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Oil Prices May Have Hit Bottom. Heating Oil Prices Softening.

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Commodities prices overall, and oil prices in particular, have recovered some of the losses from last week’s price declines, in Monday’s Asian trading. We’ll be watching today’s NYMEX trading to see if the U.S. markets follow the same course. Some experts have indicated that last week’s price declines may be “played out” indicating that we may be at or near the low-mark for heating oil prices and gasoline prices for some time.

With last week’s price decline, partially driven by the news of Osama Bin Laden’s death which suggested greater stability in the Middle-East, other Middle-East and northern Africa tensions continued to instill worries in the market. Libyan oil production is still absent from the market. And in Syria, security forces detained hundreds of protestors in a door-to-door arrest campaign using tactics similar to what was used in Iran, reported The Christian Science Monitor. Meanwhile anti-government protesters pledged to press on with their demands.

Oil prices also recovered on better-than-expected employment data from the U.S., suggesting that oil demand will increase.

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middle east and africa

Will Libya's Cease Fire Put the Brakes on Heating Oil Prices?

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Early indications are encouraging. “We are taking off some of the geopolitical risk”, said Oliver Jakob, Managing Director of Petromatrix a Swiss based energy analytics company. As of mid-day, NYMEX Crude Oil futures were down 1% to $111.60/barrel. If crude oil prices decline, it will take several weeks before the decrease is reflected in prices of home heating oil, gasoline and other refined products. Home Heating Oil prices are averaging close to $4.00 a gallon in most regions of the U.S.

However, experts point out that the Libyan cease-fire will only be successful if the rebels also accept the terms of the cease fire. Even if the cease-fire does hold, an economist with BP pointed out that it could take years for Libya to resume significant oil exports. However, a successful cease fire will reduce the risk premium on oil.

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Blue Global Map

Record Oil Price Fuels UK Fears. Can U.S. Avoid Further Oil Price Increases?

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As Brent crude oil prices hit a new record in terms of the British pound, UK officials sought to calm the oil markets. Chris Huhne, UK Energy and Climate Change Secretary stated, “There is no shortage of supply, and yet the price has remained high. International energy markets should understand that the current price of oil does not reflect the realities of supply and demand.”

Prices for crude oil and refined petroleum products have soared as civil unrest, protests and violence have escalated across the Middle East and Northern Africa. Brent crude oil prices, the European benchmark price, hit $121 on Monday which is below the high of $147 in 2008 except that the British pound sterling has fallen 17% against the dollar, so Monday saw a new oil high in terms of the pound.

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Industrial Oil Rig

Permits Issued to Resume Gulf Oil Drilling

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Amid rising oil prices, fewer short-term alternatives and escalating criticism, the Department of the Interior has recently issued 5 permits for renewed oil drilling in the Gulf of Mexico. Yesterday, Chevron received the fifth certificate in what was described as the “first deepwater permit approved for completely new exploration since the deepwater drilling moratorium was lifted” according to the press release issued by the Bureau of Ocean Energy Management, Regulation and Enforcement. However, Forbes.com pointed out that the Chevron drilling of well #1 is not really new, “ Chevron didn’t get very far with Well #1 last Spring, but it had been in the field and drilling—in 6,750 feet of water about 215 miles south of the Louisiana coast.”

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Shadow Oil Rig

Oil Inventories Increase and Oil Prices Fall

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U.S. oil inventories increased this past week, according to the weekly report published by the Energy Information Administration, and crude oil prices dipped slightly on trading Thursday afternoon. The EIA reported that U.S. crude oil inventories increased by 2.1 million gallons in the week ending March 18 while distillate inventories (heating oil and diesel fuel) remained unchanged. Crude oil inventories have now risen in 8 of the last 9 weeks in spite of the civil unrest in Libya and other countries in the Mid-East that has disrupted supplies. Occidental Petroleum announced that they have now started to remove workers from Yemen, in light of increasing anti-government demonstrations. Yemen only account for 0.3 percent of world oil supply, but their location on a key oil shipping channel is more critical. Any shipping disruptions in this strait would cause tankers to make a lengthly trip around the southern tip of Africa to supply European markets.

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Metal Globe

Oil and Gas Price Push Higher on Mideast Turmoil

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27 percent of the world’s oil comes from MENA, the Middle-East and northern Africa region, so energy analysts are watching this region very closely to determine the impact on world oil supply and oil prices. West Texas Intermediate Crude oil traded above $105 a barrel on Tuesday. Brent crude in London closed above $115 a barrel. Average retail gasoline prices in the U.S. are at $3.547 per gallon, the highest ever for this time of the year and 72.7 cents higher than a year ago, according to the Associated Press. Heating Oil prices ended the heating season at $3.878/gallon up 33% from the beginning of the heating season.

