energy and markets newsletter 122711

8/3/2019 Energy and Markets Newsletter 122711

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estimated that such investments could create a million U.S. manufacturing jobsover the next 15 years. West Virginia is vying with Pennsylvania and Ohio toattract an ethylene plant that Royal Dutch Shell PLC said it plans to build in theAppalachian region to take advantage of the plentiful new gas supplies. Shell isdue to announce a site early in 2012. Ethylene, produced from ethane in naturalgas, is used to make plastics and other materials that go into an array of products,

including pipes, paint and antifreeze. West Virginia's legislature, meeting in aspecial session, passed a bill this month setting rules for shale gas drilling andproduction. The legislation ensures "a reliable supply" of shale gas in West Virginiaand should dispel regulatory uncertainty that could slow investment, KeithBurdette, the state's commerce secretary, said in an interview.http://online.wsj.com/article/SB10001424052970204844504577100421253005122.html

Fracking boom boosting demand for Ohio sand The surge in exploration for oil and natural gas in underground shale deposits hascreated a booming business for Ohio companies that provide special sand used indrilling, the Akron Beacon Journal reports. About 6,000 to 8,000 tons of sand is

needed for the hydraulic fracturing process to drill one well, the newspaperreports. It is mixed with water and chemicals to fracture the shale and release theresources inside.http://www.bizjournals.com/columbus/morning_call/2011/12/fracking-boom-boosting-demand-for-ohio.html

Natural-gas price likely to drop in 2012Booming U.S. natural-gas production from shale formations and slowing demand

from households, factories and power plants are poised to send prices down for an

unprecedented fifth year in 2012. Gas might tumble 8.2 percent from its 2011

average next year, as output rises 2.8 percent to a record 67.72 billion cubic feet

a day, the Energy Department forecasts. Demand probably will grow 1.7 percent,after a 1.8 percent increase this year, the department said this month. “It’s been

practically impossible to turn off the shale-gas tap,” said Adam Sieminski, chief

energy economist at Deutsche Bank in Washington. “Industrial demand has been

rising, but it’s not enough.” The natural-gas price has dropped 29 percent on the

New York Mercantile Exchange this year, the most since 2006, as improved drilling

technology and profits from selling gas liquids encouraged producers to pump

record amounts of the fuel from shale formations from Texas to Pennsylvania.

Future prices have dropped in each of the past three years, the longest stretch of

declines since the contracts began trading on the Nymex in 1991.

http://www.dispatch.com/content/stories/business/2011/12/27/natural-gas-price-likely-to-drop-in-2012.html

Exelon-Constellation merger edges closer to completionUS electricity firm Exelon Corporation is edging ever closer to the completion of itsmerger with Constellation Energy Group (CEG), despite attempts to halt it by EDFEnergy. Last week, the New York Public Service Commission cleared the merger,and the State of Maryland Governor, Martin O'Malley publicly backed it, meaningthe deal is now highly likely to be approved by the Maryland Public ServiceCommission. "The one we were most concerned about was Maryland, but now the

governor has thrown his approval onto the merger it seems like Maryland is on

http://online.wsj.com/article/SB10001424052970204844504577100421253005122.html


http://www.bizjournals.com/columbus/morning_call/2011/12/fracking-boom-boosting-demand-for-ohio.html












counted on to advance the U.S.—and the world—into a new energy age. Globaldemand for solar power is still growing—about 8% more solar panels will beinstalled this year compared with 2010, according to Jefferies Group analysis—butit is expected to flat-line next year. At the heart of the industry woes are swiftlyfalling prices for solar panels and their components—polysilicon, wafers, cells andthe modules themselves. The reason is simple: There are simply too many

manufacturers trying to sell their wares.http://online.wsj.com/article/SB10001424052970204552304577117140511996840.html?mod=WSJ_hp_LEFTTopStories

Total ‘Doubling Down’ on Solar Energy, Raises Stake in SunPower

Total SA (FP), Europe’s third-largest oil producer, raised its bet on solar energy by

boosting its stake in SunPower Corp. and selling its renewable energy

development unit to the U.S. company. Total, which already owns 60 percent of

the second-largest U.S. solar-panel maker, agreed to pay $163.7 million for an

additional 6 percent, SunPower said yesterday in a statement. The solar company

agreed to acquire Total’s Tenesol SA unit for $165.4 million in cash. Total will pay

a 50 percent premium over the Dec. 22 closing price for the SunPower shares, a

move that Pavel Molchanov, a Houston-based analyst at Raymond James &

Associates Inc., said was a vote of confidence in the company. Its plans contrast

with BP Plc, Europe’s second-largest oil company, which is shuttering its solar unit

after 40 years.

http://www.bloomberg.com/news/2011-12-23/total-increases-sunpower-stake-with-

164-million-share-purchase.html

Crude Oil News

OPEC Daily Basket Price 12/21/2011- $106.98

(OPEC Daily Basket Price 12/20/2011- $105.05)

