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Daily Commentary From OilSlick.com
Exxon's Biggest Profit Ever
July 30, 2008: Exxon Mobil (XOM) reported the biggest quarterly profit ever in U.S. corporate history. With sales of $138 billion the oil giant earned profits of $11.7 billion. Those earnings were only 14% higher than last year despite nearly double price of oil. Unfortunately Wall Street was not impressed after Exxon said production dropped -8% for the quarter. Continue Reading
Too Good To Be True
July 30th, 2008:
Oil at $120 was bullish for the equity markets but it appears it was too good to last. The EIA inventory report on Wednesday morning showed gasoline stocks fell by 3.5 million barrels as refiners cut production due to weak demand. Crude inventory levels fell only -100,000 barrels and much less than the -1.5 million barrels expected. Still the drop in gasoline was just enough of a bullish news event to trigger some massive short covering. That produced a +4.58 gain to close at $126.77.
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Shell Declares Force Majeure
July 29th, 2008: Everyone knew it was coming after MEND rebels attacked two pipelines in Nigeria over the weekend. Shell suspended export obligations for Nigerian Bonny Light crude after the pipelines were shut down. The force majeure is for remaining deliveries in July and for August and September deliveries. Force majeure means Shell cannot complete deliveries for circumstances out of their control and allows them to halt deliveries without a penalty. Continue Reading
Ahmadinejad Fanning the Flames
July 28th, 2008: Oil prices rose to $125 on Monday after MEND rebels blew up two pipelines. The MEND rebels said they were attacking to refute rumors that the government had paid them off to halt attacks. The pipelines belonged to Shell and the company said they were shutdown to prevent additional spillage. Meanwhile Iran's president finally found his speaking voice and said Iran had doubled its nuclear enrichment program but he was willing to listen to any new offers from the United States.
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An Interesting Weekend
July 27th, 2008: The head of OPEC, Algeria's energy minister Chakib Khelil, said on Saturday that the price of oil could fall to between $70-$80 a barrel if the dollar strengthened and concerns over Iran are reduced. Hugo Chavez said while on a visit to Spain that "the price of oil needs to stabilize at around $100 per barrel" based on his view of the current market. You may remember him predicting $200 oil a month ago and $300 oil if Exxon seized Venezuelan assets again. Continue Reading
No Free Oil for Democrats
July 25th, 2008: The House of Representatives failed on Thursday to pass legislation intended t cool off gasoline prices by requiring the government to sell 70 million barrels of light sweet crude oil from the Strategic Petroleum Reserve. That would have been the equivalent of 10% of the strategic stockpile. The White House threatened to veto the measure if passed saying Congress should focus on increasing supply rather than depleting strategic reserves. Continue Reading
Karnack the Magnificent
July 24th, 2008: The US Geological Service (USGS) did a perfect imitation of Johnny Carson's Karnack the Magnificent today. For those of us old enough to remember Johnny, wearing a fortuneteller costume used to hold a sealed envelope up to his forehead and answer the question in the envelope without seeing it. He would then open the envelope and read the question, which was always nothing like the answer he previously gave. The USGS held their report to their forehead today and answered "90 billion barrels of oil." Continue reading
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