Oil Drops Sharply As Gas Plummets

[USA320Pilot]

Crude prices drop sharply as gasoline futures plummet

"The market was extremely overbought," said Ed Silliere, a broker at Energy Merchant Intermarket Futures in New York. Mario Chavez, a broker at ABN Amro in New York, said the steady decline in prices in recent days triggered a huge wave of technical selling. "It was crazy," he said.

Oil prices have fallen all week amid massive liquidation of long positions -- or bets on higher prices -- by speculators. Speculators have been bidding up energy futures all year on expectations that rising global oil demand will outstrip supply.

See Story

I believe the long-term trend is for higher commodity and energy prices. However, as I have said from a Technical Analysis and Sentiment Analysis (speculation), the NYMEX Crude Oil Futures Contracts were overbought.

From a Fundamental Analysis perspective, energy prices will be driven by outside factors that will adjust supply and demand, but the market had to pull back or the "Bulls" would never profit.

Regards,

USA320Pilot

 

[USA320Pilot]

Oil Falls for 5th Day; U.S. Refiner Output Eases Supply Concern

See Story

USA320Pilot comments: Crude oil is now trading below $53 per barrel.

Regards,

USA320Pilot

 

[North by Northwest]

"Did the Republicans cause this good news? They get blamed for the bad. Savy " I think NOT! That is why Cheney conducts SECRET meetings with Energy cronnies. That is why Pres. Bush SEN. Travels to Saudi Arabia to visit "friends". Don't forget how Pres. Bush Jr. got his money for his FIRST oil adventure...the Kawaiti Royal Family. Least we forget why Pres. Bush sees the need to fill the national reserves at a time when prices are highest in a more than a decade. (one of the FIRST things he insisted upon after the first election) So...NO , the Republicans didn't have anything to do with this. They only have the welfare of the middlecalss (backbone) of this country in mind. Break'em...let them eat cake.

 

[Busdrvr]

"Did the Republicans cause this good news? They get blamed for the bad. Savy " I think NOT! That is why Cheney conducts SECRET meetings with Energy cronnies. That is why Pres. Bush SEN. Travels to Saudi Arabia to visit "friends". Don't forget how Pres. Bush Jr. got his money for his FIRST oil adventure...the Kawaiti Royal Family. Least we forget why Pres. Bush sees the need to fill the national reserves at a time when prices are highest in a more than a decade. (one of the FIRST things he insisted upon after the first election) So...NO , the Republicans didn't have anything to do with this. They only have the welfare of the middlecalss (backbone) of this country in mind. Break'em...let them eat cake.

[post="261275"][/post]​

Ah, I see your knowledge of energy rivals your knowledge of the airline industry...

"Secret meetings' bother you for some reason?

http://www.freerepublic.com/focus/news/822837/posts

And it's KUwait, not KAwait, and our relationship with the middle east goes back to FDR who made the first "deal with the devil". As to the Kuwaiti's, they have been one of our best allies, and rightfully so.

Now to the issue of the SPR.
The decision to fill it was announce on 13 November 2001. This was in response to 911 and the potential for terrorism to take out a large amount of world oil production with a single attack. It's estimated that a well placed Saudi attack could take 4.5 million barrels a day out of production while repairs are made. The SPR has a max draw rate of around 4.3 MB/D. Potentially, the SPT gives us 3-4 months to get things back up, longer if we took other temp emergency measures (lower speed limits, hiigher gas tax, ect). The Euro's as well as Japan and China also hold large amounts of emergency capacity. We wisely realized that we could not depend on our "friends' in the middle east to stablely supply the worlds energy needs. Since Jan 2002, the SPR has received approx 100 MB of oil over an already planned input of approx 45 MB's. That's around 30 MB/Year., or less than 1 million barrels a week. Yet we hear from the same mental giants that tell us 1.5 MB PER DAY from ANWR won't affect supply, that somehow, stocking the SPR at 1/10th that rate does. :blink: . Never mind the additional affect of reducing the "terrorism' premium. Unfortunately, we have to fill it at HIGH costs, because some IDIOT failed to do it at LOW cost in the late 90's DESPITE the rapidly growing threat of terrorism.

 

[Busdrvr]

No, if we burn less fuel, the Saudi's market share will drop. The only reason we buy oil from them is because we don't produce enough ourselves. If we consume less, that will result in less oil that needs to be imported.

