Oil slips towards $50

Started by ganeshbala, May 23, 2008, 10:53 AM

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ganeshbala


LONDON (Reuters) - Oil fell toward $50 a barrel on Tuesday, paring early gains after European equities turned lower, as investors continued to track share movements to try and gauge the strength of the global economy.

U.S. light crude for May delivery was down 86 cents at $50.19 a barrel by 1125 GMT (7:25 a.m. EDT) , having settled $1.46 lower on Monday as Wall Street tumbled.

London Brent crude fell 44 cents to $51.80.

Crude oil prices have been closely tracking the fortunes of broader markets as investors look for clues as to when oil demand might rebound.

"Everybody realizes that demand is very bad. Inventories are really high and fundamentals are not very good," said Tony Nunan, risk manager at Mitsubishi Corp.

"Demand goes hand in hand with the economy these days, so people are trading on the back of the global economy."

European shares opened higher but quickly turned lower on Tuesday, falling for the third consecutive session as figures showed the eurozone shrank by more than previously thought in the fourth quarter.

The global recession has cut oil demand around the world, with consumption expected to be curbed for the first time since the early 1980s.

The resumption of oil flow through the Kirkuk-Ceyhan oil pipeline also pressured prices.

Oil flow through the pipeline, which carries more than a fifth of Iraqi crude to the Turkish Mediterranean coast had resumed on Monday, a source at the Turkish pipeline operator told Reuters.

Strength in the dollar also weighed, as commodities prices in the U.S. currency become more expensive for overseas investors.

U.S. INVENTORIES
Little upside is expected from weekly U.S. inventories data due on Tuesday and Wednesday, with oil analysts predicting yet another increase in crude stocks because of high import levels and weak demand from domestic refiners.

A preliminary forecast of seven analysts called for a 2.1 million barrel rise in crude stocks, which are already running at a 16-year high, according to the U.S. Energy Information Administration (EIA).

"Investors are eyeing a potential build in U.S. crude stocks, which should keep prices under pressure," said Andrey Kryuchenkov, vice president commodities at VTB Capital in London.


sams.raghu

Tank up! Petrol may go up by Rs 10, diesel by Rs 5

The Petroleum Ministry wants to increase petrol price by Rs 10 per litre and diesel price by Rs 5 per litre. They also want to reduce customs and excise duties to offset the impact of surge in crude oil prices that have touched $135 per barrel.

"The situation is getting to be alarming. We need to stem the rot in the beginning," Petroleum Secretary M S Srinivasan told reporters after a meeting with the heads of state oil companies.

Srinivasan however, said the Cabinet meeting scheduled for Friday would not consider raising fuel prices as the subject needed some more preparation and a note would be moved to the authorities in a day or two.

"We expect a decision in three-four days time," he said, adding the Ministry was suggesting a combination of price hike and duty cut to lower the projected Rs 2,00,000 crore under-realisation on sale of petrol, diesel, LPG and kerosene.

"The price hike is inevitable," he said but refused to say what quantum of hike the ministry was seeking. The Ministry was seeking a lowering of customs duty on crude from 5 per cent to zero and import duty on petrol and diesel from 7.5 per cent to 2.5 per cent.

Besides, the Ministry was also seeking cut on excise duty on the two products. Petroleum Minister Murli Deora said he had discussed the situation with the Prime Minister Manmohan Singh Thursday evening and will raise the issue again today to seek and early meeting of the Cabinet.

sajiv

Still Diesel Shortage in Several Districts  :agree

BANGALORE:
Several petroleum outlets across the State ran out of diesel on Monday, and anxious transporters urged the State Government to intervene and ensure regular supplies.

Sources said most petroleum outlets that went dry were unable to procure diesel since the fuel is not supplied on Sunday. Diesel shortage was reported in Bangalore, Chitradurga, Mysore and some other districts, and in Mysore petroleum dealers are planning to close outlets by 8 p.m.

