journal website where you can sign up
for an e-mail update on a regular basis. There will be a lot of stuff you
can not access unless you are a subscriber but there is some stuff that you
can access.
I am not a subscriber ot the OGJ, never have been.
Warning here about what may be a-coming in the future, OPEC, which has
always been the prime reason for the Huge increase in crude prices in the
early 70s and started the Energy Crises of then and now, is about cause some
problems for the US Dollar and crude prices.
It has to do with the exchange rate of the Euro to US Dollar. Read the
following two paragraphs below and keep the information in mind when you
hear various reports about crude prices in the future.
Moreover, he said, when adjusted for the rise in the value of the euro
against the US dollar, a $55/bbl price for benchmark US crude is the
equivalent of just $42/bbl for that crude and $38/bbl for the OPEC basket.
That fact is "not lost on the OPEC ministers," who paid for their oil in
dollars while trading with Europe in euros, Sieminski noted.
Source: analysts in the Houston office of Raymond James & Associates Inc.
for the posted part of the paragraph below:
"The previously announced OPEC cut of 1.2 million b/d is still being
implemented; we expect to see a curtailment in
production when December numbers are reported. A second OPEC cut is lined up
for February, which should further sweep more crude off the international
markets. We believe OPEC is determined and has the resolve to further
decrease output defending its $60/bbl benchmark.
MARKET WATCH
Crude prices tumble as warm winter continues
Sam Fletcher
Senior Writer
HOUSTON, Jan. 5 -- Energy prices continued to tumble Jan. 4, pushed down by
warm winter weather, with the front-month crude futures contract plummeting
9% to near 18-month lows in the first two trading sessions of 2007 on the
New York market.
"We have to go back to early December 2004 to find a 2-day loss that was
greater than the loss of this week. The sharp correction has not been
limited to oil or energy but has been a widespread commodity move," said
Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland.
"El Niño is taking a toll on the energy complex as it brings a warm northern
hemisphere winter. We believe this fact has already been reflected in
natural gas markets and is now showing up in oil," said Adam Sieminski of
Deutsche Bank AG, New York. "Although the oil price could have further
downside, we believe the drop so far combined with dollar weakness will
prompt the Organization of Petroleum Exporting Countries into further action
to defend the oil price which, in an environment of still robust world
growth, we believe will eventually push the oil price back up above $60/bbl
in 2007," Sieminski said.
Demand elasticity estimates from the US Energy Information Administration
indicate a 10% warmer winter in the US this year that would require a 17%
drop in gas prices and 21% drop in oil prices to balance out demand losses.
"At $6.16/MMbtu, natural gas is already down over 20% from its $8[/MMbtu]
November average price. At $55.50/bbl, oil prices are down about 11% from
the December average of $62/bbl. With OPEC already cutting output and poised
to cut more, we believe that oil prices are not likely to rest at the
$50/bbl level implied by the elasticity model, even if prices do 'test' that
level," Sieminski said.
Moreover, he said, when adjusted for the rise in the value of the euro
against the US dollar, a $55/bbl price for benchmark US crude is the
equivalent of just $42/bbl for that crude and $38/bbl for the OPEC basket.
That fact is "not lost on the OPEC ministers," who paid for their oil in
dollars while trading with Europe in euros, Sieminski noted.
"Warmer-than-normal weather across the US has helped keep inventories of
heating oil at healthy levels this season. Also, predictions of a slowing US
economy in 2007 could curb the demand for oil in the world's largest
consumer of crude and its products," said analysts in the Houston office of
Raymond James & Associates Inc. Fears that non-OPEC supply coming online
will drown the energy markets with crude in 2007 are another factor
undercutting crude prices, they said.
On the other hand, they said, "The previously announced OPEC cut of 1.2
million b/d is still being implemented; we expect to see a curtailment in
production when December numbers are reported. A second OPEC cut is lined up
for February, which should further sweep more crude off the international
markets. We believe OPEC is determined and has the resolve to further
decrease output defending its $60/bbl benchmark.
"Furthermore, the bloated crude inventories in the US have evaporated and
the double-digit surplus beyond 5-year highs has dissipated in just a few
weeks. Another factor is the lack of comfortable OPEC excess capacity that
might be insufficient to fill the void in the event of a supply disruption."
Even if the US economy slows in 2007, rising economic activity in Europe and
Asia may easily make up for the lost US demand, Raymond James analysts said.
"Finally, the real and existing threat of geopolitical wildcards such as
Iran, Iraq, Nigeria, and Venezuela continue to hang over the oil markets,
and they most likely won't disappear anytime soon," they said. "Clearly
there are more fundamental and concrete reasons to support the bulls over
the bears."
Energy prices
On Jan. 4, the February contract for benchmark US light, sweet crudes
dropped $2.73-the same amount as its Jan. 3 loss-to $55.59/bbl on the New
York Mercantile Exchange. The March contract lost $2.77 to $56.64/bbl. That
market was closed Jan. 1 for the New Year's holiday and Jan. 2 in a day of
mourning for former President Gerald Ford.
Heating oil for February delivery fell 4.5¢ to $1.54/gal on NYMEX. The
February contract for reformulated blendstock for oxygenate blending, which
replaced the previous unleaded reformulated gasoline futures contract on
NYMEX, dropped 6.19¢ to $1.49/gal.
The February gas contract slipped by 0.1¢ to $6.16/MMbtu on NYMEX. On the US
spot market, however, gas at Henry Hub, La., gained 10.5¢ to $5.62/MMbtu. On
Jan. 5, EIA reported the withdrawal of 47 bcf of gas from US underground
storage in the week ended Dec. 29. That was below the consensus of Wall
Street analysts and compared with withdrawals of 46 bcf the previous week
and 1 bcf during the same period the previous year. US gas storage is now
slightly above 3 tcf, 433 bcf more than last year's levels and 408 bcf above
the 5-year average.
"On the natural gas front, weather remains the name of the game," said
Raymond James analysts. In a recent report by the National Oceanic &
Atmospheric Administration, forecasts for above-normal temperatures across
the US subsided, with colder-than-normal temperatures making their way
across the North and Midwest. "Any signs that this front may extend to the
Northeast will prove bullish and serve as a catalyst for natural gas
prices," said Raymond James officials.
In London, the February IPE contract for North Sea Brent crude fell by $2.85
to $55.11/bbl. The January contract for gas oil lost $7.25 to $494.50/tonne.
The average price for OPEC's basket of 11 benchmark crudes dropped 16¢ to
$53.23/bbl on Jan. 4.
Contact Sam Fletcher at sa...@ogjonline.com.
Bill Walker
"Dixon Ranch" <jsdi...@swbell.net> wrote in message
news:pqYnh.14647$sR....@newssvr29.news.prodigy.net...
ROTFLMAO... Wanna talk about "Market Manipulation" just a little while, now
?
The new Congress and Senate are seating the incoming committee chairmen..
The hotseats are in Washington, DC.. not on a newsgroup in Texas.. This
little
article should raise a few eyebrows when it is referenced along with the
financials
of some top management of the oil companies..
Shades of Enron.. Ken Lay and Fastow.. <evil grin> hmmm.. Word is that
Cheney
is frantic..
Bill Walker
Irving