Daily Archives: July 2, 2009

Carola Hoyos

On Energy Source:

Chevron may have last laugh in Iraq

A rogue trader at PVM (via Alphaville)

Oil falls as US inventories rise


The Americans are coming: Hurray for Afren (Telegraph)

The US’s first biodiesel pipeline starts operations (NYT)

Friedman hates Waxman-Markey bill, but wants it passed anyway (NYT)

Exxon continues to fund climate sceptics (Guardian)

CNPC eyes Repsol’s Argentine assets (South China Morning Post via Reuters)

Oil fell on Thursday as the market continued to digest US government data showing a large increase in petrol stocks, increasing worries that consumer demand was flagging and the energy markets had been overbought.

Crude sagged as investors across most asset classes adopted defensive stances after closely-watched US non-farm payrolls data showed unemployment in the world’s leading economy fell more than expected.

Data on Wednesday from the Energy Information Agency, the statistical arm of the US Department of Energy showed crude inventories fell for the fourth consecutive week but this was overshadowed by the sharp rise in petroleum products.

Nymex August West Texas Intermediate, the US benchmark, fell $1.40 to $67.87 a barrel. ICE August Brent fell $1.35 to $67.43 a barrel.

“We see prices as being likely to stay largely within the $65-75 range in the current quarter, with brief forays possible either side of that range, and have adjusted price forecasts to reflect that core view,” said Barclays Capital.

“The main dynamic within the US data recently has been one whereby the overhang of crude oil inventories is being turned into a greater overhang of oil product inventories. Indeed, that dynamic has been the reason why we have remained wary of long exposure to product cracks in recent weeks and have preferred long crude but short products”.

Base metals meanwhile were broadly weaker ahead of the US data. Copper fell 2.9 per cent to $4979 per tonne and aluminium was down 1.9 per cent to $1633 per tonne.

Gold slipped as the dollar strengthened and reduced the relative value appeal of bullion. Spot gold lost 1.4 per cent to $929.10.

London-based oil brokerage PVM Oil Associates is understood to have parted company with one of its senior long-standing derivatives brokers after allegedly detecting a large unauthorised Brent ICE position on his book.

While the oil market in London was abuzz with the story on Thursday, hard details were still thin on the ground.  However, the wayward trade is thought to have involved anywhere between 1,800 and 9,000 lots of Brent ICE futures, which at the top end would be equal to as much as $630m or 9m barrels of oil.

To put that in context, the world’s top exporter Saudi Arabia has the ability to produce some 11m barrels a day at maximum capacity.

The huge position is said to have been amassed in the early hours of Tuesday morning, around 2am.  Sources said PVM, the world’s biggest independent oil broker, began to unwind the position as soon as it was detected when the firm formally opened for business on Tuesday, minimising losses to the privately-owned company to around $10m.

Sheila McNulty

A BP-led consortium may have won a deal to develop Iraq’s largest oilfield, but Chevron could have the last laugh.

The US oil company did not even bid for one of the highly touted contracts. While Chevron is not saying anything about what kept it out of the race, an industry source says the world’s third biggest oil company decided the terms being offered were too unfavorable for the company to make money.

There is no doubt BP is a risk taker. TNK-BP, the Russian joint venture and one of its biggest risks, has mired BP is a political tug of war with some of the country’s most powerful oligarchs. Whether that risk will pay off is still unclear to some.

Chevron, too, takes risks, it stayed in Venezuela when others, such as ExxonMobil and ConocoPhillips, pulled out amid the nationalization of energy assets. Yet that risk has proven more valuable than the withdrawals of Exxon and Conoco, which have yet to recover their lost investments.

If Chevron decided Iraq was not worth the investment, maybe it wasn’t. One striking thing though is that Chevron, unlike many other international oil companies, did not bid at all. Even those that did not want to win – and were certainly not going to accept Iraq’s demands – put in bids, albeit such unattractive ones that they were unlikely to win any contract. Chevron was almost alone in showing up for the show in person (an executive was in the bidding room in Baghdad) but not ever putting up its hand, even tentatively to show it was in class in the hopes of winning a few brownie points, rather than scoring itself a contract to repair an Iraqi oil field.

- Areva plans to raise €10bn through disposals
Chief declares end to years of uncertainty (FT)

- Indian fuel prices raised by 10%
Increase is first this year (FT)

- Pakistan raises fuel prices 12%
Move triggers protests from consumers (FT)

- Russia offers Turkey a role in gas pipeline to Europe
Another Russian attempt to undermine EU’s project (Reuters)

- John Wood Group shrugs off doubts
Company points to recent rise in oil prices (FT)

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