"Diesel went out of supply in lot of outlets in Bangalore on Monday morning, and the situation eased only by afternoon. However, supply will not be as bad as it was on Monday," Akhila Karnataka Petroleum Dealers Association vice-president B.R. Ravindranath said.
Quota system blamed

Several outlet owners blamed the diesel quota system for the shortage. Oil companies implemented a quota system from July 1 by which petroleum outlets get only 10 per cent more by volume than what was supplied in July 2007.

While many outlets in Mysore lost business as they ran out of diesel, long queues of vehicles were seen in front of outlets in Chitradurga. "I have been losing Rs. 1,500 every day for the past fortnight. Shortage of diesel has hit my business hard," said a worried tractor owner, S.P. Chandrappa of Chitradurga.

For the past 15 days inadequate supply of diesel has been making vehicle owners anxious. The shortage has also resulted in panic buying and hoarding in Chitradurga, creating further scarcity in the market even as petroleum companies have asked dealers not to sell huge quantities of diesel to individuals or those who use it for power generation.

In Mysore, the purchase of diesel in bulk by industrial units from petroleum dealers has created a shortage of fuel for transport vehicles. "More than 80 per cent of the dealers have run out of stock. We are planning to close all outlets by 8 p.m.," Mr. Dinesh, president of the Petroleum Dealers' Association of Mysore, said.

Though the demand for diesel in Mysore is estimated to have gone up to 24 lakh litres a day, the daily supply of the commodity by oil companies continues to hover around 18 to 19 lakh litres a day. "We are short by at least 20 per cent," he said.
Appeal to Government

Karnataka Lorry Owners Association President V.R. Shanmukhappa has written to the State Government to ensure proper supply of diesel in the State. "We had to go through anxious moments in several districts including Bangalore, Mysore, Hassan and Chitradurga where several petroleum outlets had run out of diesel stock."

He said that with the available stocks just sufficient to last till Tuesday or Wednesday, the association members were planning to meet the Chief Minister on Wednesday.

:acumen

ganeshbala

Chennai IT industry hit by diesel shortage

The city's cup of woes on the power-supply front may overflow with another problem on hand. After petrol being in short supply, it is now the turn of diesel to disappear from fuel outlets.

And the most affected by this shortage is the IT sector, which needs barrels and barrels of the black gold.

Chennai now has a ban on selling diesel in barrels.

Oil marketing companies have reportedly approached the Tamil Nadu government to assist them curb bulk purchase of diesel in barrels.

Many companies from the non-transport sector were using the subsidized fuel for power generator sets.

Managing Director of Zylog Systems Limited, Ram Sesharathnam said that his company, a global services provider delivering technology-driven business solutions, relies on 1500 litres (or 750 barrels) of diesel to run its generators per day.

But now, the company has been forced to reinvent its working and even suspend the bus service for employees to save fuel for its generators.

"This is going to affect our daily operations. When there's a shortage of power, obviously generators become vulnerable at that time. We are looking for some forums to present ourselves to the government to look for a possible solution," said Sesharathnam.

Signboards telling that the fuel outlet has run out of diesel have become regularity of late.

The oil companies say that there is a lapse on part of the retail outlets as well.

Dispensing petrol and diesel into cans, barrels or any other container other than a tank fitted to a vehicle is illegal and it has to be enforced by the State government.

But the petrol pump dealers have a different story to tell. They say that instructions on the issue have not been concrete and direct.

President, Tamil Nadu Petroleum Dealers Association M Kannan said, "There's nothing formal about what they say. Everything is always oral. The company gives us instructions to not sell in barrels. Dealers are in no way responsible for this short supply or the ban."

The IT industry already reeling under the power cuts now hopes for some interference by the government to lift this ban so that they can carry on their operations effectively.

