energy and markets newsletter 100511

8/3/2019 Energy and Markets Newsletter 100511

1/8

October 5,2011

Energy Data Highlights

Crude oil futures price10/3/2011: $77.61/bbldown$2.63 from week earlierdown$3.97 from year earlier

Natural gas futures price10/3/2011: $3.617/mmBtudown$0.165 from week earlierdown$0.183 from year earlier

Retail gasoline price10/3/2011: $3.433/galdown$0.076 from week earlierup$0.701 from year earlier

Retail diesel price10/3/2011: $3.749/gal

down$0.037 from week earlierup$0.749 from year earlier

Weekly coal production9/24/2011: 21.193 million tonsdown0.015 million tons from week earlierdown0.611 million tons from year earlier

Natural Gas/ Power News

EIA Storage Release 9/29/11 (Actual): +111 BcfPrevious Week: +89 Bcf-2.7% Change from 1 Year Ago+0.2% Change 5-year Average

North Dakota Bakken Shale infrastructure projects reach $3 billion markAbout $3 billion worth of infrastructure projects are on the drawing boards inNorth Dakota's Bakken Shale play to monetize the natural gas produced inassociation with oil, which otherwise would be lost to flaring, operators and state

officials said in interviews.About 134,000 Mcf/d, or almost one third of the gasproduced in North Dakota, is flared because of the lack of infrastructure to take

Follow
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RCLC1&f=Dhttp://www.eia.gov/dnav/ng/hist/rngc1d.htmhttp://www.eia.gov/oog/info/gdu/gasdiesel.asphttp://www.eia.gov/oog/info/gdu/gasdiesel.asphttp://www.eia.gov/cneaf/coal/weekly/weekly_html/wcpweek.htmlhttp://www.choiceenergyservices.com/http://twitter.com/#!/Choice_Energyhttp://www.facebook.com/pages/Choice-Energy-Services/204397769603350http://www.linkedin.com/company/choice-energyhttp://www.eia.gov/dnav/ng/hist/rngc1d.htmhttp://www.eia.gov/oog/info/gdu/gasdiesel.asphttp://www.eia.gov/oog/info/gdu/gasdiesel.asphttp://www.eia.gov/cneaf/coal/weekly/weekly_html/wcpweek.htmlhttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RCLC1&f=D


2/8

the gas away or otherwise monetize it, Bruce Hicks, assistant director of the Oiland Gas Division of the North Dakota Industrial Commission said in an interviewMonday. Hicks said it is currently uneconomical to capture the gas produced inassociation with Bakken Shale oil production, given the dearth of gas-relatedinfrastructure in the 17,000-square-mile region.http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6545222

Energy bills need support from environmentalists: US Sen. GrahamBills promoting offshore drilling and nuclear energy are unlikely to advance inCongress without support from coalitions that include environmentalists,Republican South Carolina Senator Lindsey Graham told a group of Southerngovernors and fellow senators Tuesday. Incentives for the nuclear industry andefforts to speed offshore drilling in Virginia are unlikely to advance without theinvolvement of environmentalists, Graham said at a meeting of the SouthernStates Energy Board in Alexandria, Virginia. He said support from a bipartisangroup of governors could put pressure on Congress to act on energy policy. "IfCongress could have a breakthrough on anything, which doesn't look very likely,energy might be it," because of voter concerns about high energy costs, he said.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6553404

Saudis may import gas due to rocketing Mideast demand: GazpromSoaring demand for natural gas in the Middle East could turn oil giant Saudi Arabiainto a gas importer before the end of the decade, a senior official from RussianGazprom said Tuesday. Demand for LNG in the region could grow tenfold in thenext 10-15 years, Frederic Barnaud, managing director of Gazprom Global LNG,said in a presentation made on his behalf at the Middle East Petroleum and GasConference.http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8417326

Kogas says to ramp up Russia gas imports gradually; has plans to re-

exportState-run Korea Gas Corporation, which signed an agreement with Russia'sGazprom to buy 10 Bcm/year of gas for a 30-year period starting 2015, said

Tuesday it would gradually raise its purchase of Russian natural gas to the agreedvolume instead of taking the full amount at one go, and without saying at whatlevel it would start."We plan to gradually increase by 1 million mt/year [of LNGequivalent] to reflect domestic demand," he said.http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8417183

Crude Oil News

OPEC Daily Basket Price 10/4/2011- $98.59

(10/3/2011 $99.65)

Recent Rig Counts

Area

Last

Count

Cou

nt

Change

from Prior

Count

Date of

Prior

Count

Change

from Last

Year

Date of

Last Year's

Count
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6545222http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6553404http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8417326http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8417183http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6545222http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6553404http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8417326http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8417183


