Energy Markets Commentary - Nov. 19, 2007

Discussion in 'Commodity Futures' started by Ransquawk, Nov 19, 2007.

  1. Ransquawk

    Ransquawk ET Sponsor

    Energy futures are trading mostly higher this morning after OPEC members agreed to create a committee to study how a currency basket for pricing oil might work, despite resistance from Saudi Arabia. Also supporting prices were comments by Venezuela’s President, Chavez, at over the weekend, who said that $100 a barrel was a fair price for crude and that prices could rise to $200 a barrel “if the United States is crazy enough to invade Iran.” However, Iran’s President, Ahmadinejad, later downplayed the possibility of a U.S. attack by saying that the Bush Administration lacks the “economic, political and military means” to carry one out, adding that “wise men in the U.S. won’t allow an attack.”

    Although OPEC made no explicit reference to the weak dollar in its communiqué, it did say that the cartel would “study ways and means of enhancing financial cooperation among OPEC Member Countries, including proposals by some of the Heads of State and Government in their statements to the Summit.” According to Dow Jones, Iraq’s oil minister, al Sharistani, told reporters after the summit that “The committee is to submit to OPEC its recommendation on a basket of currencies that OPEC members will deal with.” The minister gave no time-line for the recommendation. In addition, the Secretary General of the Gulf Cooperation Council, al-Attiyah, said yesterday that members, which include Saudi Arabia and Kuwait, would discuss a proposal to revalue their currencies in Doha, Qatar, on Dec. 3-4.

    Saudi Aramco reported yesterday that a fire broke out at a natural gas pipeline in Eastern Saudi Arabia, killing 28 people. The fire did not disrupt gas supplies. A Saudi adviser to Saudi Arabia's oil ministry said there was no link between the explosion and the OPEC summit. He said there was no question the fire was an accident and terrorism was ruled out.

    In the U.S., Western Refining said that it shut a recycle compressor at its 122K b/d El Paso, Texas, refinery after a fire on Nov. 17. The company did not say whether production had been affected.

    According to the CFTC’s Commitment of Traders Report, net long positions in WTI crude futures fell 74% last week to 27,566 contracts, while contracts to sell oil jumped 35%.

    On the weather front, Accuweather wrote today that snow is on the way out of the Northeast today. The forecaster predicts that a warm front on Tuesday will bring a spell of mild weather to New England that is to remain through Thanksgiving. Temperatures may challenge the 60 degree mark on Thanksgiving Day as far north as southern New England.

    At 12:30 p.m. BST WTI crude futures are up $0.65 at $94.50. RBOB gasoline futures are up 1.46 cents to 239.00 and heating oil futures are rising 1.64 cents to 260.35. Natural gas futures are down 1.7 cents to $7.984.

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