Source : ibnlve

sajiv


New Delhi: Reliance Industries Ltd is willing to sell diesel from its Jamnagar refinery to state-run oil marketing companies provided the government amends tax rules, Oil Secretary R S Pandey said here on Monday, Sep 29 after a meeting with the company Chairman Mukesh Ambani.

''...the company has offered to sell diesel from the Gujarat's Jamnagar refinery to OMCs...it wants us to remove double taxation,'' Mr Pandey told reporters here. Gas production from Reliance's eastern offshore Krishna-Godavari basin D6 block is likely to begin by December-end, with peak output expected to be 80 million standard cubic meters per day, which is nealry double of domestic gas output.

The company's upcoming only-for-exports 5,80,000 barrels per day refinery at Jamnagar in Gujarat will commence operations before the year-end, Mr Pandey said Mr Ambani had apprised him.However, no discussion happened between the Secretary and the business tycoon, regarding the legal dispute between RIL and Anil Ambani's Reliance Natural Resources, where the Government had sought to implead itself.

:acumen

dwarakesh

India is likely to face a shortage of 2.5 million tonne of diesel during the November-March period, which would have to be met either through imports or from Reliance Industries' only-for-exports refinery. "The oil companies have told us that they will have a deficit of 2.5 million tonne from now till March,'' said Mr S Sundareshan, Additional Secretary, Ministry of Petroleum and Natural Gas.

IOC, Bharat Petroleum and Hindustan Petroleum have projected a cumulative diesel requirement of 1.05 million tonne for December to March, comprising 2,40,000 tonne of Euro-III diesel and 8,10,000 tonne of Euro-II grade fuel. If these quantities are not tied up with Reliance, the oil companies would have to turn to imports.

However, diesel from Reliance's Jamnagar refinery can be bought only if government does away with double taxation, he said. Since Jamnagar has turned into an Export-Oriented Unit, any supply to domestic tariff area was levied with dual basic customs dut y and a double levy of special additional excise duty.

For diesel these work out to Rs 6 a litre more in duties, which the oil companies say they cannot absorb given the fact that they already are losing over Rs 7 a litre on the sale of the fuel.

Source: The Hindu

sajiv

#6
With the assembly polls in major states concluding, the government may slash petrol price next week by Rs 10 a litre, diesel by Rs 3 per litre and domestic LPG by Rs 20 per cylinder in line with fall in global oil prices.

"Polling in Rajasthan will end today and with it electioneering in four major states. And so a revision in fuel prices is likely to be taken to the Cabinet at its next meeting scheduled on December 11," a government source said.

For the first time in three years, state-run Indian Oil [Get Quote], Bharat Petroleum and Hindustan Petroleum are selling petrol at a profit of Rs 14.89 a litre and diesel at Rs 3.03 per litre.

But they continue to lose Rs 17.26 on sale of every litre of kerosene through public distribution system (PDS) and Rs 148.32 per 14.2-kg domestic LPG cylinder.

"The Congress-led coalition is keen on rolling back the Rs 5 a litre hike in petrol, Rs 3 per litre increase in diesel and Rs 50 per cylinder hike in LPG prices announced in June.

As oil firms continue to make losses on LPG, some of the margins on petrol may be used to bring down the cooking fuel price," the source said.

Polling in Jammu & Kashmir --one of the six states that went to elections--  would end on December 24. "When even Election Commission thought it appropriate to announce results of the elections in Delhi, Madhya Pradesh, Chhattisgarh, Rajasthan and Mizoram on December 8th without waiting for polling in J&K, the government, too, is inclined to cut fuel prices," he said.

State-run oil firms have seen margins turning into positive zone from November 1 but the government did not want to revise prices as the Model Code of Conduct for elections was in place that bars it from making any announcement that could be seen as appeasing voters.

Based on the average international oil price in the second fortnight of November, the state-run firms earn a margin of Rs 44 crore (Rs 440 million) per day on petrol and Rs 42 crore (Rs 420 million) a day on diesel. They, however, lost Rs 66 crore a day on sale of kerosene and Rs 29 crore (Rs 290 million) per day on LPG.

