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what is happening to oil prices?

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just realise from my futures table very odd pricing for different future date terms on oil, here they are:

june contract (to expire next week) 76.5 US$

july contract (expire 20th june) 80.5$

september contract 83.5$

december contract 85.7$

december 2011 88.8$

So, usually you get more expensive prices with later date, but I never seen a 5% premium for 1 month and 10% for 6 months and than flatten out after that.

Anyone has got an idea?

May be someone is dumping oil short term to buy gold? or just some oil producer is in trouble? or may be storage is running out?

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just realise from my futures table very odd pricing for different future date terms on oil, here they are:

june contract (to expire next week) 76.5 US$

july contract (expire 20th june) 80.5$

september contract 83.5$

december contract 85.7$

december 2011 88.8$

So, usually you get more expensive prices with later date, but I never seen a 5% premium for 1 month and 10% for 6 months and than flatten out after that.

Anyone has got an idea?

May be someone is dumping oil short term to buy gold? or just some oil producer is in trouble? or may be storage is running out?

We had quite a nice contago some time ago, I guess there is plenty of oil to get rid of.

Edited by Deck

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We had quite a nice contago some time ago, I guess there is plenty of oil to get rid of.

seems I found something on bloomberg:

Brent Oil Premium May Collapse as Demand Rises: Energy Markets

Share Business ExchangeTwitterFacebook| Email | Print | A A A By Margot Habiby

May 12 (Bloomberg) -- Brent oil’s premium to West Texas Intermediate crude is poised to collapse from the highest level in nine months as strengthening U.S. demand may cut record inventories at the Cushing, Oklahoma, delivery hub.

WTI traded on the New York Mercantile Exchange may overtake London’s Brent during summer, the peak U.S. gasoline-demand period, as the economy expands and refineries run at the highest seasonal rate in five years. In past three years, the U.S. grade exceeded the benchmark European crude two-thirds of the time.

Full storage tanks at Cushing, the delivery point for Nymex’s light, sweet crude oil futures, the world’s most actively traded commodity contract, have helped to undermine WTI’s traditional premium to Brent. The pipeline hub routes Gulf Coast oil to Midwestern refiners and Canadian oil to plants in Texas and Louisiana.

The conclusion of maintenance at Midwestern refiners will cause “the negative spread between WTI and Brent to reverse,” said Allison Nathan, a Goldman Sachs Group Inc. analyst based in New York, in a report this week. She said the lack of available storage at Cushing would be resolved in “weeks” and recommended selling Brent and buying WTI.

Brent traded on the London-based ICE Futures Europe Exchange cost $4.12 a barrel more than WTI yesterday, the widest premium since Aug. 14. Oil for June delivery on the Nymex fell 43 cents to settle at $76.37 a barrel yesterday. Brent for June settlement gained 37 cents to $80.49 a barrel.

“It’s all about Cushing,” said Michael Fitzpatrick, vice president of energy at MF Global in New York. “Stockpiles are near to overflowing at Cushing.”

Cushing Inventories

Inventories at the hub increased 1.68 million barrels, or 4.9 percent, to 36.2 million in the week ended April 30, the Energy Department reported last week. That’s the largest amount in data going back to 2004. U.S. imports jumped 2.8 percent to 9.95 million barrels a day, the highest level since July.

“The spread’s not going to return to normal until somebody actually stops importing crude oil into the U.S.,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “The price signal is here, but so far nobody has responded to that signal.”

In other markets, U.S. gasoline demand at the pump rose 1.4 percent from a 10-week low in the week ended May 7 as fuel consumption increased before the beginning of the peak driving season on May 31, MasterCard Inc. said in its SpendingPulse report yesterday. The average pump price for regular gasoline rose 5 cents to $2.91 a gallon, the highest level since Oct. 17, 2008. Prices are 37 percent above a year earlier.

U.S. refineries ran at a 23-month high of 89.6 percent of capacity in the week ended April 30, the Energy Department said.

Oil Spill

The widening oil slick from a BP Plc well leaking about 5,000 barrels a day following an explosion that sunk the Deepwater Horizon rig in the Gulf of Mexico last month may cause shipping disruptions that would curb imports. BP diverted an oil tanker to Europe from the Gulf.

