Oil prices to yet another new record

Oil prices rose to another record high today on the New York Mercantile Exchange.  After rising as high as $126.25 before they settled up $2.27 at $125.96 making it almost a $10 gain in oil prices for the week.  Prices are up more than 100% in the past year.  So far in 2008, oil prices have averaged $103.17 a barrel.

 

At the pumps gas prices climbed as well overnight, jumping 2.6 cents to a record $3.617 a gallon, according to a survey of gas statiosn by AAA and the Oil Price Information Service.

 

Meanwhile gasoline futures rose 6.34 cents to settle at a record $3.2012 a gallon after rising as high as $3.2038.  Heating oil for June delivery rose 12.62 cents to settle at $3.636 after rising as high as $3.6524 earlier in the session.  Natural gas futures rose 27.4 cents to $11.537 per 1,000 cubic feet after earlier hitting a record $11.569.

 

In a new KPMG survey of 372 petroleum industry executives, 55 percent said they believe oil prices will drop below $100 a barrel by the end of the year.  21 percent or those that responded predicted prices will end the year between $101 and $110 a barrel, while 15 percent forecast oil prices will be between $111 and $120 a barrel.

 

Only 9 percent said they expect oil prices to stay above $120 a barrel through the end of the year.

 

Of the executives surveyed, 44 percent said their companies plan to boost capital spending on exploration and production by 10 percent during the next year.

 

The survey was conducted last month and the data was released Friday.  It included executives for major oil companies, independent exploration and production outfits and other energy companies.

 

Brazilian President Luiz Inacio Lula da Silva said in an interview with a leading German magazine that Brazil wants to join OPEC to help lower global oil prices.  He said it plans to exploit its massive offshore oil reserves to make itself "a major oil exporter."

 

It is believed Brazil has proven reserves of 11.8 billion barrels.

 

Alberta, Canada Premier Ed Stelmach said the province will simply sell its huge reserves to other countries if the U.S. goes ahead with plans to impose import restrictions on fuels made from Canada's oil sands.

 

The U.S. is preparing to block the military and other federal agencies from buying fuel made from oil sands crude and other sources that produce higher greenhouse gas emissions than conventional fuels.

 

Stelmach said he has told U.S. officials that Alberta will no longer allow itself to depend primarily on the American market for exports.

 

It is estimated that Canada's oil sands could yield up to 175 billion barrels of oil.

 

Venezuela Oil Minister Rafael Ramirez said Venezuela's proven crude oil reserves have increased by 30 percent.  Venezuela now has 130 billion barrels of proven oil reserves.  After Canada's massive reserve of harder to process oil sands, that is the biggest reserve outside the Middle East.

 

Ramirez said Venezuela added 30 billion barrels to its total last month, and plans to quantify additional heavy crude deposits in the country's Orinoco River basin.

 

This week the number of rigs looking for oil and natural gas in the United States rose by seven to 1,846.  Of the rigs running nationwise, 1,475 were looking for natural gas, 361 for oil, and 10 were listed as miscellaneous..  One year ago the rig count stood at 1,740.

 

According to a Platts(http://www.platts.com/) survey of OPEC and oil industry officials released on Friday, OPEC pumped an average of 31.87 million barrels of crude oil per day in April.  Compared to March this was down by 350,000 barrels per day.  The sharp drop was largely the result of steep output losses in Nigeria.

 

Excluding Iraq, the 12 members which participate in output agreements pumped an average 29.49 million barrel per day, down from an estimated 29.85 million barrels per day in March.

 

"OPEC production has been relatively steady in recent months, but the sharp fall in Nigerian output shows how vulnerable overall supply from the group can be to developments in one country," said John Kingston, Platts global director of oil.  "Given that space capacity is also relatively tight, any disruption has a bigger impact on markets."

 

The latest estimates show the OPEC-12 missing their 29.673 million barrels per day target by 183,000 barrels.

 

With a blizzard hampering visibility, an operator of a frontloader struck a compressed air line while moving snowdrifts at a central power station in Alaska's Prudhoe Bay region, damaging the power supply to processing centers.  This halted the 380,000 barrels of crude oil per day that flow down the trans-Alaska oil pipeline.  Officials said production would be "way down" and would ramp back up over the next several days.

 

Bp's Northstar field also went off-line as a result of the power outage.  Northstar produces about 79,000 barrels of crude daily from a man made island in the Beaufort Sea.  All told, Alaska's North Slope field produces about 730,000 barrel each day.

 

The power supply has been re-energized, with four of the plants expected back online later Friday.  The hopes are to have the rest operating by Saturday.

 

According to Lehman Brothers, Saudia Arabia is getting ready to buy influence with the next president of the United States.  It is currently working on boosting its output by 1.3 million barrel a day, more than the expected increase in global demand next year--but the secretive nation is likely to keep its political tool, excess production capacity, close to it chest until it has a new U.S. president to win over.

 

Saud production is currently a little less than 10 million barrels per day.  Even though Saudi Arabia guards its oil production and reserves as state secret, it recently announced three long-awaited oilfields have begun production.

 

While the RSI keeps on rising now up to 77 the number of open June contracts keeps fallings, now down to 280,224 from 302,673 yesterday.  This is more than 100,000 less contracts then on April 28th.  Overall open contracts total 6,588,778 up from 6,545605 yesterday.  The 20 day moving average is at $117.43 and the 50 day moving average is also moving higher each day.  Yesterday it was at $109.23 today it settled at $109.71.  We should be seeing near term top forming on the charts and a breather should be in store.  The weekend break may just end up providing this break.