3/8

U.S. 30 Sept11

1990 -1 23 Sept 11 +331 1 Oct 10

Canada 30 Sept11

510 5 23 Sept 11 +197 1 Oct 10

International

August2011

1183 +33 July 2011 +81 August 2010

http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm

Oil Climbs for First Time in Four Days on Surprise Drop in U.S. Stockpiles

Oil rose from its lowest in a year in New York after a surprise drop in crude

stockpiles and on signs the U.S. may take further steps to sustain an economic

recovery. Futures rose as much as 3.7 percent after sliding 7.9 percent in the

past three days. Crude inventories dropped 3.1 million barrels last week, the

American Petroleum Institute said yesterday. An Energy Department report today

was forecast to show a gain of 1.5 million barrels. Federal Reserve Chairman Ben

S. Bernanke signaled yesterday hell push forward with further expansion of

monetary stimulus if needed.

http://www.bloomberg.com/news/2011-10-05/oil-climbs-for-first-time-in-four-days-

on-surprise-drop-in-u-s-stockpiles.html

Goldman Sachs: U.S. crude prices at $109 in 2012U.S. crude oil futures will hit $109 a barrel in 2012 as new pipelines, rail lines and

other infrastructure help relieve bottlenecks at a central gathering hub in

Oklahoma and carry more oil from Canada and the northern U.S. to refiners on the

Gulf Coast and elsewhere, according to a Goldman Sachs forecast. The prediction

represents a drop from the investment banks previous forecast of $123.50 a

barrel and reflects the increasingly anxious outlook for the global economic

recovery. The bank also trimmed its 2012 Brent price estimate to $120 a barrel

from $130 amid growing fears of a European financial crisis. Still, as U.S. prices

rise, the gap will narrow between West Texas Intermediate, the leading U.S.

benchmark crude, and Europe-traded Brent, which has at times in the past year

traded at nearly $20 a barrel more than WTI, the investment bank said.

http://fuelfix.com/blog/2011/10/04/goldman-sachs-u-s-crude-prices-at-109-in-

2012/

Energy Puts at Two-Year High as No Bottom Seen in Crude: OptionsOptions protecting against declines in U.S. energy stocks have surged to the most-expensive level in 30 months versus contracts on the Standard & Poors 500Index, amid concern oil will extend losses as the economy slows.Implied volatility

for three-month options on the Energy Select Sector SPDR exchange-traded fundis 12.5 points more than the level for the SPDR S&P 500 ETF Trust and almost
http://investor.shareholder.com/bhi/rig_counts/rc_index.cfmhttp://www.bloomberg.com/news/2011-10-05/oil-climbs-for-first-time-in-four-days-on-surprise-drop-in-u-s-stockpiles.htmlhttp://www.bloomberg.com/news/2011-10-05/oil-climbs-for-first-time-in-four-days-on-surprise-drop-in-u-s-stockpiles.htmlhttp://fuelfix.com/blog/2011/10/04/goldman-sachs-u-s-crude-prices-at-109-in-2012/http://fuelfix.com/blog/2011/10/04/goldman-sachs-u-s-crude-prices-at-109-in-2012/http://fuelfix.com/blog/2011/10/04/goldman-sachs-u-s-crude-prices-at-109-in-2012/http://investor.shareholder.com/bhi/rig_counts/rc_index.cfmhttp://www.bloomberg.com/news/2011-10-05/oil-climbs-for-first-time-in-four-days-on-surprise-drop-in-u-s-stockpiles.htmlhttp://www.bloomberg.com/news/2011-10-05/oil-climbs-for-first-time-in-four-days-on-surprise-drop-in-u-s-stockpiles.htmlhttp://fuelfix.com/blog/2011/10/04/goldman-sachs-u-s-crude-prices-at-109-in-2012/http://fuelfix.com/blog/2011/10/04/goldman-sachs-u-s-crude-prices-at-109-in-2012/http://fuelfix.com/blog/2011/10/04/goldman-sachs-u-s-crude-prices-at-109-in-2012/


4/8

double the average since March 2009, according to data compiled by Bloomberg.For Exxon Mobil Corp., the worlds largest publicly traded oil company, bearishoptions are trading at the highest level relative to bullish ones since November2008. Its a pure play on the commodity, and the thinking is with a dramaticslowdown in growth, there will be a collapse in demand, Jack Ablin, who helpsoversee $55 billion as chief investment officer for Chicago-based Harris Private

Bank, said in a telephone interview yesterday. The sentiment is really that wedont know if theres going to be a recession and so theres not a lot of demand forthose stocks right now.http://www.businessweek.com/news/2011-10-05/energy-puts-at-two-year-high-as-no-bottom-seen-in-crude-options.html

