Oil hits $74 per barrel on economic optimism

HOUSTON — Oil prices approached $75 a barrel Monday for the first time in 10 months amid growing optimism that the world's economies are on the mend.

Benchmark crude for October delivery rose 73 cents to $74.62 a barrel on the New York Mercantile Exchange. Oil last topped $75 in October.

Natural gas rebounded strongly from new seven-year lows Monday, though prices remained well below $3 per 1,000 cubic feet.

Expectations that demand for energy will grow were spurred Friday by Federal Reserve Chairman Ben Bernanke, who said the U.S. economy is reviving. Bernanke's remarks and signs of improvement in the U.S. housing market sent stock markets higher, and that carried over into the new week.

Even before Bernanke spoke, however, prices had already begun to rise on a large and unexpected drawdown in U.S. oil supplies last week.

Equities appeared to follow energy prices, which took off midweek.

Asian and European markets were higher Monday, and the Dow Jones industrial average rose moderately in early trading.

This time, it appeared energy prices followed equities trading.

"No doubt about it, we're riding the wave of a strong stock market," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "These bullish financial developments have forced a huge amount of passive capital into commodities, especially the oil space."

It's been slightly more than a year since a barrel of crude soared close to $150 a barrel. No one expects another run to those heights anytime soon, but even the prospect of increasing demand is sure to keep upward pressure on oil prices.

In a report Monday, trader and analyst Stephen Schork said once oil gets to $75, "there is not a hell of a lot to prevent it from going to $80 or $85."

Natural gas is another story. Prices are at seven-year lows and supplies continue to grow. Friday marked the 11th session out of 12 trading days in which gas prices fell.

"Demand prospects are the worst they have been in recent memory," said PFGBest Research analyst Phil Flynn.

It has been a very moderate summer and meteorologists are forecasting the same through the fall. That could drive prices down even further if people don't need as much heat for their homes.

Gasoline prices have flattened and few expect a major run on prices as the driving season winds down.

Retail gas prices were almost unchanged overnight, falling to a new national average of $2.626 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 14.5 cents more expensive than it was a month ago, but it's $1.062 cheaper than last year.

In other Nymex trading, gasoline for September delivery added 265 cents to $2.0221 a gallon and heating oil for September delivery rose about 2 cents to $1.9246 a gallon. Natural gas for September delivery rose 7 cents to $2.875 per 1,000 cubic feet after tumbling 14.1 cents on Friday.

In London, Brent prices rose 21 cents to $74.40 a barrel on the ICE Futures exchange.



by the associated press

Pickens alternative energy plan , is put on the side

NEW YORK — The past year has been tough on T. Boone Pickens and his $60 million mission to wean America off of foreign oil.

Over the past 12 months, Pickens pressed the public to rethink its use of energy. His "Pickens Plan” called for a number of changes such as investing in wind and solar energy, rebuilding the country’s electrical grid and replacing gasoline with natural gas in cars and trucks.

Pickens says he was influential in starting a national dialog on energy and helped draft legislation that would give tax incentives for natural gas-burning vehicles.

But after spending millions on television commercials and a public relations tour that took him to 74 cities and 22 town halls, his plan has run into some sizeable hurdles, most notably a crash in energy prices.

As prices plunged, the Texas billionaire’s hedge funds lost billions of dollars. Pickens also scrapped plans for the world’s biggest wind farm, and California voters rejected a natural gas initiative he backed.

"I do wonder how long that I can continue at the pace,” Pickens, 81, said Tuesday in an interview with Associated Press reporters and editors. "I know my time is limited. I’m in a hurry. I want to get this done.”


Billionaire cites progress
During the past year, Congress has approved incentive programs that will funnel billions of dollars to solar, wind and other renewable energy programs. The House of Representatives passed an energy bill that would create a cap-and-trade system for carbon dioxide emissions.
"I think we should be given credit for some part of that,” he said.

When Pickens announced his plan last year at this time, oil cost more than $130 a barrel and gasoline went for more than $4 per gallon. Crude has since fallen as low as $32.70 and now trades at $62.34.

Gasoline costs about $2.61 at the peak of the driving season.

While slumping energy prices have been a silver lining during the recession, there are some fears that the urgency to build solar, and for Pickens, wind power, is now diminished. For example, the natural gas that power companies use now costs less than half of what it did last year, making it harder for wind to compete.

The Texas oil man made a big splash last year by leasing about 200,000 acres in West Texas for a massive 1,000 megawatt wind farm. But he said Tuesday that the plan has fallen apart because of technical problems concerning transmission.

"We’re not going to be able to do them (in Texas), at this point,” he said.

Pickens said he already has 687 wind turbines on order from General Electric, and he’ll probably spread them among other projects.

The Pickens Plan also calls for building fleets of cars and trucks to burn natural gas.

But so far efforts have failed to create incentives for natural gas vehicles.