...
News flash -- Busdrvr is not the only person in the world. No, you don't HAVE to use mass transit. The point is to make it available and useful, and more people will use it. Not only will oil consumption drop, but traffic congestion will lessen so that your wife can drive the Yukon with the two bags of groceries unhindered.

[post="261255"][/post]​

Incorrect. Lets go over this again slowly. The Saudis have the CHEAPEST production costs in the world. We have to constantly search for new small reserves to tap. they don't. If usage goes DOWN, (as well as cost) the higher cost producers leave the market, and no new production happens. Now the Saudi's have more market share. Now let's pretend you want to enter the market because the Saudis have cut supply to 8 MB/D so jack up prices. You decided to add 1 million BPD at 20 a barrel production cost (half of that "sunk" cost) (oil is selling at $25 a barrel). Now lets also assume (simplistically), world demand for oil is 8 MB/D at $25, and 9 MB/D at $21 and 10 MB/D at $17. Will you invest in that project with a breakeven at $20 a barrel, full well knowing the saudi's can (and likely will) crush you to maintain control of their oil monopoly?

Now back to "mass Transit. The problem in many cities is the city (run by a bunch of liberal elected by city residents) foolishly spends big money to appease the inner city constituents with grossly inefficient "mass transit' initiatives, when the more efficient use of those limited public dollars would be to add a lane to the one interstate through the city that becomes a parking lot from 7-9 AM and from 3:30 to 5:30 every evening, wasting exponentially more fuel than a silly two rider bus saves. One must also consider the harsh reality when looking at users of mass transit in medium sized cities, that but for the bus, they'd WALK, so the mass transit system may actually INCREASE fuel consumption

 

[BoeingBoy]

Sorry for the delay on the weekly petroleum report, gang. My trips start on Wednesday this month and I have to leave home about the time the "Weekly Petroleum Status Report" comes out.

So, for the week ended April 1....

The highlights

U.S. crude oil refinery inputs averaged over 15.5 million barrels per day during the week ending April 1, up 352,000 barrels per day from the previous week’s average. Refineries operated at 93.7 percent of their operable capacity last week.

U.S. crude oil imports averaged 9.9 million barrels per day last week, down 678,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 10.2 million barrels per day, which is 119,000 barrels per day more than
averaged over the comparable four weeks last year.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 2.4 million barrels from the previous week. Over the last eight weeks, they have increased a total of 22.8 million barrels. At 317.1 million barrels, U.S. crude oil inventories are near the upper end of the average range for this time of year.

Distillate fuel inventories increased by 0.7 million barrels last week, but remain in the lower half of the average range for this time of year. All of the increase was in low-sulfur distillate fuel (diesel fuel).

Total product supplied over the last four-week period has averaged nearly 20.7 million barrels per day, or 2.5 percent more than averaged over the same period last year.

Kerosene-type jet fuel demand is up 9.4 percent over the last four weeks compared to the same four-week period last year.

The average world crude oil price on April 1, 2005 was $48.69, $0.06 less than last week’s revised price but $18.62 above a year ago. WTI was $57.26 per barrel on April 1, 2005, $22.87 more than last year. The spot price for No. 2 low-sulfur diesel fuel in the New York Harbor was 171.10 cents per gallon, 81.10 cents above last year.

Now for some jet fuel spot prices on April 1:

NY Harbor $1.7510
Gulf Coast $1.7385
Los Angeles $1.9238

[Did I miss something in the news - LA spot prices jumped 7 cents on Thursday (3/31) and almost 8 cents on Friday (4/01)]

To put the jet fuel prices in the context of crude spot prices on April 1:

WTI - Cushing $57.26
Brent - $54.14

And lastly, to put all those spot prices in the context of April 8 spot crude prices:

WTI $53.32
Brent $52.06
NYMEX $53.32

As has been pointed out already, crude prices dropped this week. To give a peek at 'light sweet crude' futures prices, the May contract closed at $53.32 on 4/1, the June contract closed at $54.65, and the contracts thru Feb 2006 are still above $55.

Finally, just for giggles, I put together a little chart of the monthly average spot prices of West Texas Intermediate crude (the red line) and jet fuel (the blue line) for the period starting Jan 2004 and ending Mar 2005. The jet fuel prices are the average of NY harbor, Gulf Coast, and LA. The green line is the price difference between crude and jet fuel prices on a per gallon basis.