The fall in international oil prices will result in lower revenue loss on fuel sales this fiscal. IOC, BPCL [Get Quote] and HPCL [Get Quote] will end the 2008-09 fiscal with Rs 109,190 crore (Rs 1091.90 billion) revenue loss, Rs 92,853 crore (Rs 928.53 billion) of which has already been accounted for in the first half of the fiscal.

The source said the Cabinet may also consider a mechanism to make good the losses oil firms have borne on selling fuel below the cost.

IOC posted its largest ever net loss of Rs 7,047.13 crore (Rs 70.47 billion) in July-September quarter. BPCL posted a net loss of Rs 2,625.17 crore (Rs 26.25 billion) in the second quarter on top of Rs 1,066.70 crore (Rs 10.66 billion) in April-June, while HPCL reported Rs 888.12 crore (Rs 8.82 billion)  loss in the first quarter and another Rs 3,218.92 crore (Rs 32.18 billion)  in the second quarter.

The state-run firms want the government to increase the quantum of oil bonds they get as part of compensation for selling fuel below cost.

The government compensates the three refiners for half of their revenue loss on fuel sales by way of oil bonds. Another one-third of the losses are met by companies like ONGC [Get Quote] and OIL by way of discounts on crude oil they sell to them.

However, this compensation was proving to be grossly inadequate, sources said, pointing to the net losses posted by the companies in July-September quarter.


sajiv

PETROL, DIESEL CHEAPER FROM MIDNIGHT

New Delhi: The Government on Friday cut prices of petrol and diesel for the first time in 22 months.

The price of petrol, which is currently sold for Rs 50.6 a litre in Delhi, will be cut by 5 rupees, while diesel, for which consumers are charged Rs 35.86 a litre, is being lowered by Rs 2.

As an interim measure, the government has decided to cut the prices with effect from Friday tonight, Petroleum Minister Murli Deora said in Delhi.

"We are reducing the prices with effect from midnight," Deora told reporters after it was cleared at a meeting chaired by Prime Minister Manmohan Singh.

There is no change in the prices of LPG (cooking gas) and kerosene.

The Government had in June raised the prices of petrol and diesel by Rs 5 and Rs 3 a litre, respectively and that of LPG by Rs 50 a cylinder to protect oil marketing firms against losses on account of a rally in crude prices.

Crude oil had subsequently climbed to a record high of $147 a barrel in July, but has since come to $43.5 a barrel.


ganeshbala

This is Good news ,,thanks for the information...

But still the price should be lowered..

Govt need to reduce it....  :yes :yes


sajiv

Fuel prices down

Bangalore:
With the reduction in fuel prices, petrol in Mysore will now cost Rs. 51.30 a litre, down from Rs. 56.76. The price of diesel has come down from Rs. 39.05 to Rs. 36.85

sajiv

New fuel prices

MANGALORE: Petrol and diesel prices have come down by Rs. 5.46 and Rs. 2.20 respectively in Mangalore and Udupi from Friday midnight.

According to Indian Oil Corporation sources, petrol will cost Rs. 50.98 a litre in Mangalore, down from Rs. 56.44.

The price of diesel has come down from Rs. 38.70 to Rs. 36.50.

The prices in Udupi are Rs. 51.04 (Rs. 56.50) for petrol and Rs. 36.56 (Rs. 38.76) for diesel.


sajiv

Rs 5 cut in petrol price, Diesel cut by Rs 2

Petrol price cut
New Delhi: Govt on Friday, Dec 5 has cut petrol price by Rs 5 and diesel by Rs 2 a litre starting midnight tonight.

As an interim measure, the government has decided to cut the prices with effect from midnight tonight, Petroleum Minister Murli Deora said in New Delhi. There is no change in the prices of LPG (cooking gas) and kerosene.

