Crude-Oil Futures Settle Up After Steep Two-Day Losses

Crude-oil futures prices, battered in a sharp two-day selloff on demand worries, settled modestly higher Friday, while gasoline futures prices rebounded.

"It seems the blood-letting ran its course and the market's trying to catch its breath," said Gene McGillian, broker and analyst at Tradition Energy.

Front-month U.S. benchmark crude-oil futures prices dropped $4.58 a barrel in the previous two days, ending Thursday at a new 2013 low. Prices barely staggered to their feet after the two-day pounding, in which commodity funds shed their expectations of near-term higher prices, helped by a large jump in U.S. crude-oil inventories.

Market anxieties may not let up next week as the March-delivery contracts for reformulated-gasoline and heating-oil futures expire at Thursday's settlement and the March 1 deadline to break a government impasse and reach a deal to avoid $85 billion in automatic spending cuts looms. Failure to reach a deal likely would unnerve markets, traders said.

Light, sweet crude-oil futures for April delivery on the New York Mercantile Exchange settled 29 cents higher, at $93.13 a barrel. The contract fell 3.4%, the worst weekly performance for Nymex crude since Oct. 26, 2012.

April ICE Brent crude oil, which lost $3.99 over the previous two days, settled 51 cents higher Friday, at $114.10 a barrel. The contract lost 3% in the week, the biggest decline since the week ended Dec. 7, 2012.

Analysts at Goldman Sachs said oil prices are now "in line with fundamentals" after moving too high on "forward-looking survey data generating renewed optimism" on the global economy and oil-demand growth. The reality of "lackluster" hard data on actual demand and weak physical markets for oil brought about the selloff, the analysts said in a note.

Pressure on U.S. crude prices built when the Energy Information Administration reported domestic crude-oil stocks rose by 4.1 million barrels last week, more than twice the expected level. Stocks are now sufficient to meet nearly 27 days of current low demand from refiners, EIA data show. That is the highest level of inventory cover since March 1994, and crude-oil stocks outright are at their highest level for this time of year on EIA data beginning in 1982.

Andy Lebow, senior vice president for energy futures at Jefferies Bache, said U.S. crude now appears set to trade in a range of $90-$95 for the near term, down from the recent $95-$100 span.

Meantime, fireworks may surround the expiration of the March-delivery reformulated gasoline futures contract next week. The contract dropped 9.8 cents a gallon in the previous three days from a 20-week high, before recovering to settle 1.4% higher Friday.

Price volatility is common at this time of year as refiners walk a fine line between producing enough fuel to meet the winter-grade specification for the March contract before switching to the costlier, cleaner-burning summer-grade fuel that meets the April contract specifications.

In the last four trading days of the March 2012 contract, RBOB futures, then at a seven-month high, fell 11.05 cents, or 3.5%.

March-delivery RBOB futures rose 4.31 cents a gallon Friday, to settle at $3.0796 a gallon.

March-delivery heating oil futures, which shed 12.8 cents over the previous four sessions, settled 0.85 cent higher, at $3.1042 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Crude-Oil Futures Settle Up After Steep Two-Day Losses

Crude-oil futures prices, battered in a sharp two-day selloff on demand worries, settled modestly higher Friday, while gasoline futures prices rebounded.

"It seems the blood-letting ran its course and the market's trying to catch its breath," said Gene McGillian, broker and analyst at Tradition Energy.

Front-month U.S. benchmark crude-oil futures prices dropped $4.58 a barrel in the previous two days, ending Thursday at a new 2013 low. Prices barely staggered to their feet after the two-day pounding, in which commodity funds shed their expectations of near-term higher prices, helped by a large jump in U.S. crude-oil inventories.

Market anxieties may not let up next week as the March-delivery contracts for reformulated-gasoline and heating-oil futures expire at Thursday's settlement and the March 1 deadline to break a government impasse and reach a deal to avoid $85 billion in automatic spending cuts looms. Failure to reach a deal likely would unnerve markets, traders said.

