Oil hits new 6-month high above $66

[Joanne98]

Source: AP


LONDON (AP) -- Oil prices extended a rally to above $66 a barrel Friday to hit a fresh six-month high, after the U.S. reported a fall in oil inventories and further signs of an improving economy.

OPEC oil ministers, who on Thursday agreed to leave production levels unchanged, expected the rally to continue until 2010. "I think that by year end we will see $70 to $75," Abdalla Salem El Badri, secretary general of the Organization of the Petroleum Exporting Countries, said Friday in Vienna.

Benchmark crude for July delivery was up $1.16 cents to $66.24 a barrel by late morning in Europe in electronic trading on the New York Mercantile Exchange. On Thursday, the contract rose $1.63 to settle at $65.08, a six-month high and almost double the lows reached in March, when it fell below $35 a barrel.

The Energy Department's Energy Information Administration on Thursday said U.S. oil supplies dropped unexpectedly by 5.4 million barrels last week. Though crude inventories remain near 19-year highs, it was the third week in a row that supplies have fallen.


Read more: http://finance.yahoo.com/news/Oil-hits-new-6month-high-apf-15381268.html?sec=topStories&pos=2&asset=&ccode=

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It has NOTHING to do with an "improving economy". It's the Saudi's and the banks taking product off the market. Morgan Stanley even rented an oil tanker to put theirs in.

Morgan Stanley Hires Supertanker to Store Oil in Gulf

By Alaric Nightingale

Jan. 19 (Bloomberg) -- Morgan Stanley hired a supertanker to store crude oil in the Gulf of Mexico, joining Citigroup Inc. and Royal Dutch Shell Plc in trying to profit from higher prices later in the year, two shipbrokers said.

The ship is the Argenta, capable of carrying more than 2 million barrels, Paris-based Barry Rogliano Salles and Athens- based Optima Shipbrokers said in reports today. Morgan Stanley officials in London didn’t immediately reply to three phone messages seeking comment.

Banks and commodity traders are seeking new ways to make money after the Standard & Poor’s 500 Index fell by the most since 1937 last year and crude oil prices dropped more than $100 a barrel from their peak. Companies including Koch Industries Inc. and BP Plc are hoarding enough crude at sea to supply the world for almost a day.

“It’s a window of opportunity that won’t last long,” Gareth Lewis-Davies, a London-based energy analyst at Dresdner Kleinwort Group, said by phone. There may only be four or five banks with the expertise to make the trade, he said.

Frontline Ltd., the world’s biggest owner of supertankers, said Jan. 14 about 80 million barrels of crude oil are being stored in tankers, the most in 20 years. A purchaser could buy oil now, keep it for months at sea and fetch better prices by selling futures that are higher than the spot price.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aIbVHft2R3SE&refer=home

[Hannah Bell]

1. bought gas yesterday for $2.69. world economic activity down, in the us down something

like 6% last qtr.

so much for supply & demand.

[fasttense]

2. This is what will cause inflation.

Increase in gas prices will cause inflation as everything goes up to compensate for the ever increasing price of transporting everything across the globe. The increase in money supply will not be the cause.

This inflation causing oil bubble was caused by the billions of dollars pumped into the hands of the uber wealthy through the bailouts of banks/Wall Street/insurance firms. And you know what those uber wealthy are doing with our tax funded billions in bailouts? Why they are speculating in oil and causing oil prices to go up and up. The more Geithner and Summers give to the bankers/Wall Street/insurance billionaires, the more gas prices will go up.

So basically you and I are funding our own increase in gas prices. Don't you just love unintended consequences?

[durablend]

3. And of course they're not going to stop it...

Aside from the fact that they're making money (duh), more speculation looks like the economy actually is improving.

[chill_wind]

4. kicking and recommending. n/t

[Joanne98]

5. Here's a reuters article on "oil hoarding" from May 1st. Koch Industries pigging out

01 May 2009 09:16:56 GMT
Source: Reuters
* Oil company windfall from contango trade

* Over 120 mln bbls of oil, products held offshore

* Environmentalists say boosts risk of spills

* Shipping regulator called on to act

By Tom Bergin

LONDON, May 1 (Reuters) - Big international oil companies are making hundreds of millions of dollars storing crude on tankers offshore in a trading play that environmentalists say sidesteps shipping rules and puts coastlines at risk.

The $100 per barrel drop in crude oil prices since July, to around $50, has pushed the market into an unusually sharp contango -- a scenario where the cost of oil today is much lower than the price of oil in the future.

Meanwhile, the global economic crisis has led to a more than halving in the cost of chartering oil tankers since last year.

This combination has created an opportunity to buy oil, simultaneously sell it for future delivery to lock in a profit, while storing the oil at sea until the delivery date.

London-based oil major BP <BP.L> made an exceptional gain of around $500 million in its downstream arm in the first three months of 2009, mainly due to the contango trade, Chief Financial Officer Byron Grote told analysts this week.

U.S. rival ConocoPhillips <COP.N> said last week that it spent around $1 billion in the first quarter buying crude to take advantage of the unusual market structure.

Other oil companies including Royal Dutch Shell <RDSa.L> said they also benefited from arbitraging the contango, while ship brokers said trading groups such as Swiss-based Gunvor and U.S.-based Koch Industries also participated.

In total, close to 100 million barrels of crude are being stored offshore, compared to none a year ago, Jens Martin Jensen, acting chief executive of Frontline <FRO.OL>, one of the world's biggest independent oil tanker owners, said last week.

Analysts have since said the figure could be even higher and that around 25 million barrels of refined products, including jet fuel and gasoil, are also being stored.

This compares with global daily consumption of around 84 million barrels a day and the roughly 600 million barrels of crude which is normally in transit on the seas from producers to users, according to International Energy Agency figures.

"This is an insane situation," said Professor Rick Steiner, marine biologist at the University of Alaska Fairbanks, who worked on the 1989 Exxon Valdez oil spill, the U.S.'s worst ever.

The Valdez clean up cost $2.5 billion and twenty years on, still-pungent oil still lingers on some Alaskan beaches.

http://www.alertnet.org/thenews/newsdesk/L1633954.htm

[hunter]

6. Bounce, bounce, bounce. This is gonna hurt bad.

High oil prices followed by economic slumps followed by low prices followed by economic recoveries followed by high prices... all the way down into the pits of hell. I doubt this economy will ever recover.

We've got to build a new economy that's not dependent upon oil simply because the easy oil is going, going, gone...

[NickB79]

8. Sssshhhh, don't point that out

Just keep up the talking point that if only we could get rid of those pesky speculators and/or OPEC, gas would be 99 cents a gallon for the rest of our lives, the DOW would shoot past 30,000, we'd all get Hummers, and kittens would crap rainbows.

[Baclava]

7. Gas prices go up right after Memorial Day. Who woulda thunk it?

Where have I heard this before?

The annual "screw the vacation drivers" - just like clockwork.

[BeFree]

9. Price controls, or...

nationalize the industry?

The importance of oil prices to the economy has been proven to be so great that we must take control so that damages can be limited. The American public must be protected.

The democrats better get off their asses and do something or they will get blamed for the coming damage.