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WTI Crude Drops Most in Three Weeks on Inventories

West Texas Intermediate crude fell the most since March 12 on speculation that U.S. inventories gained for an 11th week and as a gauge of manufacturing rose less than expected. Brent slipped. WTI dropped for a second day. Stockpiles probably climbed 2.5 million barrels last week, according to a Bloomberg survey before a government report tomorrow. The Institute for Supply Management ’s U.S. manufacturing index was 53.7 in March, lower than the 54 forecast in a Bloomberg survey. A separate report showed Chinese manufacturing weakened. “All the news is bearish today,” said Michael Lynch , president of Strategic Energy & Economic Research in Winchester, Massachusetts . “The manufacturing data is not supportive and we are expecting another build in inventories.” WTI for May delivery declined $1.84, or 1.8 percent, to settle at $99.74 a barrel on the New York Mercantile Exchange . The volume of all futures traded was […]

Posted On : Published By : Tom Whipple
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Natural Gas Slides as Market Looks to End of Supply Drawdowns

Natural gas futures tumbled 2.2% Tuesday as warming temperatures cooled expectations of continued gas-fired heating demand. Gas futures for May delivery fell 9.5 cents to $4.2760 a million British thermal units on the New York Mercantile Exchange, its third straight losing session and fourth out of the past five. The market opened lower but continued the slide throughout the morning. The decline took gas prices to their lowest level since March 24 and 30% below their peak during the depths of winter in mid-February. Some traders had been holding on to bullish positions in the hope that colder-than-normal temperatures across the country would continue. But the most recent forecasts show a warm blast over much of the U.S. in the next few days, followed by cooler temperatures–but not cold enough to drive outsized demand for gas-fired heating. "Without the promise of further extreme weather, traders are […]

Posted On : Published By : Tom Whipple
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Ethanol Rises to Highest Level Since 2006 on Shipping

Ethanol surged to the highest price in more than seven years as producers struggle to get the biofuel to consumers while demand for it climbs. Futures rose 1.7 percent a day after BNSF Railway said a winter storm in the Midwest would force it to reroute trains there, leading to longer transit times. Ethanol is delivered by rail, truck and barge, and about 89 percent of plants are located in the region. “Rail transport is difficult and that inherent difficulty is compounded by weather,” said Peyton Feltus, president of Randolph Risk Management Inc. in Dallas . “Some plants have slowed down or halted production because they couldn’t do anything with it.” Denatured ethanol for April delivery gained 5.8 cents to settle at $3.517 a gallon on the Chicago Board of Trade, the highest close since July 10, 2006. It was the fourth consecutive advance. Futures have gained 84 percent […]

Posted On : Published By : Tom Whipple
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Gazprom to raise bills for Ukraine

Russian energy company Gazprom said Tuesday it would raise by $100 per 1,000 cubic meters the amount it would charge Ukraine for natural gas. Ukraine in December secured a 30 percent discount for the amount of gas delivered by Gazprom. The company’s chief executive officer, Alexei Miller , said Tuesday the discount no longer applied and Ukraine could be charged another $100 per 1,000 cubic meters, the standard purchase volume. "In line with the current contract on delivering gas, the price for Ukraine in the second quarter [of 2014] will be $385.50," he said . Gazprom in 2009 cut gas supplies to Ukraine because of contractual disputes. Ukrainian Prime Minister Arseniy Yatsenyuk said the economy is in ruins, though Gazprom said Kiev still has around $1.7 billion in unpaid gas debts. European consumers get about a quarter of their gas needs met by Gazprom, though […]

Posted On : Published By : Tom Whipple
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Pemex’s March Crude Production Falls to Lowest Level Since 1995

Petroleos Mexicanos’ March oil production slid to its lowest monthly level in almost two decades after output declines accelerated at the world’s fifth-largest crude oil producer. Monthly crude production fell to 2.47 million barrels a day through March 30 as output at the company’s largest Ku-Maloob-Zapp and Cantarell fields dropped from the previous month, state-owned Pemex said today in a preliminary report. March was Mexico City-based Pemex’s smallest monthly output since October 1995 when it produced 1.898 million barrels a day. Pemex is banking on a December law change allowing foreign companies to join the energy industry to boost investment and increase national oil production to 3 million daily barrels by 2018, the government has said. The energy overhaul, which President Enrique Pena Nieto called the most important economic change in 50 years, is expected to raise as much as $30 billion a year in foreign investment, according to […]