Petroleum Minister Murli Deora announced the same after a meeting with Prime Minister Manmohan Singh.

sajiv



The central government on Friday decided to cut the price of petrol by Rs 5 per litre and diesel by Rs 2 per litre, as international crude oil prices tumbled to a four-year low. There will be no reduction in the prices of LPG and kerosene. In June, the government had raised the price of LPG by Rs 50 per cylinder, petrol Rs 5 per litre and diesel by Rs 3 a litre. "The cut will come to effect from midnight," said the Union Petroleum Minister, Mr Murli Deora, after a meeting of the Cabinet Committee on Political Affairs. Crude oil prices, which had reached a record high of $147 per barrel in July, fell below $44 on Friday.

Before the price cut, PSU oil marketing companies (OMCs) were making a profit of Rs 14.89 a litre on petrol and Rs 3.03 on a litre of diesel. The petroleum ministry said that the cut in prices of petrol and diesel would take up the under recoveries of public sector OMCs for 2008-09 to Rs 1,10,000 crore.
Mr D. K. Joshi, the principal economist of Crisil, said that the fuel price cut would bring down inflation quickly.. Besides the fuel cut, the Centre and RBI are expected to ann-ounce more measures on Saturday to spur growth. The Union commerce minister, Mr Kamal Nath, said that the stimulus package would help sectors hit by the slowdown.

The cut in petrol and diesel prices will gladden consumers in Andhra Pradesh too, but would cause a loss of about Rs 165 crore to the state government in the remaining three months of the financial year.
Sources said tax on petroleum products for-med 20 per cent of the revenues of commercial taxes department. The CTD collected Rs 4,200 crore in the first nine months of the financial year. The loss comes at a time when the revenues are already on a downward trend.

APSRTC will be the biggest beneficiary of the cut in diesel prices. "We are going to save Rs 270 crore," said a senior RTC executive. The state consumes 10 crore litres of petrol and 40 crore litres of diesel every month. The consumers of the state will save Rs 170 crore because of the reduction in prices.

sajiv

NEW DELHI: Describing the cut in petrol and diesel prices as "highly inadequate," the Communist Party of India (Marxist) on Saturday demanded that the United Progressive Alliance government announce a further reduction.

In a statement, the party Polit Bureau said the cut was belated and was not adequate considering that the international price of crude oil had come down to almost $40 a barrel.

It said the party was of view that the petrol price should have been brought down by at least Rs. 10 per litre and diesel by Rs. 5 per litre, which could have given some urgent relief to the people.

The party also demanded a reduction in the price of cooking gas.

sajiv

KOZHIKODE: Chief Minister V.S. Achuthanandan has termed "insufficient" the Centre's decision to reduce the retail price of petrol and high-speed diesel by Rs.5 and Rs.2 respectively.

The prices of petrol and diesel should be cut by Rs.20 and Rs.10 considering the drop in prices of crude oil in the global market, the Chief Minister told a media conference here on Saturday.

He said the prices of crude oil had fallen by 70 per cent in the last few weeks. Crude oil prices had plunged from $147 to between $40.

However, the Centre had slashed the prices only by a small per cent, Mr. Achuthanandan said.

Then and now
When the prices of crude oil stood at $120, the Centre had hiked the rates by Rs.5 and Rs.3 for petrol and diesel. It had increased the prices of petroleum products five times in the last three years.

The Chief Minister accused the Congress-led United Progressive Alliance government of being a facilitator for oil companies to make huge profits.

He said the people expected a significant cut in the prices of petrol and diesel after the Assembly polls. However, this was not done. The Centre had also left the prices of liquefied petroleum gas and kerosene untouched, Mr. Achuthanandan said.

The prices of essential commodities would come down only if the Centre lowered the prices of petroleum products, he said.

Meet on fare rollback
Replying to a query, the Chief Minister said the State government would call a high-level meeting of officials and other stakeholders to take a decision on cutting the recently hiked fare of bus, taxis and autos.