States along the Gulf of Mexico accounted for 58 percent of U.S. oil imports, according to the Energy Department.

“The interesting thing will be if the oil spill prevents imports or reduces imports into the Gulf and brings Cushing down, which seems quite possible over the next few weeks,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

About 5.81 million barrels a day of oil was brought into the U.S. through Gulf states in the week ended April 30.

“Once we do see delays, Cushing is going to start getting drawn down very quickly,” said Carl Larry, president of Oil Outlooks & Opinions LLC in Houston. Alternatively, the Brent premium could strengthen as foreign oil seeks other U.S. ports, such as on the U.S. East Coast, he said.

Demand Forecasts

The Energy Department and OPEC increased their 2010 forecasts for oil consumption this week, citing economic growth, particularly in China and emerging markets.

The Organization of Petroleum Exporting Countries, responsible for about 40 percent of the world’s oil, boosted its forecast for worldwide crude consumption this year by 180,000 barrels a day, or 0.2 percent, to 85.38 million barrels a day. The U.S. raised its outlook to 85.55 million from 85.5 million last month.

Brent has been supported as daily shipments of the four North Sea crude grades that determine the price of Dated Brent were forecast to drop 22 percent in June to the lowest level since August 2007, according to data compiled by Bloomberg. Dated Brent is the benchmark for two-thirds of the world’s oil.

Brent was also bolstered last week as Royal Dutch Shell Plc suspended export obligations on Nigeria’s Bonny Light crude oil for May and June after production was reduced by a fire on a pipeline in the Niger Delta. Bonny Light is priced against Brent.

To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.

Last Updated: May 11, 2010 20:41 EDT

I use the nymex for my future pricing and might explain the odd results.

Strange that oil pricing is not much on then news as this contango is something even more extreme then last time (personally i have never seen before 5$ difference for 1 month )

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seems like the oil contango keeps extreme with similar precedents during last GFC,

here is a good update:

Crude Oil Tumbles to a Three-Month Low on European Debt Concern

Share Business ExchangeTwitterFacebook| Email | Print | A A A By Mark Shenk

May 14 (Bloomberg) -- Crude oil tumbled to a three-month low in New York on concern that Europe’s sovereign-debt crisis will reduce global economic growth and fuel consumption.

Oil fell 3.8 percent and the euro tumbled after Deutsche Bank AG Chief Executive Officer Josef Ackermann said Greece may not be able to repay its debt. Supplies at Cushing, Oklahoma, where New York-traded West Texas Intermediate oil is delivered, rose to a record last week, according to the Energy Department.

“The European debt worries are hitting a lot of markets,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “This together with rising inventories, especially at Cushing, will continue to weigh on oil.”

Crude oil for June delivery fell $2.79 to $71.61 a barrel on the New York Mercantile Exchange, the lowest settlement since Feb. 5. Oil declined 4.7 percent this week, and is up 22 percent from a year ago.

Oil has dropped 18 percent on the Nymex since it reached $87.15 a barrel on May 3, a 19-month high, as the euro weakened against the dollar. The European currency traded at $1.2386, down 1.2 percent from $1.2535 yesterday. The euro breached $1.25 for the first time since March 2009 and touched the lowest level since Oct. 28, 2008.

Gasoline for June delivery decreased 6.43 cents, or 2.9 percent, to $2.1308 a gallon in New York, the lowest settlement since May 7.

Greek Debt Rating

Moody’s Investors Service said there is a “greater than” 80 percent chance it will cut its rating on Greece’s debt again as the government struggles to push through measures to reduce its budget deficit.

“Oil is being hit by today’s re-emergence of the euro-zone crisis,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut.

Portugal announced austerity measures yesterday, a day after Spain proposed to reduce its deficit, spurring concern that fiscal tightening in the region will undermine economic growth and derail the global recovery.

U.S. equities retreated on concern that European governments will default on debts. The Standard & Poor’s 500 Index declined 2.3 percent to 1,130.49, and the Dow Jones Industrial Average fell 1.9 percent to 10,575.95.

“The sovereign debt crisis and the fact that the Saudis don’t want to see $90 oil are responsible for the drop in oil prices,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington. “The only problem for the Saudis is there’s no fine-tuning of the oil price.”

