This page has been archived and commenting is disabled. Weekly Oil Market Update: 03/1/2010 - 03/5/2010

Tyler Durden's picture



U.S. Jobs Data Propels Crude Oil Above $80 a Barrel

Oil Market Summary for 03/01/2010 to 03/05/2010

Jobs data indicating that U.S. economic recovery might be picking up steam finally pushed crude oil futures decisively over the stubborn $80 a barrel threshold. Nymex’s benchmark West Texas Intermediate settled Friday at $81.50 a barrel, a seven-week high, after topping $82 in intraday trading.

An unchanged unemployment rate of 9.7% and a smaller-than-expected drop in payrolls propelled both stocks and commodities higher on Friday. Earlier in the week, industry job data also came out better than expected, pushing crude just above the $80 a barrel mark.

Any improvement in the labor market would translate into more commuter driving, more vacation driving this summer and generally greater energy demand, analysts said.

The jobs figures trumped other data, such as increases in inventories, that normally dampen oil prices. Oil inventories rose by 4 million barrels in the week, well ahead of consensus forecasts for a gain of only 1 million barrels.

Remarks by Chinese Premier Wen Jiabao at the opening of the National People's Congress on Friday expressing continued support for the economy also pushed prices higher, analysts said. Wen said the economy was on track to grow 8% this year. Recent efforts by Chinese authorities to curb bank lending have led to uncertainty about Chinese growth prospects.

But the situation in Europe with Greece’s fiscal crisis weighing on the euro continued to unsettle markets. Greece successfully placed a bond issue this week, but questions remain about the stability of the euro zone. The euro inched above the $1.36 mark in late Friday trading.

Oil prices also overcame a nearly 4% drop in natural gas prices on Thursday. The benchmark Nymex contract fell 18.2 cents on Thursday to settle at $4.575 a million British thermal units. Traders concluded that cold winter weather was now over, analysts said.

The draw-down in gas storage was only 116 billion cubic feet in previous week, less than the consensus forecast, so that total gas storage remains above the five-year average. Natural gas futures settled only marginally higher on Friday at $4.595/MMBtu.

Natural gas price trends are more often decoupled from crude oil trends as increased output of shale gas in the U.S. creates a different supply and demand situation.

The Commodity Futures Trading Commission has begun flexing some enforcement muscle in energy futures trading. The CFTC fined UBS for exceeding position limits in heating oil and natural gas contracts, and the U.S. Oil Fund, an exchange-traded fund, said the agency may charge it with wrongly reporting some trades.

But the UBS fine was quite small, only $130,000, and the fault in the USO reporting may lie with the broker or clearing house. Even so, commentators said these may be early signs that the CFTC will be following through on its pledge to police futures trading more carefully.

By Darrell Delamaide for who focus on, Fossil Fuels, Metals, Crude Oil Prices, Alternative Energy and Geopolitics To find out more visit their website at:


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Sat, 03/06/2010 - 13:16 | Link to Comment Rainman
Rainman's picture

A $ 130k fine for UBS fraud is an absolute joke and no incentive to discontinue the oil futures trading ponzi. Not even the SEC can match CFTC's lack of vigilance against fraud . Just more wrist slapping.

Penalties have to be meaningful to even put a small dent in the fraud going on with commodities trading. And CFMA 2000 needs to be's a ticket to steal.

Sat, 03/06/2010 - 13:21 | Link to Comment doublethink
doublethink's picture


"Any improvement in the labor market...."




Sat, 03/06/2010 - 13:32 | Link to Comment Anonymous
Sat, 03/06/2010 - 14:04 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

That is the formula.

I wonder where do those who say there is no such thing as peak oil, base their statement.

I am afraid that when it becomes obvious it will be too late.

The world at large should look for alternatives before it's too late. My take is that only by utilizing extreme chemistry combined with quantum physics one can find ways to create natural recourses cheaply and in abundance from the basic elements.

We create real diamonds. don't we?

Brains of the world, here is your challenge.

Sat, 03/06/2010 - 21:53 | Link to Comment Hulk
Hulk's picture

Its is already obvious and already too late
Replacing the energy represented by oil is
the greatest challenge ever faced by mankind
Millions and millions of years of sunlight
integrated into an easily transported,energy
dense liquid fuel....
Only a miracle energy find at this point can
save us.So don't count on that
The US, no doubt, will use military might to
stave off disaster. No telling how that will go. At best, we will have 15 to 20 years of hell while we furiously start building nuclear reactors
Anyone who believes we can biofuel\PV cell\wind mill our way
out of this one is delusional
California alone uses 20 billion gallons of gas\diesel a year.
Mexican and Venezuelan are already officially
in collapse, our 2nd and 3rd biggest suppliers

Its really difficult to comprehend the magnitude of the numerous problems that now
confront us, but that is what happens when
problems are not solved as they present themselves.

Anyone who wants to understand the magnitude of the energy crisis we now face, I recommend the following:
Anything by Professor Deffeyes

Also Matthew Simmons (twilight in the desert)

Resources are cited in the wiki docs

The article "the stonewalling of peak oil"
which is an interview with Bob Hirsch,
is a must read

Sat, 03/06/2010 - 14:11 | Link to Comment Rick64
Rick64's picture

 This is a no win situation. Better economy equals higher oil prices. Lower dollar equals higher oil prices. Less available oil equals higher oil prices. That is why we are strategically positioned throughout the middle east and we aren't going to leave. WMD? Al Qeada? Iran Nuclear?