Mr. Achuthanandan accused the Manmohan Singh government of succumbing to the "designs of the U.S. administration."

Mr. Achuthanandan said the UPA government had done little to secure the coastline of the country and strengthen the intelligence network.


sajiv

Cut in fuel prices will reduce inflation

NEW DELHI: The PHD Chamber of Commerce and Industry has welcomed the Centre's decision to reduce fuel prices by Rs.5 per litre in the case of petrol and Rs.2 per litre for diesel and said it would bring down inflation.

Stating that the decision was long overdue, PHD Chamber Secretary-General Krishan Kalra said it would help spur the demand in industry and economy, especially at a time when industry was reeling under the impact of global economic meltdown arising out of the sub-prime crisis in the U.S.

"Given the steep fall in global oil prices that have eased from a high of $147 per barrel to around $43 per barrel at present, the adjustment of domestic retail price had become inevitable to help contain, to some extent, the operating costs in industry and increase the purchasing power of the consumer," added Mr. Kalra.

Pointing out that the drop in fuel prices would, doubtless, bring down inflation that has already fallen to 8.4 per cent, Mr. Kalra said it would enable the Reserve Bank of India to reduce the interest rates and also improve liquidity and consumer demand as money saved on purchase of fuel would now be available for alternative use. "However, it would have been more appropriate to affect deeper cuts in fuel prices given that international prices have been slashed in the last few months. The reduction in diesel prices is too low and would have only a marginal impact on freight rates. Besides, State levies on petrol and diesel also need to be reduced to maximise the impact of the fall of petrol and diesel prices on industry and economy," he added.


ganeshbala

Thanks for your information..but still lorry owners are requesting govt to Reduce Rs.10...

What the govt will do ?????

:agree GOVT


sajiv

Oil cos cut auto LPG rates by Rs 3 a litre

New Delhi: State-run oil companies today cut prices of auto liquefied petroleum gas by Rs 3 a litre to make the fuel competitive with petrol and diesel, the rates of which were slashed last week.

Auto LPG will cost Rs 27.37 a litre from midnight tonight in Delhi against Rs 30.37 per litre currently, an Indian Oil Corporation (IOC) official said.

The oil companies made the reduction to keep the fuel competitive vis-a-vis petrol and diesel whose prices were last week cut by Rs 5 and Rs 2 a litre respectively.

"If auto LPG is not cheaper than petrol, no one will use it," the official said.

After last week's price cuts, petrol in Delhi costs Rs 45.62 a litre while diesel is priced at Rs 32.86 per litre.

The oil companies were able to cut auto LPG prices because international prices of liquefied petroleum gas (LPG) have fallen from USD 886 per tonne in July to around USD 330 per tonne earlier this month.


sajiv

Furnace oil comes to the rescue

COIMBATORE: For industries in the State that had established furnace oil captive power plants, the decline in furnace oil prices has come as a boon, at least for now.

Manikam Ramaswami, chairman of the Confederation of Indian Industry – Tamil Nadu, says that with the price at Rs.16 a litre, running the furnace oil captive power plants is attractive now. If the prices were to go up to Rs.19 a litre, it will not be viable. For those who have established the plant and do not have the interest and depreciation costs now, the variable cost is the same as grid power cost. Hence, the units are using it.

However, a 1.7-megawatt (MW) furnace oil captive power plant, established in 2005 for the garment units at the Netaji Apparel Park at Tirupur, is not under operation.

