Oil Drops After Bigger-Than-Forecast Increase in Crude Supplies

May 27 (Bloomberg) -- Oil declined in New York after a government report showed a bigger-than-forecast increase in crude inventories in the U.S., the biggest energy consumer.

Oil gave up some of yesterday’s 4 percent gain after an Energy Department report said crude stockpiles rose by 2.46 million barrels to 365.1 million last week. Supplies were forecast to climb by 250,000 barrels, according to a Bloomberg survey of 17 analysts. Concern about Europe and the future of its single currency spurred a 20 percent drop in oil prices between May 3 and May 25.

“The Department of Energy data was mixed,” Toby Hassall, commodities analyst at CWA Global Markets Pty in Sydney, said by telephone. “The crude number was greater than expected. There is a wave of risk aversion that has flooded the market, stemming from Europe’s problems.”

Crude oil for July delivery dropped 74 cents, or 1 percent, to $70.77 a barrel, in electronic trading on the New York Mercantile Exchange at 8:33 a.m. Sydney time. Yesterday, the contract rose $2.76 to settle at $71.51, the biggest one-day increase since Sept. 30. Futures closed at their highest level since May 14.

Oil rose yesterday after U.S. government reports showed gains in fuel consumption and orders for durable goods. Total fuel demand climbed 0.6 percent to 19.7 million barrels a day in the week ended May 21, the Energy Department said.

“We were due for a bounce given the magnitude of decline over the last few weeks,” CWA’s Hassall said. “Volatility remains elevated.”

Fuel Supplies

Gasoline supplies fell 203,000 barrels to 221.6 million barrels, their third consecutive decline, the Energy Department report showed. Stockpiles were forecast to rise 300,000 barrels, according to a Bloomberg News survey.

Inventories of distillate fuel, a category that includes heating oil and diesel, declined 267,000 barrels according to the Energy Department.

Stockpiles at Cushing, Oklahoma, where New York-traded West Texas Intermediate oil is delivered, slipped 0.9 percent to 37.6 million barrels. It was the first decline in 10 weeks. Stockpiles in the week ended May 14 were at the highest level since the Energy Department started keeping records at the storage hub in 2004.

The Organization for Economic Cooperation and Development forecast yesterday that the global economy will expand 4.6 percent this year and 4.5 percent in 2011, compared with an average of 3.7 percent during the decade through 2006 as growth in emerging economies outpaces debt-burdened developed countries.

Brent crude oil for July settlement increased $2.19, or 3.2 percent, to $71.74 on the London-based ICE Futures Europe exchange yesterday. It was the first gain in 10 days.

Soybeans Rise From 10-Week Low on Strengthening Demand in China

May 26 (Bloomberg) -- Soybeans rose from a 10-week low on speculation that rising demand for food and livestock feed in China will outweigh European debt woes.

The Organization for Economic Cooperation and Development raised its growth forecasts for 2010 and 2011 as emerging economies such as China, the biggest buyer of soybeans, outpace debt-burdened developed countries to drive the global expansion. Crude oil jumped the most in three months and equities rose after a government report showed expanding U.S. manufacturing.

“China still remains part of the demand story,” said Jim Gerlach, the president of A/C Trading Inc. in Fowler, Indiana. “Soybeans are getting a bounce today from the rally in stocks and crude oil.”

Soybean futures for July delivery rose 7.5 cents, or 0.8 percent to $9.38 a bushel on the Chicago Board of Trade, the biggest gain since April 22. Yesterday, the price touched $9.275, the lowest level since March 15.

Sales of U.S. soybeans from Sept. 1 to May 13 totaled 38.119 million metric tons, a 14 percent increase from 33.523 million during the year-earlier period, Department of Agriculture data show.

China will import 46 million tons from all suppliers in the year that ends Oct. 1, up from a 43.5 million forecast a month ago and a record 41.1 million a year earlier, the USDA said this month. Imports may grow to 49 million next year, the department said.

The soybean crop in the U.S., the world’s largest grower, was valued at $31.8 billion last year, second only to corn at $48.6 billion, government figures show.

FCPO Daily Commentary for 27th May 2010

FCPO August Futures contract traded RM16 higher as compare to previous trading sessions to close at RM2452 with a total of 8,053 lots traded in the market. FCPO price plunge lower after long consolidate despite crude oil and soybean oil were traded firm during electronic trading sessions.
FCPO price seems topped around resistance levels at RM2474 regions; 61.8% Fibonacci resistance levels in the hourly price chart. Technically, FCPO price seems likely to trade lower provided resistance levels at RM2474 and RM2500 were not violated in the coming trading sessions. However, FCPO price would further confirm to trade lower once traded price trading below support levels at RM2436 and RM2406 regions.

