Oil prices and news roundup for week ending May 9th, 2008

Oil prices have risen in price each of the past six trading sessions, rising $9.95 or 8.55% from their close on Friday, May 2nd to the high on Friday, May 9th.  As of the close this Friday oil prices had risen 8.29% this week.

 

Along with rising oil prices, heating oil and gasoline prices also rose to new records this week.  Heating oil settled on Friday at $3.6360 up 41.73 cents or 8.85%.  Gasoline rose to $3.2012 on Friday up 23.48 cents for the week or 9.27%.  Natural gas price rose for the week as well to $11.537 up 76 cents or 9.34%.

 

Making news this week Arjun Murti of Goldman Sachs predicted that oil prices should reach $150-200 a barrel within the next two years.  Meanwhile Keith Fitz-Gerald raised his guidance for oil prices to $225 per barrel.

 

The Energy Information Administration predicted oil prices will average $110 a barrel this year, up $9 from last month's forecast.  It also cut demand for U.S. petroleum products by 330,000 barrel per day this year; last month they predicted a drop 210,000 barrels per day.  It said thanks to strong demand from overseas that global oil demand will grow by about 12 million barrels per day, unchanged from last month's forecast.

 

Indonesia announced that it is considering leaving OPEC next year since it has primarily become a oil importer instead of an oil exporter.  Meanwhile Brazil is thinking of joining OPEC and seeing if they can help to bring down oil prices.

 

The Movement for the Emancipation of the Niger Delta(MEND) said former President Jimmy Carter has accepted its offer to mediate in the conflict going on in Nigeria "on the condition that the Nigerian government and any other relevant stake holder invites him."  On Tuesday the rebel group promised it would halt attacks on the oil industry in Nigeria if the Nigerian government would allow Carter to act as a mediator.

 

MEND's campaign of violence has cut oil output in Nigeria by around one fifth.

 

Crude inventories for the week climbed by 5.7 million barrels, much higher than the 1.5 million barrels that were forecast.  Gas inventories rose by 800,000, better than the expect 500,000 decline that was forecast.  Heating oil inventories dropped 100,000 barrels, analysts were expecting an increase of 1.3 million barrels.  Natural gas inventories rose by 65 billion cubic feet last week.  Refineries were running at 85% of capacity, slightly lower than last week, and much lower than normal for this time of the year.

 

Singapore Airlines announced it would be raising fuel surcharge fees once again anywhere from $5-$20 per flight depending on destination.

 

France's Total Oil reported 1Q profit of 18 percent, adjusted net income increased 9 percent to 3.25 billion euros($4.87 billion) thanks to higher commodity prices.

 

Members of Congress are talking about halting the buildup of the Strategic Petroleum Reserve.  It currently sits at a record level of 701.3 million barrels.  It has a current maximum capacity of 727 million barrels and President Bush wants to ultimately double the capacity to 1.5 billion barrels to protect against any supply disruptions.

 

Another Congressional proposal is for limiting the minimum collateral requirements for oil traders.  They are wanting to set the minimum margin requirement to at least 25%.  They hope this would discourage speculative spending.

 

Governors of Texas and Connecticut and some Republicans are calling for easing the federal mandate that requires blending 15 bilion gallons of corn-based biofuels into the nations gasoline supply by 2015.

 

The House Judicary Committee has called on OPEC's secretary general to make himself available to testify at a hearing on high gasoline prices later this month.  Lawmakes are pushin legislation to allow members of OPEC to be sues under U.S. antitrust laws.

 

President Bush and Republicans senators are jumping on high oil prices to renew their drive to allow drilling in parts of the Artic National Wildlife Refuge.

 

President Bus his planning to ask OPEC to increase oil production once again when he visits Saudia Arabia on May 16th.  OPEC Secretary General reiterated his position that oil supplies are adequate and there is no need for the cartel to boost production.  He also noted that several member countries are having a hard time finding buyers for their additional supplies.

 

Motorists in some part of California, Hawaii and New York are already pay $4 per gallon for gasoline. at the pumps.

 

A KPMG survey of petroleum executives found 55 percent believe oil prices will drop below $100 by the end of the year, while 21 percent prices will end the year between $101 and $110 and 15 percent believe oil prices will be between $111 and $120 a barrel.  Only 9 percent believe oil prices will stay above $120 a barrel through the end of the year.

 

In the same survey executives said 44 percent of their companies plan to boost capital spending on exploration and producition by 10 percent during the next year.

 

Alberta, Canada Premier has threatened to sell its huge reserves of oil sands to other countries if the U.S. goes ahead with plans to impose restrictions on fuels made from Canada's oil sands since they have higher greenhouse gas emissions than conventional fuels.

 

Venezuela announced that it has proven oil reserves have increased by 30 percent to 130 billion barrels of proven oil reserves.

 

The number of rigs looking for oil and natural gas increase for seven this week.

 

OPEC pumped an average of 31.87 million barrels per day in April, down by 350,000 barrels in large part due tp the steep output losses in Nigeria.  The latest estimates show OPEC, minus Iraq missed their 29.673 million barrels per day target by 183,000 barrels.

 

A blizzard hampered visibility in Alaska's Prudhoe Bay region and frontloader struck a compressed air line while moving snowdrifts.  This force the shutdown of 380,000 barrels of oil.  The power supply had been re-energized and the hopes were to have full operation by Saturday.

 

For more details on any of the news stories from this week check back through the blog.

 

(See bottom for chart of oil prices.)