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middle east and africa

Libyan Air Strikes Send Oil Prices Surging

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With United Nations coalition forces bombing the defenses of Libyan leader Muammer Gaddafi over the weekend, oil prices surged in early Monday trading. Amid Gaddafi’s assertion that it will be a “long, drawn-out war”, markets reacted to the reality that Libyan oil may be off the market for a considerable period of time. In early morning trading, crude oil prices jumped $2.00 a barrel and prices for heating oil on NYMEX future jumped over 4 cents per gallon.

According to the Financial Times, “the price surge was further supported by unrest in Bahrain, the tiny Gulf island kingdom near Saudi Arabia, and elsewhere in the Middle East region, including Yemen and Syria.”

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Oil Rig Sunset

How Japan Will Impact The Price You Pay For Your Energy

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We are watching history unfold. With all eyes on the events in Japan, there is much discussion about the long term impacts that the disaster will have on Japan, their people, their economy, the future of nuclear energy, and in fact, the impact on the rest of the world. Experts are indicating that the crisis in Japan will impact energy policy and practice for the next 40 to 50 years. In the shorter term we have commented on the impact on energy prices, specifically crude oil, fuel oil, liquefied natural gas and more. For a rather insightful look at the local and global impacts of the latest developments in Japan, listen to the weekly podcast from Financial Times. Also hear about how the unrest in the Middle East and Northern Africa is playing into the worldwide energy situation.

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Industrial Oil Rig

Japan... The Fallout of a Triple Disaster

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The enormity of the disaster in Japan is still being understood. In reality, it has actually been a triple disaster …the earthquake, followed by the tsunami, and now the nuclear explosions and radiation leakage. In addition to the loss of life and the devastation of the lives and livelihood of those affected, repercussions are now being felt around the world. The Japanese Prime Minister has likened the situation to the worst crisis his country has dealt with since World War II.

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Blue Global Map

Events Around the World Are Supporting Oil Prices

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It was a bit of a roller coater ride today for NYMEX futures on petroleum products as the market worked to figure out the impact the devastation in Japan will have on commodity markets. Crude oil closed up only slightly at 101.19 at Cushing Oklahoma. The big gainer on the day was the price of heating oil, closing up a full 3.5 cents to $306.42 on NYMEX.

As the markets sorted out the Japanese impact, it looks like natural gas will be used in Japan to generate the electricity needed to replace the damaged nuclear facilities. About 70% of Japan’s petroleum products are imported and the current expectations are that demand for oil will less from Japan due to the impact that the earthquakes and the tsunami have had on the country.

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middle east and africa

Day of Rage Demonstration in Saudi Arabia - No Affect on Oil Prices

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As of 10:00EST, oil markets have not been impacted by Saudi Arabia’s Day of Rage demonstrations. In fact, most oil prices, along with prices for refined fuels. have retreated from yesterday’s close. Saudi activists are calling for political and economic reforms, jobs, freedom and women's rights. Washington said it would closely monitor the unrest in Saudi Arabia. Buoyed by the success of civil unrest resulting in reforms in Tunisia and Egypt, other MENA (Middle East North Africa) countries are experiencing demonstrations or even violence as is the case in Libya. Read More »
Silver Oil Tanks

Should Obama Use Strategic Oil Reserves to Relieve Oil Prices?

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As oil prices continue to surge on news of supply interruptions from Libya as well as increasing demand due to the ongoing economic recovery, the Obama administration is reviewing all options, including using the U.S. Strategic Oil Reserves. Over the weekend, administration officials acknowledged that the Strategic Oil Reserve is “on the table” as an option to add supply to the market, and potentially slowing the increase in oil prices. “It is something that only has been done on very rare occasions,'' said William Daley on "Meet the Press" on NBC, adding, ''It is something we are considering.'' There is increasing concern that if oil prices remain above $105 or $110 a barrel, it could damage the U.S. economic recovery. Meanwhile both Japan and South Korea have said that they have not yet made plans to release any oil form their strategic oil reserves.

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Light Blue Home w Snow

Residential Heating Oil Prices Increase Sharply

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The U.S. Energy Information Administration released their weekly report yesterday which detailed the impact that the events in Libya and elsewhere are having on oil prices and the entire oil complex. For residential heating oil the agency reported, “Residential heating oil prices continued to rise during the period ending February 28, 2011. The average residential heating oil price increased to $3.76 per gallon, nearly a $0.14 per gallon over last week and $0.86 per gallon more than last year at this time. Wholesale heating oil prices increased by $0.21 per gallon last week, reaching a price shy of $3.05 per gallon. This is $0.93 per gallon higher than last year's price.”