Light, sweet crude-oil futures for April delivery on the New York Mercantile Exchange settled 29 cents higher, at $93.13 a barrel. The contract fell 3.4%, the worst weekly performance for Nymex crude since Oct. 26, 2012.

April ICE Brent crude oil, which lost $3.99 over the previous two days, settled 51 cents higher Friday, at $114.10 a barrel. The contract lost 3% in the week, the biggest decline since the week ended Dec. 7, 2012.

Analysts at Goldman Sachs said oil prices are now "in line with fundamentals" after moving too high on "forward-looking survey data generating renewed optimism" on the global economy and oil-demand growth. The reality of "lackluster" hard data on actual demand and weak physical markets for oil brought about the selloff, the analysts said in a note.

Pressure on U.S. crude prices built when the Energy Information Administration reported domestic crude-oil stocks rose by 4.1 million barrels last week, more than twice the expected level. Stocks are now sufficient to meet nearly 27 days of current low demand from refiners, EIA data show. That is the highest level of inventory cover since March 1994, and crude-oil stocks outright are at their highest level for this time of year on EIA data beginning in 1982.

Andy Lebow, senior vice president for energy futures at Jefferies Bache, said U.S. crude now appears set to trade in a range of $90-$95 for the near term, down from the recent $95-$100 span.

Meantime, fireworks may surround the expiration of the March-delivery reformulated gasoline futures contract next week. The contract dropped 9.8 cents a gallon in the previous three days from a 20-week high, before recovering to settle 1.4% higher Friday.

Price volatility is common at this time of year as refiners walk a fine line between producing enough fuel to meet the winter-grade specification for the March contract before switching to the costlier, cleaner-burning summer-grade fuel that meets the April contract specifications.

In the last four trading days of the March 2012 contract, RBOB futures, then at a seven-month high, fell 11.05 cents, or 3.5%.

March-delivery RBOB futures rose 4.31 cents a gallon Friday, to settle at $3.0796 a gallon.

March-delivery heating oil futures, which shed 12.8 cents over the previous four sessions, settled 0.85 cent higher, at $3.1042 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Crude-Oil Futures Pare Losses on US Stockpiles Data

U.S. crude-oil futures pared early losses Wednesday after weekly government data showed a smaller increase in crude-oil stockpiles than many analysts were anticipating.

U.S. crude-oil inventories rose 2.6 million barrels last week, according to the U.S. Energy Information Administration, below the 2.9-million-barrel increase forecast in a Dow Jones Newswires survey of analysts.

Additionally, stockpiles in Cushing, Okla., fell by 300,000 barrels, offering evidence that the supply glut at the key transit hub is slowly dissipating.

Light, sweet crude oil for March delivery recently traded 30 cents lower at $96.34 a barrel on the New York Mercantile Exchange, after trading as low as $95.04 a barrel earlier in the session. Brent crude oil on the ICE futures exchange traded 19 cents lower at $116.33 a barrel.

Market watchers said the bounce Wednesday following the data reflected a move by traders to lock in profits on bearish bets. While the decline in Cushing stockpiles raised some hopes for an end to the supply glut, other indicators in the weekly report signalled that rising U.S. production is keeping domestic supplies robust, which should translate into lower prices.

Gasoline stockpiles increased by 1.7 million barrels, well above the 900,000-barrel increase analysts had forecast. In addition, oil imports fell 6.2% last week as refineries continued to seek cheaper, domestic oil in place of more expensive barrel from overseas.

Tim Evans, an energy analyst at Citi Futures Perspective, said an increase in East Coast gasoline stockpiles, coupled with falling imports, could keep a lid on any gains.

"The U.S. refineries don't need it, so we're keeping the oil offshore," Mr. Evans said. "You can almost squint real hard and see the tankers loading up in Nigeria turning towards Europe rather than the U.S."

Still, oil prices remain under pressure as a result of a strengthening dollar, which can push down futures by making oil more expensive for buyers in other currencies. European markets saw broad declines Wednesday, which sent the euro lower against the dollar. The euro was recently trading 0.4% lower at $1.3537 compared to Tuesday.

