Oil up near $62 after Saudi comments on demand

[Omaha Steve]

Source: Reuters

BY ALEX LAWLER

(Reuters) - Oil rose towards $62 a barrel on Thursday as indications of a coming recovery in demand offset a further jump in U.S. crude stockpiles which underlined currently ample supplies.

Crude benchmarks in the U.S. and Europe posted their largest percentage gains in nearly two weeks on Wednesday, supported by remarks from Saudi Arabia's oil minister, Ali al-Naimi, and a slightly stronger-than-expected Chinese manufacturing survey.

Brent crude LCOc1 rose 30 cents to $61.93 by 7.32 a.m. ET, after jumping more than 5 percent on Wednesday. U.S. crude CLc1 fell 57 cents to $50.42, following a more than 3 percent gain in the previous session.

"The comments yesterday, the change of tone from Saudi Arabia, is still an element," said Olivier Jakob, analyst at Petromatrix, of Brent's gain. "The market is still reacting to that."

FULL story at link.


Read more: http://www.reuters.com/article/2015/02/26/us-markets-oil-idUSKBN0LT08620150226

[jakeXT]

1. If you're on the bottom then any movement is probably up

Last edited Thu Feb 26, 2015, 11:18 AM - Edit history (1)

Baltic Dry Index drops to lowest level since 1986

The Baltic Dry Index, an obscure economic indicator that monitors the health of the world's economy by tracking the price of shipping dry goods over oceans, has fallen to its lowest level in 29 years.

The index, compiled daily by London-based Baltic Exchange, is a daily number that tracks the prices shippers charge to send huge cargo ships of dry goods across oceans. It is believed to be an excellent gauge of the health of the world economy, although its accuracy has been called into question in recent years — in May 2008, for example, just before the recession, the Baltic Dry hit an all-time high of just under 11,800.

On Monday, the index lost almost three per cent or 18 points to 590 points. That's down by 60 per cent since the start of November, and now down to its lowest level since August 1986. It's not far off the all-time low set the month before that.

That's a bad sign for the global economy, experts suggest, because reduced demand for raw materials suggests companies have less faith in their economic prospects.

http://www.cbc.ca/news/business/baltic-dry-index-drops-to-lowest-level-since-1986-1.2940711

http://www.bloomberg.com/quote/BDIY:IND/chart

[Fred Sanders]

4. Wouldn't a huge part of that be oil not being shipped?

[jakeXT]

5. Probably, I also wonder how China's new pipeline in Myanmar/Burma will affect the shipping

China’s oil demand a mystery

..

The drop in price suddenly made it more affordable to fill stockpiles that the government and oil companies have set up to increase energy security. The ­effort gave a boost to global demand, contributing to 9.5 per cent growth in China’s crude oil imports last year: tens of millions of additional barrels from the Middle East, Russia and elsewhere.

That buying has made the task of assessing true Chinese demand more vexing for oil companies, traders and governments. The purchases have clouded their view of Chinese refiners’ actual need for oil and how the pace of buying may shift.

http://www.theaustralian.com.au/business/wall-street-journal/chinas-oil-demand-a-mystery/story-fnay3ubk-1227240356640

With Oil And Gas Pipelines, China Takes A Shortcut Through Myanmar

On the 29th of January, China opened, with little fanfare, a new oil link through Myanmar. Despite its low profile, this project has clearly been a huge undertaking, both technologically and politically. This 2,400km long pipeline runs through some of the most rugged areas on the planet, marked by jagged hills and ridges and dense jungle. On top of that, two stretches of the pipeline traverse two of Southeast Asia’s political hotspots, the Rakhine and Shan States, which retain semi-autonomous armies that have only just recently been nominally pacified.

The new route however, has one invaluable advantage in eyes of Chinese leaders: it bypasses the Malacca straits, whose infamous waters are infested with pirates. A 300,000 ton super tanker recently discharged its oil at the new deepwater port located on Maday Island—the first time this had happened—marking the start of new pipeline’s operation. That oil will now flow to Kunming, the capital of the southeast Chinese province of Yunnan, which borders Myanmar. The pipeline shortens the distance the oil will have to travel by sea to reach China by 700 miles. It also cuts by 30% the time this liquid black gold will take to get to the Middle Kingdom.

Avoiding the Malacca detour had the other, even more invaluable advantage in the eyes of the Chinese leadership. With 80% of all imported hydrocarbons to China going through the Malacca sea-route, China is vulnerable to having its overseas energy supplies blockaded by the American 6th Fleet during a Sino-U.S. geopolitical crisis. The Burmese pipeline diminishes that risk, as the oil and natural gas will no long have to pass through the Malacca Straits chokepoint.

http://www.forbes.com/sites/ericrmeyer/2015/02/09/oil-and-gas-china-takes-a-shortcut/

[Fred Sanders]

8. Thank you for that. Important information we never get from the Outrage Media.

[Javaman]

2. And then there is this from a few days ago...

Get Ready for $10 Oil

http://www.bloombergview.com/articles/2015-02-16/oil-prices-likely-to-fall-as-supplies-rise-demand-falls

A. Gary Shilling
16, 2015 6:00 PM EST

At about $50 a barrel, crude oil prices are down by more than half from their June 2014 peak of $107. They may fall more, perhaps even as low as $10 to $20. Here’s why.

U.S. economic growth has averaged 2.3 percent a year since the recovery started in mid-2009. That's about half the rate you might expect in a rebound from the deepest recession since the 1930s. Meanwhile, growth in China is slowing, is minimal in the euro zone and is negative in Japan. Throw in the large increase in U.S. vehicle gas mileage and other conservation measures and it’s clear why global oil demand is weak and might even decline.

QuicktakeOil Prices

At the same time, output is climbing, thanks in large part to increased U.S. production from hydraulic fracking and horizontal drilling. U.S. output rose by 15 percent in the 12 months through November from a year earlier, based on the latest data, while imports declined 4 percent.

Something else figures in the mix: The eroding power of the OPEC cartel. Like all cartels, the Organization of Petroleum Exporting Countries is designed to ensure stable and above-market crude prices. But those high prices encourage cheating, as cartel members exceed their quotas. For the cartel to function, its leader -- in this case, Saudi Arabia -- must accommodate the cheaters by cutting its own output to keep prices from falling. But the Saudis have seen their past cutbacks result in market-share losses.


more at link...

[davidpdx]

3. Just went to get gas here in South Korea today

Not gas, but LPG which is a gas by-product. For most of the last five years I've been driving it has hovered around $1-$1.50 per liter. In December it was down below a dollar and then came back up. Today it was about .83 cents a liter. I'm sure that won't last for long though.

[MosheFeingold]

7. Cheap NGLs

Are a byproduct of shale oil production, which is flush at the beginning. Those horizontal wells are usually pretty deep and expensive, so they are the first ones to not get drilled.

I expect a pretty healthy rise in natural gas, but enjoy the glut for the next six months or so.

Time to take that trip you've put off, I guess.

[wildbilln864]

6. a good place to track the movements of precious metals, currencies, and oil.

http://www.kitco.com/market/