Last year, Pickens’ Clean Energy Fuels Corp. pumped $19 million into a California bond initiative that would have handed rebates to people who bought natural gas and other alternative-fuel vehicles. But critics said the measure would have steered taxpayer dollars to Pickens, who is the majority shareholder of a company that supplies natural gas for transportation, and voters rejected it.

He’s now pushing for a similar measure in Congress.

Today, Pickens will release an ad promoting natural gas as an alternative fuel for cars and trucks. He said he also will be in Washington standing next to Sens. Robert Menendez, and Harry Reid when a natural gas bill is announced.

He’s embarking on another tour across the country to remind the public that even though oil prices are lower than last year, the world still faces an energy crisis.



by the associated press

Rebels of nigerian drive up Oil

A small group of insurgents in Nigeria's oil-rich Niger Delta helped drive up oil prices around the world yesterday by announcing a strike against one of Royal Dutch Shell's two main export terminals in the West African nation.

Spurning a Nigerian government offer of amnesty, members of the Movement for the Emancipation of the Niger Delta (MEND) have continued a series of attacks on oil installations. The group and its allies have now shut down a total of about 900,000 barrels a day, according to Argus Global Markets, an industry newsletter. In an e-mail yesterday, the insurgents claimed to have set fire to Shell's Forcados terminal with a "massive explosion" and to have sunk a Nigerian military patrol boat with more than 20 soldiers on board.

News of the attack helped prop up oil prices, which rose $2.33 a barrel, or 3.4 percent, to $71.49 a barrel on the New York Mercantile Exchange yesterday.

Prices rose despite a new International Energy Agency forecast warning of sluggish increases in world crude oil supplies over the next few years, but adding that demand would be even more sluggish. The group said that supplies through 2014 would rise 1.5 million barrels a day less than previously expected, but that oil consumption would be 3 million barrels a day less than the IEA had previously forecast.

"Whether we end up facing a supply crunch again by mid-decade, or with a more comfortable buffer of supply flexibility, depends largely on the pace of economic recovery and government action on efficiency", said Nobuo Tanaka, IEA executive director.

For now, however, oil supplies are plentiful, many analysts noted. World inventories are high and demand for petroleum products is weak because of the global economic slowdown. As a result of falling oil consumption and new capacity added in Saudi Arabia and Angola, there is about 6 million barrels a day of spare oil production capacity worldwide.

But the Nigerian attacks have eaten up a little bit of that cushion and have damaged the interests of several international oil companies, including Royal Dutch Shell, Chevron and the Italian oil giant ENI.

Shell, which operates and owns 55 percent of a joint venture in the marshy Niger Delta region, has suffered a series of attacks that cut output from its Forcados terminal to 25,000 barrels a day from nearly 200,000 barrels a day earlier this year and more than 400,000 barrels a day before attacks in February 2006, according to Argus Global Markets.

The attacks have also cut into the Nigerian government's oil revenues. "With Nigeria's ever increasing budget deficits, the country cannot tolerate this decline in crude production for much longer," Sebastian Spio-Garbrah, an analyst with the Eurasia Group, said in a report on the region.

Nigerian President Umaru Yar'Adua recently offered to grant amnesty to insurgents who turned in weapons and renounced "militancy." The offer is open for 60 days.

In an e-mail response to questions yesterday, a MEND spokesman who uses the name Jomo Gbomo said: "We do not need amnesty. What we need is justice." He said that at least one leader of a loosely affiliated group had accepted. He called the person "a political thug."

In an earlier note, he had said that the Nigerian government was offering large sums of money to entice groups into accepting the amnesty offer. "Only those who are willing to sell their birthright for a bowl of porridge will accept while the rest of us will continue the struggle until justice is achieved," he wrote.

Spio-Garbrah said the amnesty would likely fail because the Nigerian government "has a historical credibility problem in the Delta." The oil-rich region has long complained that the federal government does not share enough proceeds from oil.

Shell spokespeople in the United States could not be reached for comment, but Bloomberg News quoted a Nigerian-based Shell spokesman as confirming the attacks.

from the washington post

Big oil takes new role

HOUSTON — International oil companies poised for a return to Iraq find themselves in an unfamiliar spot, preparing to assist rather than lord over drilling operations and taking risks that at first glance don’t appear worth the effort.

The bigger risk, however, might be failing to seize whatever opportunity presents itself in a country with the world’s third-largest oil reserves.

Iraq desperately needs oil revenue for reconstruction, and it wants to double its daily crude output within the next four to five years.

On Monday, the country’s Oil Ministry is set to auction off service contracts that in total may pay up to $16 billion over 20 years to the dozens of oil companies that have qualified to bid.


How will it work?
When international oil companies agree to work in a country, they’re typically awarded a portion of the oil that’s pulled from the ground. That’s how they produce profits and increase reserves, a vital asset. They don’t normally work for fees alone.
But in Iraq, the goal will be to get their foot in the door and eventually use their vast sums of capital and know-how to wrangle a greater stake in the developments — namely, a share of the production.