Brent Above $108 on Supply Worries, US Data Supports

Brent crude rose slightly to trade above $108 on Tuesday, supported by supply

disruptions in Syria and Iranian naval exercises in a key shipping lane, whileimproved U.S. home sales data also supported prices. London Brent rose 39 centsto $108.35 per barrel. U.S. light, sweet crude was up 0.4 percent at $100.04 abarrel. "Syria could be a support factor for the time being, but we will not see abig climb or rocket high prices because of that," Ken Hasegawa, a derivativesmanager with brokerage Newedge in Tokyo, said. "So far supply disruptions havenot been a big issue because of some easing of demand in Europe. This has offsetthe disruption of supplies." Syrian Oil Minister Sufian Alao said on Saturday thathis country's oil production had fallen by about 30 to 35 percent as a result of sanctions imposed on Syria over its nine-month crackdown on anti-governmentprotests. Also adding to supply worries were Iran naval exercises. Iran onSaturday began 10 days of naval exercises in the Strait of Hormuz, raising concern

http://online.wsj.com/article/SB10001424052970204552304577117140511996840.html?mod=WSJ_hp_LEFTTopStories


http://www.bloomberg.com/news/2011-12-23/total-increases-sunpower-stake-with-164-million-share-purchase.html








about a possible closure of the world's most strategic oil transit channel in theevent of any outbreak of military conflict between Tehran and the West.http://www.cnbc.com/id/45769989

Oil Trades Near Two-Week High on Speculation U.S. Recovery to Boost

Demand

Oil traded near the highest settlement in two weeks amid speculation the U.S.

economy will continue to recover, bolstering demand for raw materials in the

world’s biggest crude consumer. Futures were little changed after gaining 6.6

percent last week, the most since the five days ending Oct. 28. Reports today may

show U.S. consumer confidence improved to a five-month high and home prices in

20 cities declined at a slower pace. Financial markets from Hong Kong to the U.K.

and the U.S. were closed for holidays yesterday. “Economic indicators, especially

in the U.S., are improving,” said Tetsu Emori, a commodity fund manager at

Astmax Co. in Tokyo, who forecasts oil will trade “more or less” at the $100-level

in coming months.

http://www.bloomberg.com/news/2011-12-26/oil-futures-open-at-99-92-a-barrel-

24-cents-higher-in-new-york-trading.html

Crude Oil Higher in Thin TradingCrude-oil futures were slightly higher Tuesday in thin trading as many market

participants weren't trading because of a public holiday in London. At 6 a.m. ET,

the front-month February Brent contract on London's ICE futures exchange was up

37 cents, or 0.3%, at $108.33 a barrel. The front-month February contract on theNew York Mercantile Exchange was trading up 8 cents at $99.76 a barrel. Brent

crude and Nymex prices traded in a narrow range as volumes were low. Oil prices

traded higher on both sides of the Atlantic, but Nymex prices kept below the key

$100 a barrel mark, which was breached last week after the U.S. Labor

Department said Thursday that new jobless claims fell to their lowest level since

April 2008. "The main thing to consider this week will be the lack of trading

volume," said Olivier Jakob, an analyst at Petromatrix, in a note Tuesday. Investors

are waiting for Standard & Poor's to announce which European countries it will

downgrade, he said.

http://online.wsj.com/article/SB10001424052970203391104577124134269308646.html?mod=googlenews_wsj

Oil traders flee as crude price swings below $100

Large traders pulled out of the oil market, cutting bets to a four-year low, as crude

climbed above $100 a barrel on rising tension with Iran, then fell on concern over

the European economy. Outstanding contracts among the biggest players in the

futures market, including swaps dealers, hedge funds, producers and commercial

users, fell by 4.9 percent to 2,207,528 contracts, the lowest since May 2007, in the

seven days ended Dec. 20, according to the Commodity Futures Trading

http://www.cnbc.com/id/45769989

http://www.bloomberg.com/news/2011-12-26/oil-futures-open-at-99-92-a-barrel-24-cents-higher-in-new-york-trading.html




http://www.cnbc.com/id/45769989







Commission’s Commitments of Traders report on Dec. 23.

http://www.dailyherald.com/article/20111226/business/712269797/

Crude Oil Recovery May Be Cut Short, Gold to Challenge Trend Support

Crude oil prices may continue to drift higher as a supportive set of US economicdata helps fuel a corrective rebound in risky assets on the back of year-end profit-taking. Expectations point to nominal improvements in the Consumer Confidenceas well as the Richmond and Dallas Federal Reserves’ measures of manufacturingactivity (released independently of one another).Technical positioning is beginningto warn of a turn lower ahead however. Prices are testing the top of a fallingchannel set from the November 17 high, now squarely at the 100.00 figure, with abreak higher targeting 101.39. Near-term support remains at 97.89. A candle inStar position hints preliminary signs of a bearish reversal may be emerging butconfirmation is needed before anything can be said with confidence.http://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/commodities

/2011/12/27/Crude_Oil_Recovery_May_Be_Cut_Short_Gold_to_Challenge_Trend_Support.html

Crude Oil Analysis for the Week of December 26, 2011

Last week the fundamentals clashed with the technicals in the February Crude Oil

futures market and by week’s end the fundamentals clearly won. Even though the

contract did not take out any significant price levels, the strong upside momentum

probably gave bullish traders the incentive to continue to buy while putting fear

into the short-traders and encouraging them to continue to cover their positions.