Posted On : Published By : Tom Whipple
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Two percent of Canada's oil gets to overseas markets

Only 2 percent of the crude oil produced in Canada made it to overseas markets last year, the National Energy Board reported. NEB, an independent regulator based in Calgary, Alberta, published its annual review of the Canadian petroleum sector. It said the oil industry is heavily influenced by the United States. "In 2013, approximately 71 percent of Canadian crude production was exported to the U.S. and 2 percent was exported to overseas markets from terminals on the east and west coasts," the report said Monday. Canadian Prime Minister Stephen Harper has tried to add a layer of diversity to an export economy that depends largely on the United States. European governments in particular have expressed concern about the environmental issues associated with bitumen, Canada’s heavier grade of crude oil. An increase in U.S. oil production has led the country to rely less on foreign imports […]

Posted On : Published By : Tom Whipple
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Two percent of Canada’s oil gets to overseas markets

Only 2 percent of the crude oil produced in Canada made it to overseas markets last year, the National Energy Board reported. NEB, an independent regulator based in Calgary, Alberta, published its annual review of the Canadian petroleum sector. It said the oil industry is heavily influenced by the United States. "In 2013, approximately 71 percent of Canadian crude production was exported to the U.S. and 2 percent was exported to overseas markets from terminals on the east and west coasts," the report said Monday. Canadian Prime Minister Stephen Harper has tried to add a layer of diversity to an export economy that depends largely on the United States. European governments in particular have expressed concern about the environmental issues associated with bitumen, Canada’s heavier grade of crude oil. An increase in U.S. oil production has led the country to rely less on foreign imports […]

Posted On : Published By : Tom Whipple
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BHP Billiton Signals Confidence in Its Coal Business

Coal being excavated at a U.S. mine earlier this month. Coal mining is one of the activities BHP Billiton still considers a core business. SYDNEY—The head of BHP Billiton Ltd. ‘s coal business signaled confidence in the outlook for the strained global coal industry, forecasting increases in world demand for decades to come. Dean Dalla Valle said he expects most demand growth to come from outside China, which has been the primary driver of global commodity prices in recent years. China currently accounts for about half of the world’s coal consumption. "Over the next couple of decades we expect global growth in demand for both energy coal and metallurgical coal," he said in a speech in Brisbane Wednesday. Although "the likes of India, a country not overly endowed with metallurgical coal, [is] anticipated to be the most significant source of new demand" for coal used in steelmaking, he said. […]

Posted On : Published By : Tom Whipple
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Federal Polls Push Up India Crude Oil Imports

India’s crude oil imports rose by nearly a quarter in February as demand for fuel products rose ahead of federal polls that begin from next week. The world’s third-biggest crude oil importer after the U.S. and China bought 16.42 million metric tons, or 4.29 million barrels a day of oil, from overseas last month, up from 13.37 million tons a year earlier, according to oil ministry data. Crude oil refiners say the demand for crude is up due mainly to the steady rise in demand for fuel products as political parties burn more gasoline and diesel to power their campaign for the federal elections. Fuel demand in February rose 2.4 per cent to 12.836 million tons from a year earlier. According to a senior government official, imports also rose because local refineries raised crude oil processing volumes to meet their fiscal-year throughput target. The annual crude oil contracts […]

Posted On : Published By : Tom Whipple
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Itochu Writes Down Samson Investment as U.S. Shale Bet Sours

Japan ’s third-largest trading house, said it booked another writedown on its investment in oil and gas producer Samson Investment Co., as its bet on the U.S. shale boom sours. The latest impairment of 29 billion yen ($279 million) follows charges of about 33 billion yen reported by the Tokyo-based company last year. Itochu has now written down most of the 78 billion yen, worth $1.04 billion at the time, it paid in 2011 for a 25 percent stake in family-owned Samson. The development of shale, which involves extracting hydrocarbons from rock formations through chemical injections, has slapped investors with writedowns in the last two years after U.S. gas prices fell to their lowest level in more than a decade in April 2012. BHP Billiton Ltd., the world’s largest mining company, in August 2012 announced a $2.8 billion writedown of its U.S. shale gas assets. Itochu joined a […]

Posted On : Published By : Tom Whipple