tigerhonaker
09-23-2006, 03:10 PM
Oil May Fall for 5th Week on Ample Fuel Supplies, Amaranth Loss
By Robert Tuttle and Mark Shenk
Sept. 22 (Bloomberg) -- Oil may fall for a fifth week amid rising U.S. fuel inventories and speculation that losses on natural gas bets at Amaranth Advisors LLC will trigger selling of energy futures by other funds.
Twenty-four of 43 analysts, traders and brokers, or 56 percent, said prices will fall next week, according to a Bloomberg News survey. Twelve said prices would rise and seven predicted little change. A week ago, forty-five percent of respondents forecast that futures would be little changed.
Oil has dropped 21 percent since reaching a record $78.40 a barrel on July 14 on rising U.S. supplies of gasoline, heating oil and diesel. Prices briefly dipped below $60 this week after Amaranth, a hedge fund which had $9.5 billion of assets in August, said it lost $4.6 billion this month in wrong-way bets on natural gas prices.
``Amaranth's big loss may spur liquidation of oil and natural gas futures contracts by some other hedge and pension funds in the weeks ahead,'' said Ken Hasegawa, a manager of the international department at oil broker Himawari CX Inc. in Tokyo.
``Oil in New York is searching for the bottom and may fall below $59 a barrel next week.''
Crude oil for November delivery fell $2.43, or 3.8 percent, to $61.59 a barrel in the first four days of trading this week on the New York Mercantile Exchange. Futures for delivery in October touched $59.80 on Sept. 20, the lowest for a contract closest to expiration since March 21. The October contract expired Sept. 20. November oil traded at $61.95 at 11:41 a.m. Singapore time.
U.S. Inventories
U.S. distillate supplies, including heating oil and diesel, rose to their highest level since January 1999 last week, according to an Energy Department report released on Sept. 20. Distillate consumption usually climbs as winter approaches.
Gasoline inventories rose 1.1 percent in the five weeks ended Sept. 15 to 207.6 million barrels, the report showed.
``The markets will be unable to ignore all this crude and product sloshing around in the world,'' said Addison Armstrong, director of market research at TFS Energy LLC in Stamford, Connecticut. ``There is not one iota of bullish news out there, which includes Iran.''
The U.S. agreed this week to give Iran, the world's No. 4 oil producer, more time to meet a United Nations demand to stop its research. Futures rose earlier this year on concern that Iran may cut exports if faced with UN sanctions.
Nuclear Negotiations
Ali Larijani, Iran's top nuclear negotiator, will meet with the European Union's foreign policy chief Javier Solana next week for talks on Iran's nuclear program, the official Islamic Republic News Agency said Sept. 20.
Iran has about two weeks to begin negotiations on its nuclear program, including suspension of uranium enrichment, before the U.S. renews a push for United Nations sanctions on the country, a European diplomat said Sept. 20.
Iran failed to meet an Aug. 31 deadline to suspend uranium enrichment. The U.S. and some European countries accuse Iran of trying to develop nuclear weapons. Iran says its nuclear program is strictly for civilian energy.
Russia's government this week denounced Exxon Mobil Corp. and Royal Dutch Shell Plc for breaching environmental rules in their oil and gas projects in Sakhalin Island, in eastern Russia.
The government is stepping up pressure on three Sakhalin projects operated by Shell, Exxon and Total SA under production- sharing agreements that grant the state a share of oil after the investors recover costs.
`Technical Correction'
``Now that prices have declined sharply, there is potential for a technical correction back to the upside,'' said Tim Evans, an energy analyst at Citigroup Global Markets Inc. in New York. A rise could be driven by ``worries about Russian government moves to pressure Sakhalin Island oil producers or movement in the UN Security Council toward placing sanctions on Iran.''
The 11 members of the Organization of Petroleum Exporting Countries, which produce 40 percent of world oil output, kept their output target at 28 million barrels a day at the group's Sept. 11 meeting. Ministers from Nigeria, Iran and Algeria said they were concerned about the pace of declining prices.
``Traders are going to push toward $55 and see what OPEC's resolve looks like below $60,'' said Adam Sieminski, chief energy economist at Deutsche Bank Securities AG in New York. ``Then look for OPEC ministers to get serious about an emergency meeting and quota cuts.''
OPEC isn't considering an emergency meeting over the current oil price because ``prices are still at a good level,'' Saudi Oil Minister Ali al-Naimi said to reporters at an energy and environment conference in Riyadh on Sept. 19.
The survey has correctly predicted the direction of prices 52 percent of the time since it was introduced.
Bloomberg's survey of oil analysts and traders, conductedeach Thursday, asks for an assessment of whether crude oilfutures are likely to rise, fall or remain neutral in the comingweek. The results were:
RISE NEUTRAL FALL
..12........ 7........ 24
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net (mshenk1@bloomberg.net) ; Robert Tuttle in New York at rtuttle@bloomberg.net (rtuttle@bloomberg.net)
Last Updated: September 21, 2006 23:53 EDT
http://www.bloomberg.com/apps/news?pid=20601103&sid=aOzAhwgkkL9E&refer=news
By Robert Tuttle and Mark Shenk
Sept. 22 (Bloomberg) -- Oil may fall for a fifth week amid rising U.S. fuel inventories and speculation that losses on natural gas bets at Amaranth Advisors LLC will trigger selling of energy futures by other funds.
