Developments so far this week
Oil traded in a narrow range around $104 in NY and $118 in London as economic news was mixed and there were no major developments in the Iranian confrontation. US gasoline futures continued to fall – down another 4 cents a gallon so far this week to $3.15. This is now 25 cents per gallon below the highs reached in early April.
Natural gas futures took a 9.3 cents per million BTUs surge to close at $2.07 at the end of Wednesday. Analysts attributed the move to short covering rather than any news about fundamentals.
Once again the API’s weekly telephone survey to determine US oil stocks seem to have gotten seriously out of whack. The API announced Tuesday night that US crude stocks last week had fallen by nearly a million barrels while the EIA’s official figure Wednesday morning has them increasing by 4 million barrels. US gasoline and distillate inventories decreased by 2.2 million and 3.1 million barrels respectively. The EIA says that US crude production last week climbed to 6.1 million b/d the highest since November 1999. US oil product consumption over the last 4 weeks has been 3.2 percent lower than last year and gasoline consumption 4.2 percent lower.
The Carlyle Group, a private equity firm, seems to be the new favorite to take over Sunoco’s refinery near Philadelphia which is due to be closed in July. Sunoco is said to be putting in the refinery while Carlyle puts the cash and will manage the joint venture. Carlyle is supposed to be in a better position to demand benefit and tax concessions from unions and local and state governments who are desperate to keep the refinery operating.
Tehran’s envoy in Moscow said his government is considering a Russian proposal to halt the expansion of its nuclear program. Everybody seems to agree that oil will fall by $5-10 a barrel if some sort of agreement is reached.
The UK and Spain seem to be sliding into another recession while in the US the Federal Reserve says the economy will pick up. Chinese manufacturing seems to be improving although the country’s apparent demand seems to have slipped in March.
The body count in Syria continues to grow amid talk of foreign intervention. With Russia and Iran firmly on the side of the Assad government, there is no telling where a Western intervention would lead.
Baghdad is so excited about its new export terminals and recent growth in production that it is again talking about getting production up to a Saudi and Russian sized 10 million b/d within six years. For the umpteenth time, the Iraqi Parliament rejected the government’s proposal for a new oil law.