According to A. Sakthivel, chairman and managing director of the park, even at the current level of oil prices, it is not viable to run the plant now. The furnace oil plant has to be run round the clock and garment units might find it difficult to use the entire load.


sajiv

Petrol cheaper by Rs 5 a litre, diesel by Rs 2: Impact

The government last Friday slashed prices of petrol and diesel by Rs 5 and Rs 2 a litre, respectively, with effect from midnight. The price cut, the first in over two years, will come as a relief to fuel consumers, tame inflation and boost demand in the economy. On the flip side, the move will shrink oil companies' margins, which had just begun improving with the fall in crude oil prices. In the past one year, consumers have seen a steady rise in home budgets, with prices of fuel, fruits, veg ...

sajiv

Oil drops below USD 36 per barrel

London Oil fell below $36 on Friday to its lowest level in more than four years as the global economic slowdown overshadowed OPEC's record supply cuts.

US light crude for January delivery were down 51 cents at $35.71 a barrel by 1100 GMT. It earlier touched $35.62, the lowest since June 2004.

London Brent crude was trading 59 cents up at $43.95.

Oil prices have fallen by more than $110 from their peak above $147 in July. They look set for their second biggest weekly decline since 2003.

"Until traders see a sustained drop-off in the rate of demand destruction, the market will have a hard time establishing a floor," Jonathan Kornafel, Asia Director of Hudson Capital Energy, said.

"From a credibility standpoint, OPEC has no choice but to bite the bullet for the next few months."

Oil has continued to drop despite pledges by the Organisation of the Petroleum Exporting Countries (OPEC) this week to remove 2.2 million barrels per day from its supply, which will be the largest ever reduction by the producer group.

OPEC kingpin Saudi Arabia's Oil Minister Ali al-Naimi, speaking in London, said on Friday the kingdom would be pumping less oil in January and would be at its new output target in line with the group's latest cut.

Other key markets were also falling on Friday. The dollar looked set for its biggest weekly decline since 1985 and world stocks fell as concerns about the US economy worried investors in the last full trading week of 2008.

OUTLOOK

Because of the worldwide credit squeeze, many analysts now expect a drop in oil use this year, the first demand contraction since 1980.

Some doubt OPEC, whose third production cut since September has brought its total reduction to over 4 million bpd or 5 per cent of world supply, will fully implement the agreed cuts, further weighing on prices.

"We believe that full implementation of the cuts is unlikely," said Goldman Sachs analysts in a note to clients.

Nobuo Tanaka, executive director of the International Energy Agency (IEA), said on Thursday oil prices were responding to the global economic recession and investors would have to see how much actual supply cuts OPEC would deliver to the market.

But OPEC President Chakib Khelil said on Friday he believed oil prices had found a floor around current levels.

"I don't believe there is any reason for it to fall any further. I don't see it going lower," he told Reuters in London.


sajiv

Oil below $34 as Brown warns on volatility

The price of oil tumbled below $34 today as continuing fears about global demand obscured a record production cut by the world's leading oil states.

New York light sweet crude fell as low as $33.44 in midday trading, hovering around the four-and-a-half year low it hit on Wednesday.

An announcement by Opec, the cartel of the world's oil-rich states, that it would reduce production by an additional 2.2 million barrels a day from January 1, failed to halt the slide in the price, which has been accelerated by fears about waning demand during the economic downturn.

It was the declining price that prompted Opec to take the decisive action. Total cuts by the cartel since August have reached 4.2 million barrels a day, just under 5 per cent of global production.

Today's fall came as Gordon Brown warned of the threat to the world economy from volatility in the price of the commodity.

At a meeting of energy ministers from 27 nations and representatives from some of the world's biggest oil companies in London this morning, the Prime Minister estimated that the surge in the oil price, which peaked at $147 a barrel in July, had taken $150 billion off global economic output.

"But today with prices falling, it is clear that our most pressing challenge now and for the future is oil price volatility. Such volatility is in no-one's interest. Wild fluctuations in oil prices harm nations all round the world," Mr Brown said.

Today's summit, chaired by Ed Miliband, the Energy and Climate Change Minister, was originally planned in June, before the record high. More than $100 has since been wiped off the oil price.

Mr Brown, who opened the meeting, called for multilateral action to steady such "ferocious volatility".

"We will need a new partnership between oil-producing and oil-consuming countries," he said.

