Geez I just dont know how to pick this one-she is showing so much strength!! Lots of big bids above 50, and not much above 50 for sale. Plus oil is still set to decrease by all accounts...Hmmm think its definately a HOLD
Oil prices continue to fall
September 11, 2008
AP
Oil prices closed slightly lower in jittery trading on Wednesday, as the strengthening US dollar and signs of a slowing economy outweighed inventory drops and word that OPEC would cut production.
The Energy Department's Energy Information Administration said that crude inventories fell by 5.9 million barrels last week compared to the previous week, and that gasoline inventories fell by 6.5 million barrels.
The EIA also reported, however, that inventories of distillates - which include heating oil and diesel fuel - fell by a lower-than-anticipated 1.2 million barrels.
Refineries were running at a low 78.3 per cent of their capacity last week, the report said.
"It's being seen as somewhat aberrant because of the storms," said John Kilduff, senior vice president of risk management at MF Global LLC. "But I don't think you can ignore this data."
Light, sweet crude for October delivery fell 68 cents to settle at $US102.58 a barrel on the New York Mercantile Exchange, after initially jumping on the EIA's report. It was crude's lowest close since April 1. The contract fell by more than $US3 a barrel in the previous session.
The supply readings came after OPEC said it would reduce output by 520,000 barrels a day.
The Organisation of Petroleum Exporting Countries, however, decided not to take the more dramatic step of slashing production targets. The decision was viewed as a compromise meant to avoid a backlash from the biggest petroleum consuming nations while halting the rapid decline in oil prices.
A number of analysts said they did not expect OPEC's output decision to spark a sustained rally in oil prices, as investors remain concerned over slowing economic growth in the US, Europe and Japan.
"All they're saying is, 'We've been cheating for the past year.' .... I don't think the market's going to take it that seriously," analyst and trader Stephen Schork said by phone from Vienna. "I think the general mood is we are heading lower."
Antoine Halff, an energy analyst with Newedge USA, said OPEC's move could "be the most bearish signal to date in the oil market rout."
"The ministers appear genuinely concerned that the bottom is falling out of global demand and that once depleted stocks are rebounding with a vengeance," Halff said in a note. "Their panic is a testament to how soft the market has become. It is likely to grow even softer."
"You just can't fight the weight of the market right now," said Darin Newsom, senior analyst at DTN in Omaha, Nebraska. "I still think we're going to drop below $US100."
Accumulating evidence that demand for crude is falling away in developed nations has created an exodus from the oil markets. The EIA's report Wednesday showed that demand for gasoline, distillate fuel and jet fuel over the past four weeks a falling from last year's levels.
The US dollar rose against the euro, pound and yen, encouraging investors who used commodities to hedge against a weakening dollar to unwind those bets.
At 2pm EDT (0400 AEST Thursday), Hurricane Ike was about 410km west of Key West, Florida, and was moving toward the northwest at about 21km/h with top sustained winds of around 160km/h. It was expected to cross the Gulf of Mexico, strengthening to a Category Three.
Forecasters said that it could hit on Saturday morning about anywhere along the Texas coast, with the most likely spot close to Corpus Christi, where there are number of refineries.
The US Department of the Interior's Minerals Management Service said that as of Wednesday, about 95.9 per cent of oil production and about 73.1 per cent of natural gas production in the Gulf remained shuttered as Hurricane Ike approaches Texas. Oil and gas operators have had the bulk of their production shut down since they began preparing for Hurricane Gustav nearly two weeks ago.
In other Nymex trading, heating oil futures fell 2.23 cents to settle at $US2.9024 a gallon, while gasoline prices gained about a penny to settle at $US2.6616 a gallon.
Natural gas for October delivery fell 14.2 cents to settle at $US7.393 per 1,000 cubic feet; the EIA is scheduled to release its weekly reading on natural gas in US storage on Thursday.
OPEC cuts output to shore up market
September 11, 2008
AFP
The OPEC oil group has announced a cut of 520,000 barrels per day to its output, citing downside risks to the oil market as prices fell below $US100 for the first time since April.
After a marathon meeting in Vienna, which finished about 3am local time (1100 AEST) on Wednesday, the president said its members had agreed to begin reducing production immediately.
"If you do your own calculations, it is a cut of 520,000 barrels per day," said OPEC president and Algeria's Energy Minister Chakib Khelil, announcing a new OPEC output quota of 28.8 million barrels per day, excluding Indonesia - which officially left OPEC on Wednesday - and Iraq.
The cut, which immediately boosted sliding oil prices, was likely to dismay consumers hoping for bigger falls.
US energy secretary Samuel Bodman had asked for producers to keep oil markets well supplied.
Oil sank below $US100 for the first time in five months in London on Tuesday when Brent North Sea crude for delivery in October dropped to $US99.04 in late European trade.
But prices rebounded in Asian trade. New York's main contract, light sweet crude for October delivery rose by 92 cents to $US104.18 a barrel while Brent North Sea crude rose 65 cents to $US101.07.
Analysts had suggested OPEC would keep its official policy unchanged but would discreetly agree to rein in production by cracking down on output by some members, mainly Saudi Arabia, who are pumping above their quota.
Khelil said he did not expect the OPEC decision to reverse the downward trend of oil prices, which peaked at $US147 a barrel in July.
"My hunch is probably the price still will be going down despite the decision that we made," he said.
"I don't think this will affect the consumers in any way because first of all, there's an oversupply. Everybody agrees on that."
The stakes for OPEC were entirely different from the last time the group met in March when prices had broken through $US100 and were on a steep upwards trajectory.
The gathering this time led to questions about what price level the cartel wanted to protect as the market came down.
Iran, Iraq and Venezuela have identified $US100 as their minimum, while analysts see Saudi Arabia as being comfortable with a figure around $US80 or $US90.
Explaining its decision on Wednesday, OPEC identified a shift in sentiment in the oil market linked to falling economic growth, a strengthening dollar, easing geopolitical tensions and greater supply.
"All the foregoing indicates a shift in market sentiment causing downside risks to the global oil market outlook," it said.
OPEC also announced that Indonesia had formalised its departure from the group after it became a net importer of crude.
"The conference regretfully accepted the wish of Indonesia to suspend its full membership in the organisation," OPEC said in a statement.
Meanwhile, Russian vice premier Igor Sechin reached out to OPEC late on Tuesday, calling for greater cooperation between the cartel and his country, the world's biggest non-OPEC oil producer.
"Cooperation with OPEC is one of the priorities of Russia," he said, according to a statement read out at the opening of a meeting of OPEC's 13 members.
In production terms, the departure of Indonesia was more than compensated for by the arrival of Angola, which produces 1.85 million barrels a day; and Ecuador, which produces 500,000.
A statement from the group said Angola would hold the OPEC presidency for a year from beginning of next year.
The departure and arrivals brings OPEC's membership to 12 nations.
Their next meeting will be held in Oran, Algeria, on December 17.