"Right now, they’ll take whatever is available,” said Fadel Gheit, an energy analyst at Oppenheimer & Co. "But this is not their business. Their business is to be in charge. They’re not spectators. They’re players.”

With an estimated 115 billion barrels of proven reserves — behind only Saudi Arabia and Iran — Iraq could provide a rare opportunity for international producers that are finding it harder and more expensive to gain access to new oil.

"The bigger picture is this could lead to other things,” said Brian Youngberg, an analyst at Edward Jones. "I’d think that’s what their plans are: to get more of a piece of the action down the road.”

The technical-service contracts that are likely to be sought by Exxon, Royal Dutch Shell PLC, Chevron Corp. and 30 other oil companies hardly seem worth the risk, at least for the largest producers.

There’s still no law governing oil revenue in Iraq. There’s also a serious rift between the semiautonomous Kurdish region, which has two of the six oil fields that are up for bid, and the central government in Baghdad.

Each has accused the other of setting up illegal contracts with overseas oil companies.



by the associated press

The value of the dollar

NEW YORK — Oil prices jumped above $70 a barrel Thursday after the government said that the economy may be faring better than previously thought.

Benchmark crude for August delivery added $1.56 to settle at $70.23 a barrel on the New York Mercantile Exchange. In London, Brent prices increased $1.45 to settle at $69.78 a barrel on the ICE Futures exchange.

The value of the dollar again is playing a strong role in the price of crude.

Crude prices have fallen off after peaking above $73 a barrel earlier this month as the dollar strengthened.

Most experts agree prices on Nymex, and at the local gas station, hit levels that weren’t supported by meager demand for energy.

They blame investment money that has flowed into the market, using oil as a hedge against inflation.

Retail gasoline prices fell for the first time in nearly two months Monday, and have fallen every day since. The national average lost another 0.9 cents to $2.667 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

A gallon of gas is 24.2 cents more expensive last month, but it’s still cheaper than last year when prices topped $4 a gallon.

Stores of natural gas, a key energy source for power plants, also continued to build as manufacturers slowed production and major employers trimmed operations.

The government reported Thursday that natural gas supplies rose again last week, though less than analysts expected.

In other Nymex trading, gasoline for July delivery rose 5.58 cents to settle at $1.8983 a gallon and heating oil gained 3.82 cents to settle at $1.7763 a gallon. Natural gas for July delivery advanced 8.3 cents to settle at $3.844 per 1,000 cubic feet.



by the associated press

Big oil prepares comeback in Iraq

BAGHDAD — More than three decades after they were booted from the country by Saddam Hussein, international oil companies are poised for a return to Iraq, where next week they will bid for a slice of the country’s vast crude reserves.

Iraq needs the expertise of internationals that can develop its dilapidated oil and gas industry. The country lacks the oil revenues needed for reconstruction after a U.S.-led war.

Yet a constitutional fight pitting Oil Minister Hussain al-Shahristani against the parliament and the semiautonomous Kurdish government threatens to undercut the bidding process.

Discord over the two days of bidding scheduled to begin Monday lies in a struggle between Iraq’s various religious and ethnic factions over control of one of the world’s largest proved reserves of oil — an estimated 115 billion barrels. And the debate in Baghdad is tinged with a troubled past that includes some of same international companies now back at the table.

Exxon Mobil, Royal Dutch Shell, Repsol, the China National Petroleum & Chemical Corp. and Russia’s Lukoil and other approved companies, have been asked to put up a total of $2.6 billion for what the ministry calls "soft loans.”

In return, they will have the right to develop Iraq’s main oil fields, which could net the companies a total of $16 billion. The companies also must shoulder the costs of creating a national oil and gas joint-venture.

In return, Iraq has offered limited access, through the service contracts, to its oil fields that hold 43 billion barrels of reserves. But the contracts provide little in the way of security, physically or contractually, to big oil companies.


by the associated press

Oil industry more spending on lobbying

HOUSTON — Oil and gas companies have accelerated their spending on lobbying faster than any other industry, training their gusher of profits on Washington to fight new taxes on drilling and slow efforts to move the nation off fossil fuels.

The industry spent $44.5 million lobbying Congress and federal agencies in the first three months of this year, on pace to shatter last year’s record. Only the drug industry spent more.

Last year’s total of $129 million was up 73 percent from two years earlier. That’s faster than any other major industry, according to data from the Center for Responsive Politics.

From the late 1990s through the first half of this decade, the oil industry spent roughly $50 million to $60 million a year on lobbying. It ramped up lobbying in 2006, when Democrats retook Congress, and further as President Barack Obama took office.

"They’re under attack, they’re ramping up their operations and they’ve got money to spend,” said Tyson Slocum, who runs the energy program at watchdog group Public Citizen. "They’re in much better position than other industries to draw upon financial resources for their lobbying effort.”

Billions of dollars in oil profits in recent years have made the industry a target for new and higher taxes on exploration and drilling. Oil companies and refiners are also trying to blunt the effect of costly climate change legislation pushed by Obama.

