WTI is up $0.90 @ $103.83

WRI is down $0.36 @ $102.49

Brent is down $1.30 @ $119.91

I see no set of factors, in combination, that would take global production of crude oil higher in 2012, or next year, or thereafter.

Copper prices sank to their lowest level in three months as investors shed economically sensitive assets on weaker-than-expected growth in China and concerns about Spain’s debt load.

WASHINGTON (AP) — The Obama administration said Friday it is creating a multi-agency working group to coordinate federal oversight of hydraulic fracturing and other natural gas drilling techniques.

The working group, headed by White House energy adviser Heather Zichal, includes representatives of about a dozen agencies that oversee various aspects of drilling. Natural gas production has boomed in recent years as drillers use new techniques to gain access to wells that were hard to reach in the past.

Hydraulic fracturing, also called fracking, involves blasting mixtures of water, sand and chemicals deep underground to stimulate the release of oil or natural gas. Another technique is horizontal drilling.

Critics, including the industry and congressional Republicans, have accused President Barack Obama of having a double standard — saying he supports gas drilling on the one hand, but cracking down on it with the other.

The Interior Department is expected to issue new rules in the next few weeks on natural gas drilling on public lands.

Meanwhile, the Environmental Protection Agency is poised to regulate air pollution from oil and gas wells and has pursued tighter rules on wastewater from drilling operations.

Zichal and other officials were scheduled to meet Friday with industry groups, including the American Petroleum Institute and the American Gas Association.

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No article necessary. Just look at it.

WTI and Brent fell and then pared most of their losses. Currently WTI is down $0.24 @ $103.40

Source

“Banning oil speculators from commodities exchanges could drive down the price of oil by 40 percent and gasoline down by $1 a gallon, says Joseph P. Kennedy II, a former U.S. representative from Massachusetts and founder of Citizens Energy Corporation.

Today, speculators, who buy and sell oil futures without ever taking physical delivery of the product, dominate the market in pursuit of financial gain, Kennedy writes in a New York Times OpEd.

Supporters of allowing speculators buy and sell oil futures say they keep the market liquid and dilute risk.

Maybe it’s gone too far, Kennedy says.

“It’s one thing to have a trading system in which oil industry players place strategic bets on where prices will be months into the future; it’s another thing to have a system in which hedge funds and bankers pump billions of purely speculative dollars into commodity exchanges, chasing a limited number of barrels and driving up the price,” Kennedy contends.

Consumers are more sensitive to swings in oil futures unlike other commodities that naturally compete with substitutes.

“There is a fundamental difference between oil futures and, say, orange juice futures. If orange juice gets too pricey (perhaps because of a speculative bubble), we can easily switch to apple juice. The same does not hold with oil,” Kennedy writes.

“Higher oil prices act like a choke-chain on the economy, dragging down profits for ordinary businesses and depressing investment.”

Senator Bill Nelson, a Florida Democrat, has called for Commodity Futures Trading Commission chief Gary Gensler’s ouster if he doesn’t apply regulations limiting speculation in commodities markets.

“Middlemen are bidding up the price of oil and flipping futures contracts for a quick profit, much like speculators who bought and resold condominiums during the real estate bubble,” Nelson writes in a letter to President Barack Obama, according to Reuters.

“Mr. President, if CFTC Chairman Gary Gensler doesn’t act soon to implement rules that will cut down on speculation in the oil futures markets, then you should consider not reappointing him.”

“Commodities will decline this quarter as central banks in the U.S. and Europe refrain from adding further stimulus, removing the driver that helped to lift prices in the first three months, according to UBS AG. (UBSN)

“In the absence of further injections in the second quarter, we expect prices to drift lower,” analysts led by Hong Kong-based Peter Hickson said in an e-mailed report today. Crude oil, copper, nickel and cotton may decline, the report said.

Goldman Sachs Group Inc. cut its three-month outlook on commodities to neutral from overweight on March 28, saying that most raw materials reached targets after gaining and economic growth may soften in the second quarter. Commodity-exporting nations face the risk of lower prices in the coming months, the International Monetary Fund said on April 10.