Close to Perfect

Saudi Arabian Oil Minister Ali al-Naimi said last month that prices in the $70-to-$80 range are “as close to perfect as possible” and that he hoped oil would remain in that range. King Abdullah has targeted $75 oil as a fair price for consumers and producers.

“We’re still in this phase of deleveraging,” said Tobias Merath, head of commodity research at Credit Suisse Group AG in Zurich. “We’re seeing concerns about the bailout package. With the European sovereign debt problems, banks need to reduce their risky activities. What’s also getting everyone’s attention is the development in the inventories.”

Crude-oil stockpiles at Cushing increased 784,000 barrels last week to 37 million, the highest level since the Energy Department started keeping records at the storage hub in 2004.

The price of oil on the Nymex for June delivery is $3.82 a barrel lower than for July. Yesterday the spread increased to $4.59, the widest divergence between front-month contracts since Feb. 12, 2009. The differential, or contango, between the June and December contracts is $9.42.

Cushing Supplies

“Cushing supplies keep going up, and the contango tells you to continue to do more,” said Kyle Cooper, managing director at IAF Advisors in Houston. “It’s self-reinforcing.”

Total crude oil supplies in the U.S. rose 1.95 million barrels to 362.5 million, the 14th increase in 15 weeks, as refiners cut processing rates, the Energy Department’s supply report showed. Inventories were 6.1 percent above the five-year average for the period, compared with 5.4 percent the previous week.

“WTI is no longer a physical commodity,” Cooper said. “It’s a financial instrument. It’s one of the finest oil grades and wouldn’t be trading at a discount to everything on the board if it were a true physical commodity.”

Brent Oil

Brent crude oil for June settlement, which expired today, declined $2.93, or 3.7 percent, to end the session at $77.18 on the London-based ICE Futures Europe exchange. It was the lowest settlement price since March 1. Brent, usually cheaper than Nymex futures, is trading at a $5.57-a-barrel premium.

The more actively traded July Brent contract slipped $3.50, or 4.3 percent, to settle at $77.93 a barrel.

Oil volume on the Nymex was 800,977 contracts as of 3:10 p.m. in electronic trading in New York. Volume totaled 1.17 million contracts yesterday, the most since April 13 and 62 percent greater than the average of the past three months. Open interest was 1.48 million contracts.

The exchange has a one-business-day delay in reporting open interest and full volume data.

To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: May 14, 2010 15:50 EDT

so, we have oild going down and gold going up, lately gold bottomed at aroun 13 times gold, now we are at over 17 using the short term oil price, 16 using 1 month oil term price and 15 for long term. during the GFC last yea gold peaked at 30 times oil

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pretty impressive the slide of oil, even today after opening this morning at 72$ now is just below 70$, the contango is a bit less cor july contract 3.5$ higher (was 4 last week) and still around 9$ for year end.

copper also today is hammered down big time and trade at 3.02$. gold up a touch when priced in US$ up against the AU$ and specially the euro where it is at 1010 euro.

i have to say the AU$ is holding better then i thought and still 87.6 US$ and 80.65 JPY. I am expecting big drop on the AU$ unless world market suddenly change.

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I am expecting big drop on the AU$ unless world market suddenly change.

Frankly I hate this AU above 0.7, I have adjusted my costs but this situation is not satisfying as I don't have much control.

Bloody hard to create real wealth and to export in this Country :-(.

I would be better off buying bunches of crappy 1br flats and becoming a scumlandlord.

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pretty impressive the slide of oil

It is rather impressive how oil can be at $70 and ULP at $1.389 with the AUD at 0.87. ULP is extremely overpriced compared to when oil was $147.

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It is rather impressive how oil can be at $70 and ULP at $1.389 with the AUD at 0.87. ULP is extremely overpriced compared to when oil was $147.

Yes but the current spot price is not necessarily the price point for all purchases of oil in Australia. There will have been hedging done between $147 and $70 which will be affecting the cost to the Aust oil companies.

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funny day for oil prices with spot price rising and prices at later term falling, contango at year end has dropped from 9$ to 6 $ in a couple of days. the june future expire later today so contango will go down to just 4$. european oil prices also got the spread with us down from 2$ to 1$ in a day or so

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