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Silver Oil Tanks

NYMEX Heating Oil Contract Price Tops $3.00/gallon. Crude tops $100/barrel.

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Concerns over ongoing unrest and violence in Libya is again driving oil prices higher as most oil production has come to a halt. Conoco and Marathon both reported that they have shut down Libyan operations and recalled employees. Growing concern in now focusing on Oman where unrest is developing. The NYMEX oil futures complex rallied in post-settlement trade Tuesday. April crude traded as high as $100.13/b by 3:55 p.m. EDT before retreating blow $100. April heating oil climbed 10 cents to $3.0389/gal and April RBOB jumped 10 cents to $2.9927/gal.

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Metal Globe

Retail Gasoline and Heating Oil Prices Continue to Rise

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Even as world oil markets have cooled down since Saudi Arabia began offering crude oil to make up for any supply loses caused by the protest in Libya, higher retail prices for gasoline and heating oil continued to reach the market. The Associated Press reported this morning that “Gasoline prices rose 4 percent last week to a national average of $3.29 per gallon. That's the highest level ever for this time of year, when prices are typically low.” When weekly heating oil prices are announced this week, we are likely to be approaching the record high heating oil prices of 2008. The most recent heating oil retail average of $3.618/gallon is just 24 cents below the record …and last week’s wholesale price increases on heating oil will undoubtedly push the retail price closer to the record.

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Industrial Oil Rig

Oil Prices Ease. Libyan Situation Clearer.

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Reuters reported this morning that oil prices have eased “amid signs the crisis in Libya may have cut supplies less than previously estimated and as Saudi Arabia seemed ready to boost output.” Crude oil is above $97 a barrel in early Friday trading, which is well under the peak of $103 the day before. Consumers are still seeing increases in the price of heating oil and gasoline as the wholesale price increase make their way through to the retinal level.

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Shadow Oil Rig

Heating Oil Prices Soar on Libyan Unrest

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Wholesale heating oil prices increased almost 15 cents per gallon since last week, before reversing 5 cents per gallon at the close of markets today. This whipsaw effect is fairly common in a market that his been driven into a frenzy based upon fear and speculation, as opposed to the fundamentals and the basics of supply and demand. The ongoing events in Libya have markets on edge and certainly supply disruptions out of Libya are real. As of this morning Morgan Stanly was reporting that all ports and terminals were reportedly closed, cutting off Libya’s exports of 1.3 million barrels a day. However, according to Morgan Stanley, “Saudi Arabia has said the Kingdom will be able to make up lost exports using its spare capacity. Saudi estimates that it will take a month to replace the 1.3 million barrels daily that would be lost.” Gasoline also retreated about 2 cents per gallon today.

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Oil Rig Sunset

Mid-East Tensions Weigh on Oil Prices

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“Global crude futures were up Tuesday morning in Europe as turmoil and protests continued to rock Libya, affecting the OPEC member's oil production”’ Platts reported. This unrest is certain to have a continued impact of oil, gasoline and heating oil prices as these price levels have not been seen since October 2008. On Monday, al-Jazeera television reported that crude production at Libya's Nafoora oil field had stopped because of a strike by workers, hours after a tribal leader warned that oil exports from the OPEC member would be halted unless Muammar Qadhafi ordered an end to the violent suppression of nationwide protests. It was not possible to verify the report independently. Libya is the first OPEC country to be hit with the protests that are spreading throughout the Middle East.

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Gas Prices

Heating Oil Prices Skyrocket

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Wholesale heating oil prices increased almost 11 cents per gallon yesterday on news of the civil unrest in Libya, which holds the largest oil reserves in Africa and the ninth largest in the world. The Libyan situation, although not independently verified, appears to have intensity to the rebellion that is closer to a civil war, far more brutal and serious than the protests seen in Egypt, Tunisia and Bahrain.

The wholesale increase in heating oil prices is likely to have an almost immediate impact on retail prices as Northeast temperatures again dip in what continues to be a harsh winter. If the wholesale price holds on heating oil, average retail prices across the U.S. will likely move to heating oil to $3.70/gallon, which would be the 2nd highest weekly price on record.

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Thermometer

Oil Prices Rise and Other Energy News on Valentine's Day

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Valentines Day is shaping up to be a volatile day for world oil prices set against a backdrop of Mubarak’s departure, Chinese exports, Alaskan pipeline concerns and more. In what’s turning out to be quite a news day, here is a sampling of what is impacting the price we are paying for gasoline, heating oil and other fuels.