Statements from the Federal Reserve’s Open Market Committee “suggest the likelihood of further quantitative easing is minimal,” the UBS analysts wrote. “A more durable global economic recovery has heightened concerns about rising interest rates and a stronger U.S. dollar.”

The Standard & Poor’s GSCI index of 24 raw materials has lost 1.2 percent since the end of March, eroding the 6.8 percent rally in the first quarter. Brent crude for May was little changed at $120.22 a barrel at 5:14 p.m. in Singapore, with the most-active contract 2.2 percent lower this quarter. Brent may lose $10 on higher Saudi oil output, UBS said….”

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Full article

Read here:

U.S. gasoline pump prices may have peaked for the year as demand slides, job growth slows and crude prices moderate.

Regular gasoline, averaged nationwide, has fallen five straight days to $3.915 a gallon, the longest streak since December, after surging 20 percent to $3.936 on April 4, according to data from AAA, the nation’s biggest motoring club. Americans have purchased 5.3 percent less gasoline so far this year than in 2011, data from credit-card receipts analyzed by MasterCard Inc. showed yesterday.

Deliveries (DOEDMGAS) to wholesalers last week were 5.4 percent below a year earlier, the Energy Department reported today. The department forecast consumption to decline to 8.65 million barrels a day this year, the lowest level in 11 years. The U.S. added the fewest jobs in five months in March, the Labor Department said April 6, limiting prospects for higher demand.

“Gasoline was the best-performing asset in the first quarter, but the sentiment is turning,” said Amrita Sen, a London-based analyst at Barclays Capital. “For the time being, our view is that it has probably peaked.”

Prices reached the highest level of 2011 at $3.985 on May 4, weeks before the U.S. Memorial Day holiday kicked off the traditional start of the summer driving season. The record retail price was $4.114 on July 15, 2008.

Gasoline in the U.S. will peak in May at $4.01 a gallon, the Energy Department said yesterday in its monthly Short-Term Energy Outlook.

Full article

“The US Energy Information Administration (EIA) released its weekly petroleum status report this morning. US commercial crude inventories rose by 2.8 million barrels last week, bringing the total US commercial crude inventory to 365.2 million barrels, around the upper limit of the five-year range for this time of the year.

A Platts survey provided a consensus estimate for a weekly inventory gain of 1.8 million barrels while the American Petroleum Institute had projected an inventory gain of 6.85 million barrels. Today’s increase is substantially less than the 9 million barrels gained last week.

Total gasoline inventories fell by 4.3 million barrels last week and remain in the upper limit of the five-year average range. Over the last four weeks, gasoline supplied has declined by -4% compared to the same period last year. Total motor gasoline supplied averaged 8.6 million barrels/day for the four weeks.

For the past week, crude imports averaged 8.5 million barrels/day, a drop of 1.3 million barrels/day from the previous week. Refineries were running at 83.8% of capacity, with daily input of nearly 14.4 million barrels/day, down by 395,000 barrels/day from the previous week….”

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“Oil rose from the lowest close in almost two months in New York after a European Central Bank official signaled the lender may act to stem the spread of the region’s debt crisis.

Futures gained as much as 0.7 percent. ECB Executive Board member Benoit Coeure suggested that the bank may revive its bond-purchase program in Spain, pushing up the euro versus the dollar. Crude declined yesterday after an industry report showed U.S. stockpiles rose for a third week. The Energy Department will release its inventory report later today.

“Oil is getting some support from a weaker greenback amid some ECB reassurances,” saidAndrey Kryuchenkov, an analyst at VTB Capital in London. “We also have a general rebound across the board along with equities after losses yesterday, though it seems this may be short-lived.”

Oil for May delivery was at $101.52 a barrel in electronic trading on the New York Mercantile Exchange, up 50 cents, at 11:33 a.m. London time. The contract yesterday fell 1.4 percent to $101.02, the lowest settlement since Feb. 14. Prices are up 2.7 percent this year.

