http://www.marketwatch.com/news/story/Asian-oil-firms-gains-built/story.aspx?guid={84C78F17-EAE7-46B1-8F39-78BF0B510504} Asian oil shares may shift gears with crude prices ------------- Once crude eases back, Chinese oil companies may be hit especially hard TOKYO (MarketWatch) -- Shares of major oil companies in Asia are riding the recent rally in crude futures, which have climbed to their highest level in five months, but some analysts say that hefty supplies and weak demand may soon send oil prices -- and oil-related stocks -- lower again. "Oil stocks are running ahead of their fundamentals," analysts at Credit Suisse wrote in a note to clients Tuesday. "They are running ahead of the oil price." Shares of Chinese oil companies, in particular, are "looking expensive, and investors should take profit," the analysts said. Demand out of China, the world's second-largest oil consumer, has been key to a recovery in oil prices. But in China, "oil production growth outlook for oil-related companies generally looks unexciting in 2009 and 2010," according to analysts at Goldman Sachs. "Given that that China only accounted for 10% of global oil consumption in 2008, we think the primary earnings driver for the oil companies will therefore be the future spot oil prices, which are more or less a function of global growth conditions [rather] than simply a China-driven story," the analysts wrote in a research note Tuesday, citing some 2008 statistical data from BP Plc. "Oil prices have gone too high based on fundamentals, in our view [with] inventories at [a] record and no sign of demand resurrection," J.P. Morgan analyst Brynjar Bustnes wrote in Monday note to clients. He downgraded Cnooc to neutral from overweight "on strong performance and high valuation." Cnooc's stock rallied 14% in three days and has "reached fair value in the short to medium term," said Bustnes. But analysts at Credit Suisse said they prefer Sinopec over PetroChina and Cnooc, with Sinopec having the "most upside/least downside" potential. As for oil, some analysts said prices may still head higher in the longer term. "The possibility of higher oil prices does exist," said Williams. "The reasons are the usual: wars, revolutions or terrorist attacks in exporting counties or attempts to block any of the major transit choke points," he said. And "it is conceivable, but not likely, that OPEC could cut production by enough to raise prices," he said. End of Story
Traders will be watching the weekly petroleum inventory data for the week ended May 1 from the Energy Information Agency on Wednesday. Analysts expect a build of 2.2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Crude stocks rose 4.1 million barrels last week and are near 19-year highs. The global outbreak of swine flu could also weigh on oil prices. Authorities shut down Mexico City for most of the last week in a bid to slow the spread of the virus, which has infected more than 1,000 people across the globe. "If that happens in New York City, or elsewhere in the U.S., it would really put a dent in the economy," Chu said. "So far, it doesn't seem to be a big deal, but a second wave could be deadlier."
Oil Hits 2009 Intraday High On Economic Optimism NEW YORK -- Crude oil futures traded flat Tuesday after hitting a 2009 high on hope for an imminent economic recovery. Light, sweet crude for June delivery traded 5 cents, or 0.1%, higher at $54.52 a barrel on the New York Mercantile Exchange after hitting an intraday high for 2009 of $54.83 a barrel. Brent crude on the ICE futures exchange traded 2 cents lower at $54.56 a barrel. Investors continue to drive oil prices higher, convinced that the U.S. economy has begun to recover. If true, it would herald an end to nearly two years of declining oil demand. "What's been driving this thing has been .. optimism in the economy and the stock market," said Tom Bentz, a broker and analyst with BNP Paribas Commodity Futures in New York. A new test for that optimism will come later this week, when the government releases results from its "stress test" of major banks, which is expected to show that some institutions need to raise more capital to cover potential losses should the recession worsen. A strong showing from banking stocks has provided a cue for oil to extend recent gains, with equities acting as a gauge for overall investor confidence that an economic rebound is close. The oil market may not have time to wait for an economic recovery, however. U.S. crude stockpiles are at their highest point since September 1990, and are closing in on levels not seen since at least the early 1980s. If terminals begin to run out of room, front-month futures will begin to be pressured lower to cover the growing expense of storage, wrote analysts with Goldman Sachs Group Inc. (GS). "While the market can continue to price in the improving economic outlook, it can do so only if there is room to store oil and bridge the gap between the current weak demand environment and the anticipated better future environment," the analysts wrote. Goldman Sachs predicts that oil prices will rise to $65 a barrel in the second half of the year, but not before falling back to $45 a barrel in the next two months. The storage crunch is unlikely to ease soon. Oil inventories are seen rising by 2 million barrels in data due from the U.S. Energy Information Administration on Wednesday, according to a Dow Jones Newswires survey of analysts. Gasoline stocks are expected to rise by 500,000 barrels, while distillate inventories, including heating oil and diesel, are seen increasing by 1 million barrels. Gasoline may have some strength independent of equities, as inventories are closer to seasonal norms with peak summer demand approaching, Bentz said. Front-month June reformulated gasoline blendstock, or RBOB, recently traded up 96 points, or 0.6%, at $1.5956 a gallon. June heating oil traded 10 points, or 0.1%, lower at $1.4335 a gallon.
anybody trading today?? this chop is getting really annoying. been trying to scalp but basically at breakeven still.
we hit a low of 53.53 and we should not go lower because of heavy fund buying on the upper rates. Lack of selling pressure (since funds are already long) means we go up from here.
restested 53.50 and as expected bounced from 53.51. I got out at 54.15 but expect this to go to 54.45 at least. Then it should retest 54.00 where ill look to buy again
Fed chief Bernanke sees economic rebound on tap ------------------------------- WASHINGTON (MarketWatch) -- The U.S. economy is bottoming out and is likely to turn upward later this year, Federal Reserve Board Chairman Ben Bernanke said Tuesday. "We are hopeful that the very sharp decline we saw beginning last fall through early this year will moderate considerably in the near term and we will see positive growth by the end of the year," Bernanke said to the Joint Economic Committee. "The recent data ... suggest that the pace of contraction may be slowing, and they include some tentative signs that final demand, especially demand by households, may be stabilizing," he said. Read Bernanke's prepared remarks. While stopping short of giving high fives to the members of Congress, Bernanke was more optimistic than he has been in some time. His remarks add to the sense that Fed officials believe their unprecedented actions over the past year are sufficient to generate a recovery. Bernanke's remarks put some flesh on the bones of the recent Fed policy statement, which spoke of nascent signs of recovery. See full story. Bernanke said that the housing market, which has been in the intensive-care unit for three years, has shown signs of renewed vigor. "Sales of existing homes have been fairly stable since late last year, and sales of new homes have firmed a bit recently, though both remain at depressed levels," Bernanke said. A drop in economic activity overseas may also be nearing its end, he said. Business investment remains weak, Bernanke said. But companies have slashed inventories and production could turn around, he said. "An important influence on the near-term economic outlook is the extent to which businesses have been able to shed the unwanted inventories that they accumulated as sales turned down sharply last year," Bernanke said. "Whether there will be a sustained recovery heading into 2010 will depend on jobs," the UBS economic team wrote in a note to clients