FKLI Daily Commentary for 27th May 2010

FKLI May Futures contract traded 12 points higher as compare to previous trading session to close at 1253 levels with a total of 12,211 lots traded in the market. FKLI was opened higher but trading lower during trading sessions as regional indices were traded weak upon closing despite Dow Jones futures electronic trading were traded higher.
FKLI seems rebound at 50% Fibonacci resistance levels at 1262 regions before consolidate trading lower to find support during trading sessions. Technically, FKLI would seems continue to trade lower in the coming trading sessions provided resistance levels at 1262 and 1267; both 50% and 61.8% Fibonacci resistance levels. However, FKLI would anticipate certain of buying interest around support levels at 1238 and 1230 regions.

Kuwait Says OPEC ‘Not Yet’ Concerned By Oil Below $70

May 25 (Bloomberg) -- OPEC ministers are “not yet” concerned that oil costs less than $70 a barrel, and there is no need for the group to hold an emergency meeting, Kuwait’s oil minister said.

The group needs to provide a “clear signal” of a price floor to avoid investors pulling out of the oil market, JP Morgan Chase & Co said in a research note today.

OPEC is planning to do “nothing” about the 26 percent drop this month in oil prices, Sheikh Ahmad al-Abdullah al-Sabah told reporters in Kuwait today. “We ask for more compliance” by group members with their agreed output limits, he said.

Oil, which traded as high as $87.15 a barrel on May 3, dropped as low as $64.24 on May 20 as investors sold the commodity on concern that Europe’s debt crisis might spread. Crude for July delivery fell as much as $3.06, or 4.4 percent, to $67.15 a barrel today on the New York Mercantile Exchange.

Organization of Petroleum Exporting Countries Secretary- General Abdalla El-Badri has said that prices of between $70 and $90 are reasonable to encourage producers to expand exploration. Saudi Arabian Oil Minister Ali al-Naimi, representing the group’s biggest exporter, said on March 30 that he hoped prices would remain in a range of $70 to $80 a barrel.

OPEC agreed in March to uphold output quotas for a fifth time. The group’s members slashed their quotas at a meeting in December 2008, after global energy demand fell amid the worst recession since World War II. Crude oil prices slumped from a record $147 a barrel in July of that year to $32 in December.

Quota Compliance

Members currently exceed those allocations by about 2 million barrels a day, meaning they’re maintaining 53 percent of a promised 4.2 million barrel-a-day cutback, according to Bloomberg estimates.

While Gulf nations Saudi Arabia, Kuwait and the United Arab Emirates have stuck to their agreed targets, other members are producing close to capacity. No minister has called for an emergency meeting.

“Probably the most bearish factor in the market though is the mounting tensions within OPEC,” JPMorgan said in the note. “If the market believes the core trio will leave supply alone until compliance in the rest of the organization improves, it will feel that price is on the losing end of a game of chicken.”

The group won’t meet before its next scheduled gathering on Oct. 14 as the oil price slump has been caused by uncertainties linked to the financial crisis in Greece, and not to crude supply and demand, Algeria’s Oil Minister Chakib Khelil said May 19, echoing comments from Qatari Oil Minister Abdullah bin Hamad al-Attiyah on May 15. Saudi Arabia’s Minister of Finance Ibrahim al-Assaf said May 18 he’s “not worried” about the price drop.

OPEC is “tense” about the decline in oil prices and may call an extraordinary meeting if the drop continues, Angolan Oil Minister Jose Maria Botelho de Vasconcelos said May 18. Sheikh Ahmad of Kuwait said May 8 that oil prices below $65 a barrel would “ring a bell” for OPEC ministers to hold an emergency meeting.

Oil Rebounds Above $70 After Report Shows Gasoline Supply Drop

May 26 (Bloomberg) -- Crude oil rebounded, rising above $70 a barrel in New York, after an industry-funded report showed a drop in gasoline stockpiles in the U.S. and equities recovered from their worst levels.

Oil pared most of yesterday’s 2.1 percent slump after the American Petroleum Institute said gasoline supplies declined by 3.19 million barrels last week. The Dow Jones Industrial Average fell 22.82 points after plunging 292 points in early trade.

“A drop in gasoline supplies almost always gives the energy markets reason to trade higher,” said Mike Sander, an investment adviser a Sander Capital Advisors in Seattle. “Oil is also up after the Dow Jones rallied in trading at the end of its session. With such a positive reversal, the price of oil received a boost.”