Twenty-four of 43 analysts, traders and brokers, or 56 percent, said prices will fall next week, according to a Bloomberg News survey. Twelve said prices would rise and seven predicted little change. A week ago, forty-five percent of respondents forecast that futures would be little changed.
Oil has dropped 21 percent since reaching a record $78.40 a barrel on July 14 on rising U.S. supplies of gasoline, heating oil and diesel. Prices briefly dipped below $60 this week after Amaranth, a hedge fund which had $9.5 billion of assets in August, said it lost $4.6 billion this month in wrong-way bets on natural gas prices.
``Amaranth's big loss may spur liquidation of oil and natural gas futures contracts by some other hedge and pension funds in the weeks ahead,'' said Ken Hasegawa, a manager of the international department at oil broker Himawari CX Inc. in Tokyo.
``Oil in New York is searching for the bottom and may fall below $59 a barrel next week.''
Crude oil for November delivery fell $2.43, or 3.8 percent, to $61.59 a barrel in the first four days of trading this week on the New York Mercantile Exchange. Futures for delivery in October touched $59.80 on Sept. 20, the lowest for a contract closest to expiration since March 21. The October contract expired Sept. 20. November oil traded at $61.95 at 11:41 a.m. Singapore time.
U.S. Inventories
U.S. distillate supplies, including heating oil and diesel, rose to their highest level since January 1999 last week, according to an Energy Department report released on Sept. 20. Distillate consumption usually climbs as winter approaches.
Gasoline inventories rose 1.1 percent in the five weeks ended Sept. 15 to 207.6 million barrels, the report showed.
``The markets will be unable to ignore all this crude and product sloshing around in the world,'' said Addison Armstrong, director of market research at TFS Energy LLC in Stamford, Connecticut. ``There is not one iota of bullish news out there, which includes Iran.''
The U.S. agreed this week to give Iran, the world's No. 4 oil producer, more time to meet a United Nations demand to stop its research. Futures rose earlier this year on concern that Iran may cut exports if faced with UN sanctions.
Nuclear Negotiations
Ali Larijani, Iran's top nuclear negotiator, will meet with the European Union's foreign policy chief Javier Solana next week for talks on Iran's nuclear program, the official Islamic Republic News Agency said Sept. 20.
Iran has about two weeks to begin negotiations on its nuclear program, including suspension of uranium enrichment, before the U.S. renews a push for United Nations sanctions on the country, a European diplomat said Sept. 20.
Iran failed to meet an Aug. 31 deadline to suspend uranium enrichment. The U.S. and some European countries accuse Iran of trying to develop nuclear weapons. Iran says its nuclear program is strictly for civilian energy.
Russia's government this week denounced Exxon Mobil Corp. and Royal Dutch Shell Plc for breaching environmental rules in their oil and gas projects in Sakhalin Island, in eastern Russia.
The government is stepping up pressure on three Sakhalin projects operated by Shell, Exxon and Total SA under production- sharing agreements that grant the state a share of oil after the investors recover costs.
`Technical Correction'
``Now that prices have declined sharply, there is potential for a technical correction back to the upside,'' said Tim Evans, an energy analyst at Citigroup Global Markets Inc. in New York. A rise could be driven by ``worries about Russian government moves to pressure Sakhalin Island oil producers or movement in the UN Security Council toward placing sanctions on Iran.''
The 11 members of the Organization of Petroleum Exporting Countries, which produce 40 percent of world oil output, kept their output target at 28 million barrels a day at the group's Sept. 11 meeting. Ministers from Nigeria, Iran and Algeria said they were concerned about the pace of declining prices.
``Traders are going to push toward $55 and see what OPEC's resolve looks like below $60,'' said Adam Sieminski, chief energy economist at Deutsche Bank Securities AG in New York. ``Then look for OPEC ministers to get serious about an emergency meeting and quota cuts.''
OPEC isn't considering an emergency meeting over the current oil price because ``prices are still at a good level,'' Saudi Oil Minister Ali al-Naimi said to reporters at an energy and environment conference in Riyadh on Sept. 19.
The survey has correctly predicted the direction of prices 52 percent of the time since it was introduced.
Bloomberg's survey of oil analysts and traders, conductedeach Thursday, asks for an assessment of whether crude oilfutures are likely to rise, fall or remain neutral in the comingweek. The results were:
RISE NEUTRAL FALL
..12........ 7........ 24
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net (mshenk1@bloomberg.net) ; Robert Tuttle in New York at rtuttle@bloomberg.net (rtuttle@bloomberg.net)
Last Updated: September 21, 2006 23:53 EDT
http://www.bloomberg.com/apps/news?pid=20601103&sid=aOzAhwgkkL9E&refer=news