Sat, 03/06/2010 - 14:15 | Link to Comment Hondo
Hondo's picture

Since everythng in the markets today is nothing more than gambeling....from LV I would put the odds of higher oil prices due to faster economic growth at 4:1against. Have fun at the tables I'm glad you decided to play

Sat, 03/06/2010 - 14:23 | Link to Comment Anonymous
Sat, 03/06/2010 - 14:29 | Link to Comment lawton
lawton's picture

There is a large supply of oil now and if carry trade speculation and the rest wasnt going on oil would be $ 60 at most now. I think I have heard when oil hits about $ 85 and the average gallon of gas is about $ 3 is the point it really drags on the economy. These speculators are only going to make the double dip happen sooner rather than later.

Sat, 03/06/2010 - 14:33 | Link to Comment Anonymous
Sat, 03/06/2010 - 15:01 | Link to Comment Anonymous
Sat, 03/06/2010 - 15:19 | Link to Comment Gimp
Gimp's picture

Victory Gardens are back in style. Start planting something, here is a good place to start:

Don't whine, become as self sufficient as possible, when the shit hits the fan you are on your own.


Sat, 03/06/2010 - 15:26 | Link to Comment Anonymous
Sat, 03/06/2010 - 16:25 | Link to Comment overmedicatedun...
overmedicatedundersexed's picture

much too glum about energy : build Nuke plants ala France's 80 % electricity production.

(nice high paying jobs there so we probably will not do it, but oh well)

mine coal - gasification (ala Germany 1940's) makes all sorts of fuels and chemical bases.and we get 300 more yrs of carbon energy

seems USA has most of worlds coal supply so of course we will not use it.. or our large Nat Gas and Oil reserves (Anwar must be kept pristine LOL ..been to the N country helping map a gold mine and pal it's a cold hell)..

Mid Eastern sheiks

pay off our congress and eco lobby very well to keep us dependent on imports-( most of the sane ZH readers know this anyway.)..add solar- wind  & geothermal as they will always be drops in the energy bucket but people seem to like the idea of a non- nuke non- carbon energy  gotta wonder what kind of humans are so.. well oh .. Stupidly stuck with ideals that facts never penetrate (ala globull warming alarmists) final idea = plenty of methane hydrates in the oceans that adds even more centuries to the energy production scheme. 

The earth can support our human populations energy needs..but then many of us will reach our  limit on having to deal with idiots who worship  Gia..or marx/lenin..I am liking dogs alot better than the walking zombie protomaxistprogressives  I am forced to live with on this planet.. add in screwed up islamists and our NWO elite bankers  . and maybe no energy is the way to go after-all

peace and love.and 12 yr old single malt scotch whiskey on cold winter nights.





Sat, 03/06/2010 - 17:51 | Link to Comment Anonymous
Sat, 03/06/2010 - 18:08 | Link to Comment wprosser
wprosser's picture

Yes oil is important- but seriously? Peak oil- decline rates? c'mon ask Natty players about that story.... see "Shale kicked my ass."

Seriously, inflation adjusted prices are a function of marginal cost and marginal demand (it is called math and ROI for those nimbasils who actually think OPEC affects the price of oil)- look at your dam bloomberg DOE- implied demand since 1988. Peak oil cant happen- oil spikes and then kurplunks. Demand is imperative and NOT INELASTIC. Would you buy more oil because it is expensive? WTF? This is not water in Africa, but driving 15% less.....Trade will end before oil can drain itself... Look at an oil chart since 1888... up down up down- c'mon somebody read a book or two.... Technology has always outpaced demand... 

Peak oil is for minds that have "peaked" or they are too ignorant to use non-linear math. Ever heard of a rig count? everybody cheats and F*** themselves. We have OPEC bc of game theory- produce- produce- produce- regardless of demand, while some other person cuts. The Fed and printing money/ interest rates/ marginal cost of lending will always move the price of oil more than "decline rates." Believe it or not decline rates were in the 30-50% back in the 30's...

However, Scotch is required in all situations 

Sat, 03/06/2010 - 18:59 | Link to Comment Anonymous
Sat, 03/06/2010 - 20:08 | Link to Comment wprosser
wprosser's picture

My argument is against the simplistic decline rate assumption, not pro economics; economics is all theory- on a good day. Why would anyone buy oil that is going to be used next month if you are betting on peak oil in 20 years? That makes sense? Oil is not oxygen... and its demand is not inelastic;like I said, go to your bloomberg and look at implied demand... it has been down for 3+ years. My point is that the rate is not comfortable, not linear, and entirely biased- look at natural gas... we do drill horizontal now... this is not the 30's. Where on earth do you get surge in rig count? Um have you been to BHI's website?  If one believes in "peak oil" they should buy corn- freeze it for 2.5 centuries- Oil is a MEANS NOT AN END. One only needs OIL to get the corn into his mouth... of course with oxygen and beer... I honestly think oil is a great LT investment- but I just cant stand ignorant sheep. If peak oil is real... it wont be because of decline rates- it will happen because of demand, and population; which both would tell you to be buy it before it gets scarce- which is not Cushing OK 2010... People wrap their minds around simple assumptions... the real world is not simple or linear... at the end of the day someone pays to drill the oil- if crap hits the fan as hard as "peak" oil would imply our monetary system is F*** (which it may be...) so just buy gold- it at least doesn't rot in a tanker after 4 years... which you could use to buy the oil in the future when it is so scarce. BTW if it declines and the price rises- that would fit into my definition of economics....

Sat, 03/06/2010 - 20:17 | Link to Comment torabora
torabora's picture

Perhaps demand is being driven by more people living in their cars. The pun is deliberate.

Sat, 03/06/2010 - 20:19 | Link to Comment Anonymous
Sat, 03/06/2010 - 20:22 | Link to Comment Anonymous
Sat, 03/06/2010 - 21:01 | Link to Comment no cnbc cretin
no cnbc cretin's picture

The jobs lost, aren't coming back. And more to go, big time.

Fri, 04/16/2010 - 08:34 | Link to Comment mark456
mark456's picture

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