Crude oil for July delivery rose $1.19, or 1.7 percent, to $69.94 a barrel in electronic trading on the New York Mercantile Exchange at 8:20 a.m. Sydney time. Yesterday, the contract fell $1.46 to $68.75 after dropping as much as 4.4 percent.

Oil fell yesterday as the dollar gained against the euro, reducing the appeal of commodities to investors. The shared currency declined as the International Monetary Fund said Spain has been too slow to strengthen its banking system.

The Standard & Poor’s 500 Index rose less than 0.1 percent after recovering from a 3.1 percent drop as U.S. stocks helped check a global retreat in equities.

Stocks Recover

The MSCI World Index of shares in 23 developed nations fell 1.5 percent, paring a drop of as much as 3.4 percent after the bank borrowing rate known as Libor rose for an 11th straight day and North Korea said it will sever ties with South Korea as tensions between the nations escalate.

U.S. crude supplies rose by 616,000 barrels last week, according to the American Petroleum Institute. An Energy Department report today may show supplies rose by 250,000 barrels in the seven days ended May 21, according to a Bloomberg News survey.

The department’s report may show gasoline inventories increased by 300,000 barrels, according to the median of 18 analyst estimates in the survey.

The Petroleum Institute collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Brent crude oil for July settlement dropped $1.62, or 2.3 percent, to end the session at $69.55 yesterday.

FCPO Daily Commentary for 26th May 2010

FCPO August Futures contract traded RM54 lower as compare to previous trading sessions to close at RM2436 with a total of 9,383 lots traded in the market. FCPO price plunge lower tracking closely with soybean oil and crude oil electronic trading during trading sessions.
FCPO price seems plunge lower after manage to penetrate previous support levels at RM2580 and RM2565 regions. Technically, FCPO price seems resume its major wave 3 correction towards south where next nearest support levels seen at RM2406 and RM2352 regions. However, FCPO price must not be trading above resistance levels at RM2466 and RM2500; both are 50% and 100% Fibonacci resistance levels in order the correction wave to remain intact.

FKLI Daily Commentary for 26th May 2010

FKLI May Futures contract plunge 31 points lower as compare to previous trading session to close at 1241 levels with a total of 14,981 lots traded in the market. FKLI plunge lower as regional indices and Dow Jones futures electronic trading were traded weak due to fear of the implications on the Europe debt issue.
FKLI seems continue to plunge lower manage to penetrate previous support levels at 1263 and 1250 regions. Technically, FKLI wound have great buying interest around support levels at 1338 and 1330 regions in the hour price chart. However, FKLI must not trade above 1252 and 1264 resistance levels in order to remain bearish sentiment.

FCPO 25th Daily Market Commentary

FCPO 3rd month Aug futures contract traded RM1 lower to close at RM2490 levels as compare to previous trading sessions with a total of 3,886 lots traded in the market. FCPO price was mainly trading within tight range despite wild price movement from crude oil and soybean oil electronic trading.
FCPO price seems trading tight range within range from RM2480 and RM2500 region during 6-hours trading after 3 attempts to penetrate the support trend line. Technically, FCPO price seems formed a symmetric triangle formation in the hourly price chart where support levels were seen at RM2480 and RM2453 while resistance levels seen at RM2493 and Rm2514; both are 50% and 61.8% Fibonacci resistance levels. We do anticipate huge price movement upon break out.

FKLI 25th May Market Commentary

FKLI Apr Futures contract plunge 14.5 points lower to close at 1272 levels as compare to previous trading session to with a total of 12,894 lots traded in the market. FKLI traded wild as regional indices were traded firm while Dow Jones futures electronic trading plunge lower during trading sessions.
FKLI plunge lower towards next nearest support levels at 1273 in the first attempt before rebound 61.8% at 1282 regions. Technically, FKLI seems would continue to trade south provided support levels at 1263 and 1250; 78.6% and 100% Fibonacci support levels. However, FKLI would seem riding on riding on rebound wave provided support levels were not violated while resistance levels were seen at 1283 and 1292 regions.

Oil Drops Below $70 on Concern European Debt Crisis May Persist

May 25 (Bloomberg) -- Crude oil declined, falling below $70 a barrel in New York, after the seizure of a Spanish bank fueled concern the fallout from Europe’s debt crisis isn’t over.