Canada urges EC against stigmatizing oil sands in new fuel standards

Fuel produced from oil sands risks unfair treatment alongside heavy crudes with

similar emissions, Canada's natural resources minister said Tuesday, responding

to the European Commission leveling higher standards on refined oil sands and oil

shale. "We don't want to see the oil sands stigmatized," Joe Oliver said after a

speech at the National Press Club in Washington. "All we're saying is these

discussions should be based on science and economics." The EC on Monday

decided to set a higher carbon value for fuels derived from oil sands compared

with fuels refined from conventional crude. The proposal goes to member

countries for approval in coming months.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6553416

As Economies Slow, Price of Gas FallsThe sharp slump in oil prices over the last few months is finally beginning to bring

relief at the gasoline pump, with the price of a gallon of regular gasoline droppingnearly a penny a day over the last four weeks. Gasoline cost an average of $3.41

nationwide on Tuesday, according to the AAA Daily Fuel Gauge report, down from

more than $4 a gallon in some states in May. And with the global economy

weakening further, prices for both oil and gasoline are likely to fall further in

coming days, analysts say.

http://www.nytimes.com/2011/10/05/business/energy-environment/as-economies-

slow-price-of-gas-falls.html?_r=1

EPA will give some states, companies more time on cross-state ruleThe Wall Street Journal reported Tuesday night that the Environmental ProtectionAgency will give some states and power plant operators more time to comply withthe Cross State Air Pollution Rule set to begin on January 1. According to thereport, the EPA will propose allowing certain states and companies to emit morepollutants than previously permitted from 1 percent to 4 percent above thelevels set when the rule was finalized in July.http://fuelfix.com/blog/2011/10/04/report-epa-will-give-some-states-companies-more-time-on-cross-state-rule/

Oil Market Lurches from Exuberance to Panic
http://www.businessweek.com/news/2011-10-05/energy-puts-at-two-year-high-as-no-bottom-seen-in-crude-options.htmlhttp://www.businessweek.com/news/2011-10-05/energy-puts-at-two-year-high-as-no-bottom-seen-in-crude-options.htmlhttp://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6553416http://www.nytimes.com/2011/10/05/business/energy-environment/as-economies-slow-price-of-gas-falls.html?_r=1http://www.nytimes.com/2011/10/05/business/energy-environment/as-economies-slow-price-of-gas-falls.html?_r=1http://fuelfix.com/blog/2011/10/04/report-epa-will-give-some-states-companies-more-time-on-cross-state-rule/http://fuelfix.com/blog/2011/10/04/report-epa-will-give-some-states-companies-more-time-on-cross-state-rule/http://fuelfix.com/blog/2011/10/04/report-epa-will-give-some-states-companies-more-time-on-cross-state-rule/http://www.businessweek.com/news/2011-10-05/energy-puts-at-two-year-high-as-no-bottom-seen-in-crude-options.htmlhttp://www.businessweek.com/news/2011-10-05/energy-puts-at-two-year-high-as-no-bottom-seen-in-crude-options.htmlhttp://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6553416http://www.nytimes.com/2011/10/05/business/energy-environment/as-economies-slow-price-of-gas-falls.html?_r=1http://www.nytimes.com/2011/10/05/business/energy-environment/as-economies-slow-price-of-gas-falls.html?_r=1http://fuelfix.com/blog/2011/10/04/report-epa-will-give-some-states-companies-more-time-on-cross-state-rule/http://fuelfix.com/blog/2011/10/04/report-epa-will-give-some-states-companies-more-time-on-cross-state-rule/http://fuelfix.com/blog/2011/10/04/report-epa-will-give-some-states-companies-more-time-on-cross-state-rule/


5/8

Oil markets have swung from irrational exuberance in the first half of the year to

increasingly irrational pessimism in recent weeks. Participants risk exaggerating

the risk of a deep and prolonged recession hitting demand in both the advanced

economies and emerging markets. Blind swings from hope to fear usually lead to

temporary mispricing, creating opportunities for those willing to take the other

side. Estimating the recession risk is perhaps the most important trade in the oilmarkets right now... The current dread about recession and plunging oil prices is

the mirror image of the February-April panic about prices spiking as market

participants worried about supply disruptions spreading from Libya across the

whole of the Middle East. Back then, the option market exaggerated the risk of

supply disruptions-- confusing a possibility with something much closer to a high

probability. Now the market is in danger of exaggerating the risk of a deep

recession and a large drop in oil consumption.