"It's a general risk-off scenario. The dollar is up and risk assets are down," said Bob Yawger, director of energy futures at Mizuho.

The Dow Jones Industrial Average was recently down 0.1% to 13968.

Front-month March reformulated gasoline blendstock, or RBOB, recently traded 1.33 cents lower at $3.0241 a gallon. March heating oil recently traded 0.51 cent lower at $3.1862 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Crude-Oil Futures Pare Losses on US Stockpiles Data

U.S. crude-oil futures pared early losses Wednesday after weekly government data showed a smaller increase in crude-oil stockpiles than many analysts were anticipating.

U.S. crude-oil inventories rose 2.6 million barrels last week, according to the U.S. Energy Information Administration, below the 2.9-million-barrel increase forecast in a Dow Jones Newswires survey of analysts.

Additionally, stockpiles in Cushing, Okla., fell by 300,000 barrels, offering evidence that the supply glut at the key transit hub is slowly dissipating.

Light, sweet crude oil for March delivery recently traded 30 cents lower at $96.34 a barrel on the New York Mercantile Exchange, after trading as low as $95.04 a barrel earlier in the session. Brent crude oil on the ICE futures exchange traded 19 cents lower at $116.33 a barrel.

Market watchers said the bounce Wednesday following the data reflected a move by traders to lock in profits on bearish bets. While the decline in Cushing stockpiles raised some hopes for an end to the supply glut, other indicators in the weekly report signalled that rising U.S. production is keeping domestic supplies robust, which should translate into lower prices.

Gasoline stockpiles increased by 1.7 million barrels, well above the 900,000-barrel increase analysts had forecast. In addition, oil imports fell 6.2% last week as refineries continued to seek cheaper, domestic oil in place of more expensive barrel from overseas.

Tim Evans, an energy analyst at Citi Futures Perspective, said an increase in East Coast gasoline stockpiles, coupled with falling imports, could keep a lid on any gains.

"The U.S. refineries don't need it, so we're keeping the oil offshore," Mr. Evans said. "You can almost squint real hard and see the tankers loading up in Nigeria turning towards Europe rather than the U.S."

Still, oil prices remain under pressure as a result of a strengthening dollar, which can push down futures by making oil more expensive for buyers in other currencies. European markets saw broad declines Wednesday, which sent the euro lower against the dollar. The euro was recently trading 0.4% lower at $1.3537 compared to Tuesday.

"It's a general risk-off scenario. The dollar is up and risk assets are down," said Bob Yawger, director of energy futures at Mizuho.

The Dow Jones Industrial Average was recently down 0.1% to 13968.

Front-month March reformulated gasoline blendstock, or RBOB, recently traded 1.33 cents lower at $3.0241 a gallon. March heating oil recently traded 0.51 cent lower at $3.1862 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.

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Rockhopper reports lower losses

3.7 million) in the first half of the year, compared with $20 million a year before as it reduced its exploration expenses, with extensive drilling and seismic campaigns coming to an end.

Exploration and evaluation expenses fell by $25 million, mainly due to a $15 million decrease in an impairment charge and a $10 million reduction in seismic acquisition costs.

The completion of the farm-out of the Sea Lion prospect to Premier Oil (PMO) in October crystallised $14 million of transaction costs and a capital gains tax liability with the Falkland Islands government, the company said.

The exact size of the liability is yet to be agreed but will be payable at 26% of the taxable gain in two installments, with the first trenche due in 2013.

The Sea Lion field is now fully financed. This means that Rockhopper has approximately 142 million barrels of financed oil that, from late 2017, should begin generating cash flow with an estimated value to Rockhopper in excess of $2 billion at a 10% discount factor.

The firm said in a statement: "Having approximately 142 million financed barrels of oil and $270 million of free cash puts Rockhopper into a very strong position.

"The current priority is working with the Falkland Islands government to input into their ongoing 'Oil Readiness Review', particularly in the area of tax where we have already had confirmation that following the review, our tax position in respect of the farm-out will be no worse and may be improved."

Analyst view

Analysts at Panmure Gordon commented: "

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