While most oil and gas executives acknowledge the nation needs cleaner energy, they say lawmakers are misguided about how quickly it can happen. They warn that taxes and tighter rules on exploration could cripple the industry before new technology is developed.


Lobby sees success
Sean Brodrick, a natural resources analyst at Weiss Research Inc., cited the coal lobby as an example of one that’s already had some success with the Obama administration.
He noted a futuristic coal-burning power plant in Illinois that languished under the Bush administration has now found favor with Obama Energy Secretary Steven Chu.

The Energy Department will commit more than $1 billion to the project under an agreement announced last week.

"I think (the Obama administration) will make some accommodations,” Brodrick said. "They may speak really tough before these laws are enacted, but you watch, I bet the energy companies will have some effect in actually shaping how these laws finally come out of the big sausage factory.”



by the associated press

Gas reserves

COLUMBUS, Ohio — The country’s natural gas reserves are much bigger than previously thought, according to a report released Thursday.

Thanks to new technology that has allowed producers to drill for gas in shale rock, the Potential Gas Committee in Golden, Colo., said that the country’s estimated reserves are 35 percent higher than just two years ago and have reached the highest level since the group started tracking the information 44 years ago.

The report comes as natural gas is being touted as a way to help reduce U.S. dependence on foreign oil and cut emissions.

"Our knowledge of the geological endowment of technically recoverable gas continues to improve with each assessment,” John Curtis, professor of geology and geological engineering at the Colorado School of Mines and the committee director, said in a statement. "Furthermore, new and advanced exploration, well drilling and completion technologies are allowing us increasingly better access to domestic gas resources — especially ‘unconventional’ gas — which, not all that long ago, were considered impractical or uneconomical to pursue.”

The committee estimated the country’s total natural gas resources at 2,074 trillion cubic feet, an increase of 542 trillion cubic feet from its last report.

The report is similar to a study prepared last summer for the natural gas-backed American Clean Skies Foundation that found the country had 2,247 trillion cubic feet of natural gas reserves — a 118-year supply at 2007 production levels. The U.S. consumes about 20 trillion cubic feet of natural gas per year.

Natural gas is used to generate about a fifth of the nation’s electricity as well as to heat homes. Those who are pushing natural gas the hardest, like Texas oilman T. Boone Pickens, have promoted natural gas as a transportation fuel that could be used to reduce dependence on foreign oil.




by the associated press

Crude Drops

LONDON (Dow Jones)--Crude oil prices extended Friday's falls Monday as further strengthening in the dollar prompted traders to take profits from oil's recent rally to seven-month highs.

Crude dropped back towards $70 a barrel - with the outgoing ICE July Brent contract dipping below - as the rising greenback made commodities less attractive to investors seeking a currency and inflation hedge.

But prices were cushioned by both internal and external reaction to Iran's presidential elections results and fresh militant claims of attacks on Nigerian oil producing infrastructure.

"Looking at the Iranian news I would have expected [crude] to be higher, but at the moment the dollar rules," said Jim Rintoul, analyst at London-based trade advisory TheOilTrader.com.

At 1131 GMT, the front-month July Brent contract on London's ICE futures exchange was down $1.16 at $69.76 a barrel ahead of expiry later Monday.

The front-month July light, sweet, crude contract on the New York Mercantile Exchange was trading $1.10 lower at $70.94 a barrel.

The ICE's gasoil contract for July delivery was down $4.25 at $577.75 a metric ton, while Nymex gasoline for July delivery was down 191 points at 202.40 cents a gallon.

Iran saw protesters rail against the outcome of the weekend's presidential election, questioning irregularities in the voting process after incumbent President Ahmadinejad was reelected. U.S. and European governments also questioned the results .

While analysts didn't rule out a possible price reaction to the events, traders appeared more focused on the greenback and cautious of whether crude prices may have recently moved too far, too fast.

"There might be a knee jerk reaction to scenes of demonstrations in the street and arrests, by oil traders expecting prices to go up," said Manouchehr Takin, senior analyst at London's Center for Global Energy Studies. "But they will realize in a few days or weeks that the world will go on."

Geopolitical tensions surrounding Iran have tended to support oil prices given the country's position as the second largest producer in the Organization of Petroleum Exporting Countries and its proximity to the waterways through which much Middle East crude flows.

Despite crude's move lower Monday, market participants warned prices still remain susceptible to further gains, particularly to any news suggesting the worst of the global downturn has now passed. Economic optimism has helped spur a doubling in crude prices in the last six months as investors chase riskier assets for higher returns, but the move has come without a corresponding improvement in near-term market fundamentals, many analysts say.

"Modest improvements in the underlying fundamentals are reflected in wildly disproportionate increases in prices as commodities investors pile in," said analysts at KBC Market Services in London. "We live in a world where tomorrow's oil price is with us today."

Any further strengthening in the dollar could trump fundamental oil market developments, analysts suggested.