Oil gave up yesterday’s 0.2 percent gain as the euro dropped against the dollar, reducing the investment appeal of commodities. U.S. supplies of crude oil probably rose for the 16th time in 17 weeks amid ample imports, according to analysts surveyed by Bloomberg News before a government report tomorrow.

“Oil prices have gone down $20 since the beginning of May and I would say about half of it would be attributed to the debt crisis,” Adam Sieminski, the chief energy economist at Deutsche Bank AG in Washington, said on Bloomberg Television. “It is a change of sentiment that has weighed on the oil market.”

Crude oil dropped 37 cents, or 0.6 percent, to $69.84 a barrel, in electronic trading on the New York Mercantile Exchange at 8:44 a.m. Sydney time. Yesterday, the contract rose 17 cents to settle at $70.21.

Crude oil rose yesterday on speculation that China may delay economic tightening measures and signals that U.S. economic growth will accelerate.

The dollar traded 0.3 percent higher at $1.2336 a euro at 8:30 a.m. Sydney time, after gaining 1.6 percent yesterday. The euro fell against all of its most-traded counterparts as the Bank of Spain said on May 22 it appointed a provisional administrator to run CajaSur, a savings bank crippled by property-loan defaults.

Crude Supplies

U.S. crude stockpiles rose 250,000 barrels in the seven days ended May 21 from 362.7 million the previous week, according to the median of 13 analyst estimates before tomorrow’s Energy Department report. Seven of the respondents forecast a gain and six estimated a decline.

Refineries probably operated at 87.9 percent of capacity last week, unchanged from the previous week, according to the median of analyst responses. Refineries operated at 89.6 percent of capacity in the week ended April 30, the highest level since May 2008.

China expanded daily crude processing volume by 17 percent to a record 8.4 million barrels a day in April, according to data released May 11 by China Mainland Marketing Research Co., which compiles information for the government.

The U.S. and China are responsible for 33 percent of global oil consumption, according to BP Plc, which publishes its Annual Statistical Review of World Energy each June.

Brent crude oil for July settlement slipped 51 cents, or 0.7 percent, to end the session at $71.17 on the London-based ICE Futures Europe exchange yesterday.

Soybeans Decline as U.S. Exports Fall to Eight-Month Low

May 24 (Bloomberg) -- Soybeans fell, erasing an earlier gain, after a government report showed U.S. shipments of the oilseed fell last week to the lowest level since September.

The U.S. inspected 3.901 million bushels for export in the week ended May 20, down 57 percent from a week earlier, according to the Department of Agriculture. The euro plunged as much as 1.8 percent against the dollar after the Bank of Spain took over a failing lender. A stronger dollar makes U.S. commodities more expensive for foreign buyers.

“Soybean export-inspections were poor last week,” said Mario Balletto, a grains and oilseed analyst for CitiGroup Global Markets Inc. in Chicago. “People are concerned that demand may slow more quickly” as supplies from Brazil and Argentina, the biggest exporters after the U.S., become relatively cheaper because of the dollar’s rise.

Soybean futures for July delivery fell 0.5 cent to $9.405 a bushel on the Chicago Board of Trade, the eighth decline in nine sessions. Prices are down 5.9 percent this month.

Sales of U.S. soybeans from Sept. 1 to May 13 rose 14 percent to 38.119 million metric tons from 33.523 million in the year-earlier period, USDA data show.

Brazil and Argentina may harvest a combined 122 million tons this year, up 36 percent from a drought-reduced harvest of 89.8 million tons last year, the USDA said earlier this month.

The soybean crop in the U.S., the world’s largest grower, was valued at $31.8 billion last year, second only to corn at $48.6 billion, government figures show.

Oil Trades Near $70 as European Debt Crisis May Slow Recovery

May 24 (Bloomberg) -- Crude oil was little changed near $70 a barrel in New York amid concern measures to reduce deficits in Europe may slow the global economy’s recovery from recession.

U.S. Treasury Secretary Timothy F. Geithner will tell his Chinese counterparts this week that Europe’s debt crisis should have only a small effect on the recovery, a U.S. official told reporters in Beijing. Oil prices below $65 would be harmful for Middle East producers, Saudi Basic Industries Corp. Chief Executive Officer Mohamed bin Hamad al-Mady said yesterday.

“There are still uncertainties regarding Europe and that has obviously been dominating markets,” said Toby Hassall, commodities analyst at CWA Global Markets Pty in Sydney. “The uncertainty is still very much there and it’s not looking like we’ll get a solution to Europe’s problems any time soon.”