 

[diogenes]

Now back to "mass Transit. The problem in many cities is the city (run by a bunch of liberal elected by city residents) foolishly spends big money to appease the inner city constituents with grossly inefficient "mass transit' initiatives, when the more efficient use of those limited public dollars would be to add a lane to the one interstate through the city that becomes a parking lot from 7-9 AM and from 3:30 to 5:30 every evening, wasting exponentially more fuel than a silly two rider bus saves. One must also consider the harsh reality when looking at users of mass transit in medium sized cities, that but for the bus, they'd WALK, so the mass transit system may actually INCREASE fuel consumption

[post="261452"][/post]​

Certainly, mass transit would not work in much of the geographical US - not enough population density to warrant it.

But if you reconstruct the map to reflect population density, mass transit makes sense in the NE, SAN-SFO and perhaps the upper Midwest and FLA populations centers.

I found the trains in Europe to be convenient and reasonable.

I don't think there is a one-size-fits all energy policy that will replace oil, and that's ok. Diversity is a smarter strategy.

We take the ease of oil distribution for granted, but if you read the history of how distribution was developed, it was anything but easy.

Distributing a new source, such as hydrogen, will be diffcult, as well. But at some point, it will become necessary. As will production of nuclear plants.

I'd rather get the jump on it for a lot of reasons.

We could tell the Saudis, and the rest of the nasties*, "seeya. And oh, by the way, since you can't blackmail us with oil anymore, we will no longer stay Israel's hand. Intercourse with them at your peril."

Oil is finite. Whoever is geared up for whatever comes next , wins the economic lottery for the next half-century. I'd just as soon it be the US.

Those reasons are anathema to the realpolitik currently in place.

Let me add a farfetched one, one that would be considered blasphemy.

Do you have any idea of how much research done at tax-supported universities is converted to commercial use? Bio-tech, computer engineering and programming, medical, and so on? I don't either, but what I have seen convinces the cost of that research is in the hundreds of millions.

Wouldn't it be cool if American universities developed a viable hydrogen system, from production to powerplant to distribution? And test it on government fleets?

And then, rather than hand it over to GM or Exxon, license it out?

You could reduce corporate and personal taxes quite a bit.

Just dreaming out loud.


* There are millions of fine folk in the Middle-East. Unfortunately, none of them are in charge.

 

[Busdrvr]

* There are millions of fine folk in the Middle-East. Unfortunately, none of them are in charge.

Not true, they've all moved to detroit.../

 

[autofixer]

Info Only: All of those TGVs and Eurostars (trains) in France are powered by electricity from nuclear power plants. We made a decision to run away from nuclear power in the late 70s (After we watched the movie "The China Syndrome" and TMI occured). 90% of France's electricity is nuclear powered. Now France can meddle in Southwest Asia and sell their military goods to the highest bidder. We are walking on egg shells.

 

[Busdrvr]

Info Only:  All of those TGVs and Eurostars (trains) in France are powered by electricity from nuclear power plants.  We made a decision to run away from nuclear power in the late 70s (After we watched the movie "The China Syndrome" and TMI occured).  90% of France's electricity is nuclear powered.  Now France can meddle in Southwest Asia and sell their military goods to the highest bidder.  We are walking on egg shells.

[post="261509"][/post]​

Fixer, you impress me more every day!! but i think the French only get approx 75-80% of electricity from Nukes, the rest is from Hydro. ironically, they export a lot of electricty to the idiots across their borders who are "afraid" of nuclear power. I don't know if I've mentioned this, but do you know how many people were killed by TMI? Anyone? Bueller?


Approx 300.


Before people cry out about the dangers of nuclear power, that's the number of people who statiscally had their lives shortened due to the FOSSIL FUELS burned to produce TMI's share of Electricty during the shutdown of reactor 3 for repairs.

 

[TechBoy]

I don't know if I've mentioned this, but do you know how many people were killed by TMI? Anyone? Bueller?
Approx 300.

[post="261527"][/post]​

300? Where did that come from? I believe that the correct number is 0.