The dollar climbed against most other major currencies Monday on investor relief that a weekend meeting of the world's leading finance ministers generated nothing to shake the currency's reserve status.

"In very short term it's a case of watching the dollar and all the stories behind why the dollar is picking up again," said Ole Hansen, managing director of futures and fixed income trading at Saxo Bank in Copenhagen.

Nigerian militants said they had destroyed three Chevron Corp. (CVX) facilities in the Niger Delta over the weekend and threatened to extend their operations to other states in the oil-rich region. Neither the Nigerian military or Chevron were immediately available for comment.



from the wall street journal

Gas prices rise

COLUMBUS, Ohio (AP) — Gas prices rose Monday for the 48th straight day, matching a record going back to at least the 1970s, with prices now up nearly two-thirds since the beginning of the year even as demand from motorists remains weak.

Yet the oil prices that influence what you pay at the pump are taking a breather from a three-month rally, with benchmark crude for July delivery falling $1.42 to settle at $70.62 a barrel on the New York Mercantile Exchange. Crude prices have fallen nearly 3 percent over the past two trading days.

The good news for consumers is that gasoline prices may be peaking in the next couple of days. Wholesale gasoline prices in the Chicago area, which serves the upper Great Lakes, have fallen about 30 cents a gallon from just 10 days ago, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. Gas prices in the region have been more expensive than much of the rest of the country.

But money flowing into energy markets continues to confound experts. Even as oil prices fell, natural gas prices surged more than 8 percent.

Other than the fact that natural gas prices had fallen so far, there seemed little reason to buy it. The latest index of manufacturing in New York indicated that demand weakened yet again. Manufacturers, major users of natural gas, have slashed thousands of jobs.

Spiking natural gas prices would be a concern for everyone, from the heavy industries that use it to power factories to consumers who use it to heat their homes.

Crude's upward track for most of the year has been mirrored by the declining value of the dollar. That's because crude futures are bought and sold in U.S. currency. Crude gets cheaper for many buyers as the dollar falls.

A lot of money has entered the oil market in recent months for that reason and, as would be expected, crude prices fell for the second straight trading day Monday as the dollar rebounded.

The Dow Jones industrial average fell 200 points Monday, which also may have pressured oil prices.

Prices at the pump rose 0.6 cents to $2.669 a gallon, according to auto club AAA, Wright Express and Oil Price Information Services. Prices are a nickel above where they were a week ago and 30.8 cents above month-ago levels, but remain $1.408 below year ago levels.

Consumers are now paying about $1 billion a day for gasoline compared with about $600 million a day over New Year's weekend and $1.5 billion a day or more a year ago, according to Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

The more than 60 percent increase in prices so far this year, Kloza said. Gas prices also rose 48 straight days in 2007.

In other Nymex trading, gasoline for July delivery rose less than a penny to settle at $2.053 a gallon and heating oil fell 2.2 cents to settle at $1.8156. Natural gas for July delivery jumped 32.5 cents to settle at $4.182 per 1,000 cubic feet.

In London, Brent prices fell $1.48 to settle at $69.44 a barrel on the ICE Futures exchange.




by the associated press

Oil prices hit 8-month high

NEW YORK — Oil prices hit an eight-month high as the dollar fell and reports suggested that consumers and business may be more willing and able to spend money on energy.

Benchmark crude for July delivery rose $1.35 to settle at $72.68 on the New York Mercantile Exchange.

In London, Brent prices added 99 cents to settle at $71.79 a barrel on the ICE Futures exchange.

Crude prices rose sharply in the morning after the federal government announced a drop in first-time jobless claims last week. Another report said retail sales grew in May for the first time in three months, in part because of spiking gasoline prices.


Experts see demand
Gasoline prices are following crude upward, even though most energy experts can find no solid basis for either.
"I still think we have a better chance of seeing $40 (per barrel of crude) than we do $80, but I’ve been saying that all along and maybe I’m desperately wrong,” said Peter Beutel of Cameron Hanover. "We’re more overbought that we were last year.”

In the summer of 2008, crude prices neared $150 per barrel before prices crashed. Crude traded below $33 per barrel before the year was over.

On Thursday, the International Energy Agency in Paris said that the slump in global oil demand in 2009 would be slightly less severe than previously expected. The organization revised its demand estimate upward for the first time in 10 months.

The IEA said in its monthly survey that global oil demand would fall by 2.9 percent to 83.3 million barrels a day this year. In today’s environment, even that is seen as good news. In May, the organization was expecting a 3 percent annual fall in demand, the sharpest rate of decline since 1981.

Oil markets have surged largely because of investor fears that massive fiscal stimulus spending could weaken the U.S. currency. The euro climbed to $1.4127 Thursday from 1.399 the previous day. Commodities can be used as a hedge against a falling dollar.

Retail gas prices added a half cent overnight to a new national average of $2.632 a gallon, according to AAA, Wright Express and Oil Price Information Service. Gas is 38.4 cents a gallon more expensive than last month.