Technically, the main trend on the weekly chart remains up although momentum

was clearly beginning to shift to the downside after 4 weeks of consolidation. Even

the penetration of a key 50 percent price level at $95.15 as well as an uptrending

Gann angle had to have had long traders on edge as the market appeared to be

setting up for a retracement of the rally from $75.73 to $103.28.

http://oilprice.com/Energy/Oil-Prices/Crude-Oil-Analysis-for-the-Week-of-December-

26-2011.html

Petroplus Plunges as Lenders Freeze $1 Billion of ‘Critical’ Credit Lines

Petroplus Holdings AG, Europe’s largest independent oil refiner, fell to a record low

after lenders froze about $1 billion in uncommitted loans. The revolving credit

lines are “critical” for business, the refiner, based in Zug, Switzerland, said in a

statement. The company is “evaluating additional strategic options to maintain

operations in its European refining and marketing system.” Petroplus stock fell as

much as 40 percent and was trading down 1.33 francs at 2.10 francs at 10:44 a.m.

in Zurich. The shares have lost 83 percent since the start of the year. Demand for

fuels such as gasoline has weakened in the sluggish global economy, cutting

profits and leading to temporary closures, sales and conversion of refineries into

storage sites. The credit freeze “is a serious issue as in the worst case the

company would lack the funds required to maintain operations,” Vontobel Holding


http://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/commodities/2011/12/27/Crude_Oil_Recovery_May_Be_Cut_Short_Gold_to_Challenge_Trend_Support.html



http://oilprice.com/Energy/Oil-Prices/Crude-Oil-Analysis-for-the-Week-of-December-26-2011.html












AG said in a note today. “We strongly advise investors to stay clear of the stock

until a sustainable financing can be restored.”

http://www.bloomberg.com/news/2011-12-27/petroplus-plunges-as-lenders-freeze-

1-billion-of-critical-credit-lines.html

Libyan Crude Output Exceeds 1 Million Barrels a Day: Persian Gulf Oil

Iraqi crude oil production jumped to the highest level in at least 20 years, or more

than 3 million barrels a day, said Hussain al-Shahristani, deputy prime minister for

energy affairs. Libya, holder of Africa’s biggest crude reserves, is now pumping

“more than a million” barrels a day as its industry recovers from months of

conflict, said the Nuri Berruien, chairman of its state-run National Oil Corp.

http://www.bloomberg.com/news/2011-12-26/libyan-crude-output-exceeds-1-

million-barrels-a-day-persian-gulf-oil.html

S Korea's GS to invest big in energy, oil sectors next year

South Korea's GS Group, part owner of the country's second-biggest oil refiner GSCaltex, said Tuesday it will spend Won 1.8 trillion ($1.6 billion) in energyinvestments next year, including the construction of a heavy oil upgrader andoverseas upstream development. The conglomerate, which also has retail andconstruction units under its wing, plans to invest a total Won 3.1 trillion in 2012,including the Won 1.8 trillion earmarked for the energy sector. "GS Caltex wouldmaintain its investment pace next year despite uncertain business conditions tostrategically prepare for the future," the group said without providing comparisonfigures for this year.http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/7927942

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

U.S. 22 Dec11

2008 -11 16 Dec11

+294 23 Dec 10

Canada 22 Dec11

406 -125 16 Dec11

+95 23 Dec 10

International

November 2011

1185 -12 October2011

+55 November2010

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

http://www.bloomberg.com/news/2011-12-27/petroplus-plunges-as-lenders-freeze-1-billion-of-critical-credit-lines.html


http://www.bloomberg.com/news/2011-12-26/libyan-crude-output-exceeds-1-million-barrels-a-day-persian-gulf-oil.html


http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/7927942






http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/7927942




Weather

Dagmar’s Hurricane Winds Cut Power to 170,000 People in Nordic

Countries

The storm Dagmar swept across the Nordic countries with Hurricane-strength

winds, cutting power and Norwegian natural gas exports as well as damagingbuildings and halting train traffic. About 180,000 homes in Sweden, Finland and

Norway were still without electricity as utilities worked to restore power after the

storm toppled trees and damaged power lines, according to estimates today and

late yesterday by power companies and national grid operators.

http://www.bloomberg.com/news/2011-12-27/dagmar-s-hurricane-winds-cut-

power-to-170-000-people-in-nordic-countries.html

6 to 10 Day OutlooksTemperature

http://www.bloomberg.com/news/2011-12-27/dagmar-s-hurricane-winds-cut-power-to-170-000-people-in-nordic-countries.html


http://www.cpc.ncep.noaa.gov/products/predictions/610day/610temp.new.gif





Precipitation

8 to 14 Day Outlooks

Temperature

http://www.cpc.ncep.noaa.gov/products/predictions/610day/610prcp.new.gif



Precipitation

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

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

energy and markets newsletter 122711

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