On the main topic, I do think that the way this administration has dealt with our oil dependancy is close to treason. Drilling in ANWR is their only "solution." It will only have a minor impact. If we were serious about the war on terrorism, we would treat it as a war for all of us, not just the soldiers. That means figuring out how to stop our dependance on oil from the Gulf. We will only succeed in that through a combination of alternative fuels (hybrids, nuclear, oil sands/shale, GPL, hydrogen), conservation (yes, it's patriotic not to buy a Tahoe when you don't need one), and exploration (drilling can be done without harming the environment). It's been over 3 years since 9/11 and we haven't even begun to talk about this problem, let alone enact solutions.

 

[Busdrvr]

300? Where did that come from? I believe that the correct number is 0.

On the main topic, I do think that the way this administration has dealt with our oil dependancy is close to treason. Drilling in ANWR is their only "solution." It will only have a minor impact. If we were serious about the war on terrorism, we would treat it as a war for all of us, not just the soldiers. That means figuring out how to stop our dependance on oil from the Gulf. We will only succeed in that through a combination of alternative fuels (hybrids, nuclear, oil sands/shale, GPL, hydrogen), conservation (yes, it's patriotic not to buy a Tahoe when you don't need one), and exploration (drilling can be done without harming the environment). It's been over 3 years since 9/11 and we haven't even begun to talk about this problem, let alone enact solutions.

[post="261536"][/post]​

You're kidding right? read the plan. Conservation AND production. It got shot down because the average citizen is an idiot. interest groups like the sierra club lobbied against things that that awfully dirty Nuclear power... :blink: so no, drillingin ANWR is NOT the only solution, but drilling on a few acreas on the frozen tundra is PART of the solution. It's the left that only considers ONE solution, moving into a cave and fashioning clothing out of "hemp", while eating only uncooked veggies before going out to say prayers to an old tree.

http://www.whitehouse.gov/energy/

Oh and to clarify, I have been corrected, it was reactor 2 at TMI, and it is perm shut down. And yes, that's the point, no deaths fromt he reactor, the deaths are from the ALTERNATIVE, millions of tons of ash (which ironically contains uranium) that are dumped on us yearly that would not be if TMI2 were still operational.

 

[TechBoy]

You're kidding right? read the plan. Conservation AND production.

[post="261540"][/post]​

And where is the conservation in the plan? Just saying the word does not make it true. I suggest that you read the bill, not the Prez's PR.

Imagine where we would be if instead of spending hundreds of billions chasing phantom WMDs we had spent tens of billions developing alternate energy sources and distribution facilities (one of the biggest problems for the alternatives) and used the tax code to encourage energy efficiency (i.e., you can still have your Tahoe, but you'll have the pay the cost to the country for your safe energy supply). I think that we would be much better off today (and have a stronger economy) and would actually be on the road to energy independence. OTOH, merely adopting Bush's plan will lead to increasing oil imports every year for the foreseeable future. Not a great plan in my book.

 

[aafsc]

Busdrvr would follow Bush off a cliff. He's intoxicated and mesmorized by the words that come out of Bushes mouth. I am not a "tree hugger" (a term invented by big business that dominate the republican party to discredit those who oppose their insatiable greed) but I am rational. What is wrong with having breathable air and drinkable water? When I worked in DFW, the smog was so bad that they always had "ozone action alert days" where people who were old, the very young, and people with respitory problems were warned to "stay in doors". As far as drinkable water and contaminated soil is concened, remember Love Canal? I, and most everyone else for that matter, could care less what you drive. But Bush's energy policy (complete with secret meetings with oil company execs headed by Cheney) will keep us addicted to foreign oil. Bush and Bush Sr. are close to the Arabs. The hundreds of billions of dollars we spent, and are continuing to spend in the Iraq war and reconstruction, could have built a hydrogen infrastructure in this country two times over. Hydrogen IS feasible because they now have buses that run of it. We could have had it at a cost much lower than what Iraq is costing us in terms of money and more importantly, lives (U.S. military, coalition, and Iraqi). You remind me of a guy I worked with in DFW. He was/is a big time republican Bush lover and worshipped and preached "the free market". We were discussing the Califorina energy crisis (this was before Enrons activities came to light). He went on and on about free markets and how great and righteous big business is and the whole 9 yards. I told him that they were manipulating the market. Subsequent events have shown that I was right and that Bush (Enron) lover was wrong.

 

[Bear96]

Uh oh, aafsc...

You're in for it now!