Meanwhile, the Energy Department’s Energy Information Administration said natural gas stockpiles jumped last week.

A large natural gas inventory is a sign that the country is using less energy as manufacturers curtail operations.



by the associated press

Expanded drilling bill

WASHINGTON — Congress sent mixed messages to the oil and gas industry Tuesday as a Senate committee voted to expand exploration in the Gulf of Mexico while a group of lawmakers introduced a bill to regulate a commonly used drilling procedure.

The industry hailed the 13-10 vote in the Senate Energy and Natural Resources committee to open more of the eastern Gulf of Mexico to drilling, including an area called the Destin Dome that is just 24 miles off the coast of Florida.

"In the eastern Gulf, we’re talking about an area with trillions of cubic feet of American gas, and potentially billions of barrels of American oil,” said Barry Russell, chairman and CEO of the Independent Petroleum Association of America. "And the best part is: Every bit of it resides in areas in proximity to existing pipelines and needed infrastructure.”

The vote came on a broad energy bill that also includes sections on alternative sources. It’s not clear when the full Senate will take it up, but the provision will likely face opposition from Florida senators and others concerned about drilling so close to tourist spots.

Meanwhile, one senator and three House members introduced legislation that would give the Environmental Protection Agency the authority to regulate hydraulic fracturing, a routine part of drilling for decades in which water and chemicals are injected at high pressures to create fractures and increase the flow of oil.


Water safety
The bill introduced Tuesday would require companies to disclose the chemicals used in the process and allow the EPA to ensure compliance with the Safe Drinking Water Act.
Rep. Dan Boren, D-Muskogee, said hydraulic fracturing had been used in an estimated 1 million wells and had not posed any problems to drinking water.

Boren said the regulation called for in the bill would be "disastrous for the industry,” but predicted that it wouldn’t advance in Congress.



from the oklahoman

Oil inches higher above $68

SINGAPORE (AP) — Oil prices rose above $68 a barrel Tuesday in Asia as traders mulled whether a weak global economy justified a doubling of crude since March.

Benchmark crude for July delivery was up 40 cents at $68.49 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. On Monday, it fell 35 cents to settle at $68.09.

Oil prices have joined a surge in equity markets on investor optimism that the worst of a global recession is over. Crude touched above $70 a barrel last week, the highest since October.

However, crude inventories remain near 19-year highs and demand in the U.S., the world's largest consumer of oil, is sluggish.

Wednesday's release of petroleum inventory data from the Energy Department's Energy Information Administration could provide some insight about crude demand. Analysts expect a rise of 800,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Stocks unexpectedly rose last week after dropping the previous three weeks.

Traders are also eyeing the U.S. dollar, as a weaker American currency would bolster prices since investors often look to commodities such as crude as a hedge against inflation.

The euro gained to $1.3863 on Tuesday from 1.3927 the previous day.

In other Nymex trading, gasoline for July delivery was steady at $1.94 a gallon and heating oil rose 1.25 cents to $1.78. Natural gas for July delivery was down 2.7 cents at $3.70 per 1,000 cubic feet.

In London, Brent prices gained 42 cents to $68.30 a barrel on the ICE Futures exchange.



by the associated press

8-month high Oil prices

NEW YORK — Oil prices broke through the $70 per barrel barrier Friday and forecasters are broadening expectations for an upward swing in crude.

Benchmark crude for July delivery lost 37 cents to settle at $68.44 on the New York Mercantile Exchange, finishing the week with a gain of nearly $2 a barrel. Earlier in the day oil jumped as high as $70.32 per barrel, the highest since October.

Oil prices have been soaring for months despite a massive surplus of petroleum and natural gas. A large amount of speculative money has flowed into the markets, according to government reports, potentially taking advantage of a weak U.S. currency.

Surging energy prices appear to be outpacing an economic recovery for now, and there are concerns that consumers may pull back spending further, especially with retail gasoline nearing the $3 mark.

"That everyday, in-your-face experience of seeing higher gas prices at the pump; that has quite an impact on people’s psyche,” said Tom Kloza, publisher of Oil Price Information Service.

"There’s this feeling of ‘here we go again’ with what happened last year,” Kloza said. "It hurts discretional spending. It leaves people to think about not taking those summer vacations.”

Gas prices added another 2 cents overnight, climbing to their highest level in more than seven months to $2.592 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of gas costs 48.2 cents more than it did a month ago, but it’s $1.397 cheaper than last year.

This week, Goldman Sachs revised its forecast and predicted that oil would rally to $85 a barrel by the end of the year as the economy stabilizes and OPEC production cuts take hold.



by the associated press

Kurdish region exports oil

IRBIL, Iraq — Iraq’s self-ruled Kurdish region officially started pumping crude oil to the international market Monday, a development that will boost Iraq’s cash-strapped economy.

The move could also bolster the Kurds’ political clout and ease tension with the central government that has threatened to erupt into new violence.