 China reported that their exports rose 37.7 percent in January - more than double the rate in December - to $150.7 billion – suggesting consumer demand is rising as well, and that could expand consumption of gasoline, diesel and other fuels, causing further price increases in oil products.

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Blue Global Map

Potpourri of Energy Topics and Energy Prices

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Oil Product Prices: The upward march in heating oil prices continues with last week’s average retail price for home heating oil advancing almost 5 cents per gallon to $3.523/gal. This is another new high for this heating season. Similarly, retail propane prices hit a new record high of $2.819/gal last week, which is the highest residential price reported in the EIA database, going back as far as 1990.

Continued Cold: Temperatures in the Northeast U.S. are forecast below normal at least up to Valentine’s Day, which will continue to put upward pressure on heating oil and propane prices as energy companies work to keep up with strong demand.

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Metal Globe

Egyptian Unrest Impacts Oil Prices

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As of this morning, record numbers of Egyptian protestors have taken to the streets in Cairo for “departure day” calling for the end of President Hosni Mubarak’s reign. Brent crude oil prices held above $102 today, in London. Brent North Sea crude for delivery in March rose 43 cents to $102.67 per barrel in London trade, one day after striking $103.37 -- the highest level since September 26, 2008.

But why does the unrest in Egypt, a relatively small oil producer, have such a strong impact on oil prices? Egypt comes in at about #21 among oil producers, with about 650,000 barrels a day. This quantity does not justify the impact that the Egyptian unrest has had on world oil prices. So what is the reason? In a word, it’s about transportation. Read More »
Silver Oil Tanks

No Oil Supply Disruption Due to Egypt Situation... For Now

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Morgan Stanley Smith Barney reported this morning that, “OPEC is making efforts to reassure oil markets. OPEC Sec. General El-Badri said that OPEC would increase production should there be any supply disruptions caused by the situation in Egypt”. What happens in Egypt remains uncertain and crowds are swelling in central Cairo, so industry watchers have both eyes on this trouble spot. In addition, political unrest is spreading to other countries in the region. “…the situation continues to ramify throughout the region.

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Oil Rig Sunset

Unrest in Egypt Sends Oil Prices Higher on Monday

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Crude oil and refined fuel prices increased today on fears that the civil protests in Egypt could disrupt the flow of oil. NYMEX crude oil was up over 3%, closing at the highest level since October 2008. Wholesale heating oil prices increased almost 6 cents per gallon, as well. Heating oil prices are further compounded by the approaching snow and ice storm for the Northeast which will extend the strong demand for heating oil and likely make fuel deliveries difficult the next several days.

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Blue Global Map

BP Releases Energy Outlook 2030

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BP released for the first time their analysis which has until now been a comprehensive internal research and planning tool and is based upon 60 years of historical data. According to the report we can look forward to a period of great change as the global economy responds to our desire for energy sustainability, the impact of global warming and changes in energy technology. Energy Outlook 2030 points out that oil will grow relatively slowly over the next 2 decades as other energy sources take on increased importance. In the U.S. changes in the fuels we use, such as home heating oil, gasoline, and diesel fuel, are likely to be significant. Read More »
Blue Chart w Pen

Incline of Global Demand for Crude Oil While Decline for Global Inventories

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Global demand for crude oil reached an all-time high in the third quarter of 2010 according to the International Energy Administration. Not surprisingly, during the same period global inventories have declined. Morgan Stanley Research published a report on December 10, 2010 titled Commodities, 2011 Outlook: A Commodity Bull Market. In the report, Morgan Stanley points out that “in an increasingly integrated global economy these fundamentals could go far to explain the underlying strength in oil prices”.

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Silver Oil Tanks

Rationing Heating Oil in the UK

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Heating oil could be rationed over winter. Huh? OK, don’t panic. That’s not likely to happen here in the U.S. but that was yesterday’s headline in the UK’s Telegraph newspaper. The problem is the weather and the potential for more snow that would further hamper deliveries. “The Government admitted the situation could become ''very serious'' if it snows, with many homes having to wait up to four weeks for oil to be delivered”, reported The Telegraph.

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Snowy Trees

Cold Weather Across US and Europe Raising Heating Oil Prices

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Extended cold in the Northeast US and across Europe is raising heating oil prices. Reuters this morning reported that oil prices rose “as forecasts for continued freezing temperatures in Europe and the U.S. Northeast this week looked set to boost heating fuel demand”. Reports of significantly increased retail prices for home heating oil, and even price gouging, continue to come from the UK where snow and cold have dramatically slowed heating oil deliveries. However, the threat of significantly higher retail heating oil prices for the US small. Read More »