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Saturday, 1 September 2012

World energy


Oil posts second monthly rise, tops $114 after Bernanke
Oil rose above $114 a barrel in volatile trading on Friday, taking gains in August above 9 percent, after U.S. Federal Reserve Chairman Ben Bernanke stopped short of signaling extra monetary easing was imminent but kept the door open for action.


31 August, 2012

Crude initially pulled back after Bernanke's address at a central bankers' symposium in Jackson Hole, Wyoming. As traders parsed the details, prices were quick to move higher, supported by stronger-than-expected U.S. economic data.

Figures released on Friday showed U.S. factory orders posted the biggest rise in 12 months in July, jumping 2.8 percent, while the Thomson Reuters/University of Michigan survey of consumer sentiment showed the index rising to 74.3 in August from 73.6 in a preliminary August report.

"There was no announcement about if more stimulus was coming immediately, but he (Bernanke) said the Fed was ready to act if necessary so that was supportive," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

"Along with the factory orders and consumer sentiment data, the (market) longs are in control."

Brent crude settled up $1.92 at $114.57 a barrel, having earlier reached a session peak of $114.78. Brent gained 9.2 percent in August, the biggest monthly percentage rise since prices jumped by 10.5 percent in February, and added to a 7 percent rally in July.

U.S. crude rose $1.85 to settle at $96.47, having earlier risen briefly above the 200-day moving average at $96.68, a key technical resistance level closely watched by traders. U.S. crude gained 9.6 percent in August, the biggest percentage gain since October 2011.

September U.S. heating oil, the benchmark distillate futures contract, expired at $3.1696 a gallon, up 4.51 cents on the day and up 11.5 percent in August, biggest monthly percentage gain since September 2010.

September RBOB gasoline rose 2.30 cents to go off the board at $3.1056 a gallon, up 6.5 percent in August, following a 6.8 percent rise in July.

Money managers raised their net long U.S. crude futures and options positions in the week to August 28, the Commodity Futures Trading Commission said on Friday.

Quantitative easing is viewed by many investors as likely to boost the price of commodities and other hard assets as it tends to depress the value of the dollar.

The euro rose against the dollar on Friday, boosted by signs of progress toward a deal to tackle the euro zone debt crisis.

Trading volume was relatively buoyant ahead of a long weekend in the United States, with Brent turnover 6 percent over the 30-day average. U.S. crude volume lagged its 30-day average by 5 percent at 3 pm in New York.

U.S. markets will be closed on Monday for the U.S. Labor Day holiday.

STRATEGIC RESERVES IN FOCUS

Crude prices were further supported by reports Germany and Italy remain opposed to a release of emergency consumer oil stocks, which created further uncertainty about the timing of any possible release as sanctions on Iranian exports have tightened the market and boosted prices.

Since mid-June Brent prices have risen by more than 25 percent, from below $90 a barrel to near $115 now.

Meanwhile, the Department of Energy loaned 1 million barrels of light sweet crude oil to Marathon Petroleum Corp (MPC.N) from the U.S. Strategic Petroleum Reserve (SPR) due to short-term supply problems created by Hurricane Isaac.

"This emergency loan from the Strategic Petroleum Reserve will help ensure Marathon's refining operations have the crude oil they need to continue operating," Energy Secretary Steven Chu said.

The DOE added it continues to "keep all options on the table to address additional or sustained oil supply issues."

Overall, however, the Gulf of Mexico oil and gas industry has so far reported little major storm-related damage to infrastructure although one Louisiana refinery had flooding. Energy production is expected to start ramping up again over the weekend.

Traders said oilfield maintenance in the North Sea was also boosting prices, with a potential strike by Norwegian oil workers looming just weeks after a walkout lasted 16 days and stopped 13 percent of Norway's oil production.

Norwegian oil drilling workers may strike on Sunday at installations operated by KCA Deutag in two North Sea fields, but production will not be affected, a union leader said Friday.

Fighting in Syria and tension over Iran's nuclear program also lent support.

A U.N. report said on Thursday Iran had doubled the number of uranium enrichment centrifuges it has in an underground bunker, showing Tehran has expanded its nuclear work despite Western pressure and the threat of an Israeli attack.


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Japan too has great hopes for methane hydrates, but it's unlikely they are economically viable. -- RF


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