Kurdish leaders hailed the exports as a chance to make up for lost time in Iraq’s oil industry. The country sits on the world’s third-largest known oil reserves, but the industry has been devastated by sanctions, sabotage and insurgent attacks, as well as the inability of Iraqi politicians to agree on an oil and revenue sharing law.

"It is an important and historic day for Iraq when its people make use of their natural resources properly,” Iraqi President Jalal Talabani, a Kurd, said during a ceremony in the regional capital, Irbil.


250K barrels a day
Nearly 100,000 barrels of oil were sent from the Taq Taq and Tawke oil fields to the national pipeline that carries it to the Turkish port of Ceyhan. Previously, oil pumped in the region was used for domestic consumption.
About 40,000 barrels per day will initially be sent from Taq Taq, which is in a remote area of Irbil, with another 60,000 barrels a day from the Tawke field in nearby Dahuk province.

The two fields are expected to reach a total capacity of 250,000 barrels per day within a year and 1 million barrels per day in the coming two to three years, said Khalid Saleh, a spokesman for the Kurdish region’s Natural Resources Ministry.



by the associated press

Crude still bucks traditional market basics

NEW YORK (AP) -- Oil prices appeared again to buck traditional market fundamentals, rising for the third straight day Friday despite a huge surplus and weak global demand.

Concerns that the U.S. bank bailout will spark a wave of inflation sent money flowing into hard assets like oil.

Benchmark crude for June delivery jumped $1.93 to settle at $51.55 a barrel on the New York Mercantile Exchange. In London, Brent prices rose $1.56 to settle at $51.67 a barrel on the ICE Futures exchange.

"It's surprised a lot of people that oil is hanging around $50 and not $40" a barrel, said Andrew Lebow, senior vice president and broke at MF Global.

Trader and analyst Stephen Schork suggested there was little reason for even small upward price movements, considering the sorry state of the world's economy. The government reported this week that the U.S. petroleum appetite is the lowest in a decade and oil inventories are now bloated with the biggest surplus in nearly 19 years.

"We do not have a thoughtful explanation as to why crude oil moved higher," Schork said in his Schork Report, "other than, there were more buyers than sellers."

Equities markets also moved higher Friday, which recently has propped up oil prices. Investors look to equities for signs that the economy is recovering, and they tend to pump money into commodities when the stock market rises.

The Dow Jones industrials average rose 1.7 percent and the Standard & Poor's 500 index rose 1.9 percent in late afternoon trading.

Natural gas futures, some say, give a better idea of what is happening in the economy.

In a break for consumers, natural gas prices fell again after dropping Thursday to the lowest price in more than six years. On Friday, natural gas for May delivery slipped 11.2 cents to settle at $3.297 per 1,000 cubic feet.

Natural gas, which is a major power source for electrical utilities, has been building up in storage at levels well above seasonal averages as manufacturers cut back on production. The Energy Information Administration reported Thursday that natural gas in U.S. storage is now 36 percent greater than it was at this time last year.

On Friday, American Electric Power blamed tepid electricity demand for a 37 percent drop in its first quarter earnings. The Columbus, Ohio, based power company said Friday that electricity use by industrial customers in its region fell 15 percent.

That falling demand can also be seen clearly in recent unemployment figures, with energy intense industries like manufacturing hit particularly hard.

The three major U.S. automakers have slowed down production this year to match a plunge in demand.

General Motors said Thursday it would shutter 13 assembly plants for up to 11 weeks this summer. That will disrupt the lives of nearly 24,000 workers.

Ford Motor Co. also has cut back on manufacturing this year.

Oil producers have been busy slashing crude exports in hopes of draining the global oil reserves and boosting prices.

On May 28, the Organization of Petroleum Exporting Countries is expected to consider another output reduction on top of the 4.2 million barrels a day it pledged to cut last year.

Deutsche Bank analyst Adam Sieminski said Friday in a research note that OPEC, which controls about 40 percent of global crude supplies, needs to slow its operations even more "to provide a more solid foundation to the oil price."

But there was evidence that some members of OPEC, pummeled by low prices, have begun to break quota agreements. Oil Movements, which tracks oil shipments at sea, said this week that OPEC compliance with quotas has stalled.

As global demand continues to sputter, companies continue to pump huge volumes of crude onto idle supertankers, effectively taking millions of barrels out of circulation. The goal is to bring that oil ashore once prices rise.

Oil Movements noted this week that tanker companies are reserving more space to store oil on top of the 100 million barrels that analyst say are already floating around at sea.

"Because the sellers can't find a bid for oil that they like, they'd rather just store it," said Andrew Lipow, president of Lipow Oil Associates.

Shipping lanes started to fill with idle tankers earlier this year when oil prices plummeted below $35 a barrel. Crude prices have stabilized around $50 a barrel, but Lipow said it still makes sense to store it.

Tanker companies have cut their rates during the past several months as OPEC exports less, and a number of new supertankers take to the seas, he said.