Brent crude for May settlement on the London-based ICE Futures Europe exchange traded at $120.12 a barrel, up 25 cents. The European benchmark contract was at a premium of $18.55 to New York futures. The spread yesterday shrank 6.7 percent, the most since Feb. 20, to $18.86.”

Well not in those words exactly; more like they expect commodity prices to fall….

Source

Are investors rotating from the ‘safety’ of Apple to the new ‘safety’ of Gold and Silver?

Down 1.4% to $33.39, near all-time highs.

Oil is down $0.45 @ $102.01

Source

“A US Geological Survey research team says a remarkable increase in earthquake occurrence in the US in the past decade is “almost certainly man-made.”

According to the study by USGS, oil and natural gas extraction activity have possibly provoked a series of recent earthquakes from Alabama to the Northern Rockies.

However, USGS authors did not estimate a direct cause-effect relationship between oil and gas activity and earthquakes.

“It remains to be determined how they are related to either changes in extraction methodologies or the rate of oil and gas production,” says the abstract for USGS study, published by the Seismological Society of America.

However they gave a possible explanation for it. They relate it to drilling, which requires the disposal of millions of gallons of wastewater for each well. The number of wells drilled has increased over the past decade.

A recent series of earthquakes in north-eastern Ohio, the latest and largest being on New Year’s Eve, has prompted that state’s Department of Natural Resources to close or suspend development by natural gas drillers of five deep wastewater disposal wells pending an investigation into well impact on increased seismic activity in the area.

Earthquakes have been linked to so-called injection wells in other states. For example, Arkansas imposed a permanent moratorium on disposal wells in an approximately 1,200 square-mile area, due to enhanced seismic activity near the Fayetteville Shale.

“The acceleration in activity that began in 2009 appears to involve a combination of source regions of oil and gas production, including the Guy, Arkansas, region, and in central and southern Oklahoma. Horton, et al. (2012) provided strong evidence linking the Guy, AK, activity to deep waste water injection wells,” the study says.

The research team led by USGS geophysicist William Ellsworth, says the frequency of earthquakes began rising in 2001 across a broad swath of the country between Alabama and Montana and culminated “in a six-fold increase over 20th century levels in 2011.”

Meanwhile, according to the federal Energy Information Administration, shale gas production grew, on average, nearly 50 per cent a year from 2006 to 2010.”

Source

Follow up to that commodity theme….which will be key for the Kingdom of Oz…

From UBS:

“In Shakespeare’s Julius Caesar, a wizened soothsayer warns the great emperor to ‘beware the Ides of March’ – for death loomed over him, until this fateful date. Like Caesar’s confidant, the battered and grim UBS commodities & mining team, too, has a warning for its clients (albeit more prosaic): downside risks loom large for metals and miners, as we head into Q2 12.

There are three elements to our cautious call on industrial commodities and miners. On all three points, we are more cautious than our global macro and asset allocation colleagues:

• The end of Federal Reserve and European Central Bank (ECB) stimuli will cause an acceleration of capital flows out of emerging markets, hitting commodity demand.
• China is undergoing a difficult transition away from the powerful labour and capital mobilisation of the past 25 years. As the authorities refuse to stimulate private construction and infrastructure in the face of a slowdown, commodity intensity will fall.
• The US may see credit conditions deteriorate, post the ECB’s LTRO2 (longterm refinancing operation 2) and with a cyclical slowdown going into the middle of 2012. This would likely trigger a  broader risk-off event and a further acceleration of capital flows out of emerging markets.

Of the three elements of our call, we are seeing gathering evidence that the first  two themes are working. However, there is no conclusive evidence of an increase in US credit stress, nor consistent signs of a US slowdown. On our investment clock that leaves us firmly in zone four: The disinflationary boom.”

They then continue by saying that they use HYG (High Yield ETF) as a proxy for US credit conditions and that should it break the 200 DMA, we would move into zone 2, the DEFLATIONARY BUST! Ouch, scary…

Especially when looking at this chart, today we are breaking the 50 DMA and stand 4.2% higher than that 200DMA. Back in those summer days it is 1 or 2 trading sessions…Ouch, definitely scary…