Crude oil for July delivery traded at $70.23 a barrel, up 19 cents, in after-hours electronic trading on the New York Mercantile Exchange at 7:53 a.m. in Singapore.

The contract fell the past nine sessions, dropping 7.1 percent last week. June oil slumped as low as $64.24 on May 20, the lowest intraday price for the near-month contract since July 2009.

Oil prices are down 20 percent from a 19-month high of $87.15 reached on May 3. Futures touched a record $147.27 on July 11, 2008.

“Commodities were certainly a forward-looking market last year and we are starting to see a speed-bump,” CWA’s Hassall said. U.S. stockpiles also remain high, he said.

Asia, U.S. Recovery

Against that, Asian demand has been picking up, and there has been a “fairly encouraging” flow of data from the U.S., the world’s biggest energy consumer, he said.

“We were never really expecting a sharp recovery in the U.S. economy and we certainly haven’t got it. But having said that, there are signs that the U.S. economic recovery is becoming self-sustaining. In terms of oil demand, that is a positive.”

U.S. supplies of crude oil and all petroleum-based fuels increased to 1.81 billion barrels in the week ended May 14, the highest stockpiles on a seasonal basis in Energy Department data through 1990.

Hedge funds and other large speculators reduced their bets on rising oil prices to a three-month low last week, according to U.S. Commodity Futures Trading Commission data.

Speculative net-long positions, the difference between orders to buy and sell the commodity, dropped 25 percent in the week ended May 18, to 67,361 contracts on the New York Mercantile Exchange, the lowest since Feb. 12.

While some speculators may be buying back in to profit from the longer-term demand recovery, markets remain volatile and investors “don’t want to catch a falling knife,” Hassall said.

Brent crude oil for July settlement advanced 12 cents to $71.80 a barrel on the ICE Futures Europe exchange in London. It slipped 16 cents to $71.68 on May 21, the lowest settlement since Feb. 8.

CME’s Dollar Palm Oil Futures May Lure Europe, U.S. Investors

May 24 (Bloomberg) -- A dollar-denominated palm oil contract introduced by CME Group Inc., the largest futures exchange, may attract U.S. and European investors, according to Dorab Mistry, a director at Godrej International Ltd.

The contract was scheduled to start trading today at 6 a.m. Kuala Lumpur time, with final cash settlement prices based on the ringgit-denominated futures on Bursa Malaysia Bhd.

About 90 percent of the world’s palm oil, used in fuel and cooking, is produced in Indonesia and Malaysia, and the commodity is the cheapest and most traded cooking oil. Futures in Kuala Lumpur, the global benchmark, surged 57 percent last year on demand from China and India, the biggest consumers. Soybean oil in Chicago advanced 21 percent.

“The main players are likely to be U.S. and European consumers and investors who are not comfortable trading a ringgit contract,” said Dorab Mistry from Godrej, one of India’s largest traders of cooking oils.

While local traders in Malaysia and Indonesia “may not be significant” participants, “refiners who export in dollars and crude palm oil shippers who export will find it an attractive hedge,” he said May 18. “It’s an ideal arbitrage instrument for the palm-soya spread,” he said.

A stronger ringgit narrowed the premium of soybean oil over palm oil to as low as $54.94 a ton on April 30, from a 12-month average of $128.97 a ton, according to Bloomberg data.

‘Added Liquidity’

While dollar-denominated futures “should give some added liquidity” to the ringgit contract, traders in Indonesia and Malaysia already have “quite a good future to trade,” said Scott Briggs, agricultural commodities strategist at Australia & New Zealand Banking Group Ltd. “They have achieved a market of this size, so why would they start trading more.”

“Food processors, commercial firms and other multinational companies who use crude palm oil and trade in U.S. currency now have an alternative for hedging that risk,” Timothy Andriesen, CME’s managing director for commodities, said March 9.

The Indonesian rupiah climbed 12 percent against the dollar in the past year, outpacing an advance of 6.4 percent in the ringgit, Bloomberg data tracking currency performance show.

The CME contract “definitely increases the visibility of palm oil as a commodity and we could see increased sensitivity of crude palm oil to other commodities,” said Arhnue Tan, a senior analyst at ECM Libra Capital Sdn. Trading will typically be low for a new contract, Tan said.

The tie-up between CME Group and Bursa Malaysia, which also manages the nation’s stock exchange, was announced in September.

In August last year, CME Group Chief Executive Officer Craig Donohue said he sees opportunities for further tie-ups in emerging markets as economic growth drives business. The CME bought its rival Chicago Board of Trade in 2007.