http://www.commodities-now.com/news/power-and-energy/8139-oil-market-

lurches-from-exuberance-to-panic.html

Shell Probe May Keep Oil Refinery Shut Through Mid-OctoberSingapores investigation of a Sept. 28 fire may force Royal Dutch Shell Plc tokeep its largest oil refinery shut at least through the middle of October. Theoffshore Pulau Bukom refinery, which exports 90 percent of its products to theAsia-Pacific region, may be closed for a minimum of several weeks, according toPurvin & Gertz Inc., an energy consultant. Standard Chartered Plc estimatedyesterday a complete shutdown may last for as long as a month.http://www.businessweek.com/news/2011-10-05/shell-probe-may-keep-oil-refinery-shut-through-mid-october.html

Halliburton to recruit ex-NASA workersHalliburton Co. will host a job fair Wednesday for former aerospace industryworkers recently put out of a job by the end of NASAs Space Shuttle program,marking the latest attempt by the oil and gas industry to recruit from the highlyskilled pool. The oil field services giant said it is searching for several types ofengineers, software testing and developers, scientists, auditors and otherfunctions, noting that many aerospace professionals share the same skills,training and safety knowledge as those in the oil fieldBaker Hughes, anothermajor oil field services provider, has also held a job fair for the ex-NASA workers,and other oil and gas industry firms have been recruiting among their ranks.http://fuelfix.com/blog/2011/10/04/halliburton-to-recruit-ex-nasa-workers/

Weather

Philippe May Become Atlantic Hurricane Soon, Storm Center Says

Tropical Storm Philippe in Atlantic waters southeast of Bermuda is expected to

become a hurricane in the next day or so, the National Hurricane Center said. The

storm, about 580 miles (930 kilometers) from Bermuda, is moving west-northwest

at 6 miles per hour with 65 mph winds, the Miami-based center said in its latest

advisory. A turn to the north is forecast for later today as the storm intensifies,

then to the northeast by tomorrow, with no threat to land.
http://www.commodities-now.com/news/power-and-energy/8139-oil-market-lurches-from-exuberance-to-panic.htmlhttp://www.commodities-now.com/news/power-and-energy/8139-oil-market-lurches-from-exuberance-to-panic.htmlhttp://www.businessweek.com/news/2011-10-05/shell-probe-may-keep-oil-refinery-shut-through-mid-october.htmlhttp://www.businessweek.com/news/2011-10-05/shell-probe-may-keep-oil-refinery-shut-through-mid-october.htmlhttp://fuelfix.com/blog/2011/10/04/halliburton-to-recruit-ex-nasa-workers/http://fuelfix.com/blog/2011/10/04/halliburton-to-recruit-ex-nasa-workers/http://www.commodities-now.com/news/power-and-energy/8139-oil-market-lurches-from-exuberance-to-panic.htmlhttp://www.commodities-now.com/news/power-and-energy/8139-oil-market-lurches-from-exuberance-to-panic.htmlhttp://www.businessweek.com/news/2011-10-05/shell-probe-may-keep-oil-refinery-shut-through-mid-october.htmlhttp://www.businessweek.com/news/2011-10-05/shell-probe-may-keep-oil-refinery-shut-through-mid-october.htmlhttp://fuelfix.com/blog/2011/10/04/halliburton-to-recruit-ex-nasa-workers/http://fuelfix.com/blog/2011/10/04/halliburton-to-recruit-ex-nasa-workers/


6/8

http://www.bloomberg.com/news/2011-10-05/philippe-may-become-atlantic-

hurricane-soon-storm-center-says.html

Tropical Storm PHILIPPE

http://www.nhc.noaa.gov/text/refresh/MIATCPAT2+shtml/290842.shtml

6 to 10 Day Outlooks

Temperature

Precipitation
http://www.bloomberg.com/news/2011-10-05/philippe-may-become-atlantic-hurricane-soon-storm-center-says.htmlhttp://www.bloomberg.com/news/2011-10-05/philippe-may-become-atlantic-hurricane-soon-storm-center-says.htmlhttp://www.nhc.noaa.gov/text/refresh/MIATCPAT2+shtml/290842.shtmlhttp://www.cpc.ncep.noaa.gov/products/predictions/610day/610temp.new.gifhttp://www.bloomberg.com/news/2011-10-05/philippe-may-become-atlantic-hurricane-soon-storm-center-says.htmlhttp://www.bloomberg.com/news/2011-10-05/philippe-may-become-atlantic-hurricane-soon-storm-center-says.htmlhttp://www.nhc.noaa.gov/text/refresh/MIATCPAT2+shtml/290842.shtml


7/8

8 to 14 Day OutlooksTemperature
http://www.cpc.ncep.noaa.gov/products/predictions/610day/610temp.new.gif


8/8

Precipitation
http://www.cpc.ncep.noaa.gov/products/predictions/814day/814prcp.new.gifhttp://www.cpc.ncep.noaa.gov/products/predictions/814day/814temp.new.gif

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