In other Nymex trading, gasoline for May delivery increased 4.76 cents to settle at $1.442 a gallon. Heating oil also rose 5.04 cents to settle at $1.3683 a gallon.


by the associated press

Investors see safety in Oil , with $ 50.00 Prices

NEW YORK (AP) — The best thing going for oil producers is that the world still needs millions of barrels of it everyday.

Even as factories shut down and consumption falters, investors continue to buy crude stocks on the expectation that the world's petroleum appetite will eventually return.

Benchmark crude for May delivery on Friday added 35 cents to settle at $50.33 a barrel on the New York Mercantile Exchange. With the May contract ending next week, traders focused on crude stocks with a later delivery under the June contract.

Crude for June delivery also increased 31 cents to settle at $52.47 a barrel.

"There's still a lot of money out there that has to go somewhere," said Michael Lynch, president of Strategic Energy & Economic Research. "They see it as a good buy long term."

Investors see oil stocks as the ultimate safe haven, a commodity that will almost certainly be in greater demand next year. That's what has kept prices aloft this week despite daily reports showing the world economy is running on less oil, not more.

The government said this week that U.S. storage facilities were bloated with the biggest surplus in nearly 19 years.

Other reports showed housing construction had stagnated to the second lowest level on record, and the number of Americans receiving unemployment insurance benefits rose above 6 million for the first time.

If that wasn't enough, the U.S. government, the Organization of the Petroleum Exporting Countries and the International Energy Agency all revised their demand forecasts, saying the world would consume even less petroleum in 2009 than expected.

A few months ago, such news probably would have pushed crude prices to new lows. But traders said they've already factored in the tepid global economy and have moved on. They're guided now by rising equities markets and a general hope that better times are ahead.

"Crude's really moving in sympathy with the stock market right now," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.

Analyst Phil Flynn also noted reports that China is pumping money into raw materials like oil to shield itself from depending too heavily on the dollar. He said in a research note that the move by China has persuaded other investors to snap up oil stocks as well.

"There is growing evidence that China will look to store oil and other commodities as opposed to U.S. treasuries," Flynn said.

Andrew Lipow, president of Lipow Oil Associates in Houston, said traders also expect a future shortage in crude as the economy picks up. Supplies may be high now, but oil exploration has declined and oil producers including both OPEC and other countries such as Mexico and Russia are sending less into the market.

Tanker tracker Oil Movements reported that exports from OPEC countries are expected to fall 560,000 barrels a day in the four-week period to May 2.

And Houston-based Baker Hughes Inc. said drilling has declined by nearly half from a year ago. The number of rigs actively exploring for oil and natural gas in the U.S. dropped by 30 this week to 975, Baker Hughes said.

A planned expansion of oil and gas drilling off the Alaska coast also was canceled Friday by a federal appeals court. A three-judge panel in the District of Columbia said the Interior Department failed to consider the impact on marine life before approving the program.

"If you throw in the general expectation that the economy will be less gloomy than what we've had in the past, I can see how that gives people reason to buy," Lipow said.

Still, all that speculation could wind up a bust.

Deutsche Bank analyst Adam Sieminski said Thursday in a research note that he expects oil prices to stay under $50 a barrel in 2009 and around $55 a barrel in 2010.

"The potential for further disappointing news on the global economy is factored into our view that prices in the second half of 2009 could end up comparable to the first half," Sieminski said.

Sieminski said OPEC's move to slash production by 4.2 million barrels a day is enough to siphon off some of the surplus in global inventories. But he said the group should consider cutting even more when it meets May 28 in Vienna.

"If the price stayed near $50 and inventories stay high, I think they'll definitely cut," said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney. "OPEC wants the prices above $70 so they'll try to push it up."

At the pump, retail gas prices were unchanged overnight at a national average of $2.052 a gallon according to auto club AAA, Wright Express and Oil Price Information Service. Gas was 13.2 cents a gallon cheaper last month, but it was $1.366 more expensive a year ago.

In other Nymex trading, gasoline for May delivery gained 1.84 cents to settle at $1.4927 a gallon and heating oil rose less than a penny, settling at $1.4225 a gallon. Natural gas for May delivery increased 13 cents to settle at $3.729 per 1,000 cubic feet.

In London, Brent prices gained 29 cents to settle at $53.35 a barrel on the ICE Futures exchange.

by the associated press

Oil Prices Fall 13 Cents

Oil prices dipped Friday after the government reported that the nation's unemployment rate rose to the highest rate since late 1983 . As emploers elimated 663,000 jobs .

Benchmark crude for May delivery fell 13 cents to settle at $ 52.51 barrel on the New York Stock Exchange .

Wire reported

Oil Prices heading upward again

Oil Prices headinng upward again .

These last few weeks the prices of oil , has been slowly higher .

From the dollar being weakened , OPEC has slowed down production . Which in return helped push the price of Oil , over 50 dollars .

And with Federal Reserve's sendind Billions to boost , US savings bonds . That might shoot the price of Oil , back to 100 dollars per barrel .