"As with the global financial crisis, this global crisis in our energy markets cannot be solved by one nation or one continent alone."

Ali al-Naimi, Saudi Arabia's oil minister, also attended the meeting and reinforced Mr Brown's economic warning with a call for Western governments, including the UK, to slash fuel taxes in a bid to restore growth.

Mr Al Naimi said excessive taxes in oil-consuming countries were creating "a drag on consumer spending" that was adding to the severity of the current global downturn.

He added that sliding prices were "wreaking havoc" in the oil industry and laying the foundations for another price spike by undermining investment.

"A number of upstream projects have already been cancelled or delayed," Mr al-Naimi said.

The plunging oil price weighed on the FTSE, which traded down by as many as 100.46 points, at 4,230.20, this morning.


sajiv

Fuel prices drop, but airfares don't

NEW YORK (CNNMoney.com) -- The plunging price of jet fuel has airline passengers wondering why fares haven't plunged accordingly.

But even with lower fuel costs, the recession has put further pressure on hard-hit airlines, and that's why analysts say they're resistant to cut ticket prices or rescind fees for services that once came for free.

"When fuel prices started dropping, [airlines] were all dancing in the streets," said Tom Parsons, travel expert at BestFares.com, a fare comparison Web site. "But then in October, they got smacked by the worst recession we've ever seen."

"The airlines basically traded a fuel crisis for a global economic crisis," said Rick Seaney, Chief Executive of FareCompare.com.

Most airlines reeled this summer as jet fuel soared to $4.35 per gallon in July, which was nearly triple its price of $1.49 in January of 2007, according to Peter Beutel of energy risk management firm Cameron Hanover. Now the price is back down around $1.49, but many have yet to rescind fuel surcharges.

"Airlines were not able to keep up with the fuel price increases, so it is logical that they try to hold fares even with lower fuel prices," said Calyon Securities airline analyst Ray Neidl in an e-mail to CNNMoney.com. "Even with lower fuel prices, they are still not making money."

Overall domestic ticket prices rose 1.2% year-over-year through November, according to industry group the Air Transport Association. Other analysts agree that they rose slightly. But fuel prices in 2008 jumped 43%, and when you take discounts into account, many ticket prices went down, leaving the carriers with a lot of catching up to do.
The discount bonanza

Airlines eliminated their least fuel-efficient flights to save money, but given the economic slowdown, they're still having a hard time filling seats. In recent months the industry has slashed capacity by 10%, according to analysts, but that's been matched by a slowdown in passenger travel, which is most noticeable during the holidays. The ATA projects a 9% year-over-year decrease in the number of air travelers during the three weeks between Dec. 18 and Jan. 7.

"You're seeing softness out there that they didn't expect, and it's strictly related to economic meltdown," said Seaney of FareCompare.com. "Starting in late October, we started seeing holiday sales, which I didn't expect to see at all this year, because I expected planes to be packed after their drawdown on seats."

Seaney said discounts that have been "flooding the market since Halloween" brought down some fares by 30% to 40%. The discounts are "targeted" to specific flights and destinations, he said, unlike industrywide fare cuts.

"That's the only way you're going to see a fare decrease - through sales," said Parsons of BestFares.com, noting that the last-minute sales to fill planes gives passengers good reason to hold out for a deal, rather than buy their ticket months ahead of time. "Hold on to your cash and let them blink first."
Airlines that make money?

The airlines' capacity-cutting, which was intended to alleviate the pressure of high fuel prices, had a side-benefit of softening the unexpected blow of the recession, according to Neidl of Calyon Securities.

For this reason, Neidl said he is "cautiously optimistic" about the industry's ability to achieve a profit in 2009. In an analyst note from Dec. 11, he projected that the industry will lose $4 billion in 2008 but will earn $5 billion in 2009.

"[Capacity cuts] combined with continuing lower fuel price expectations, should enable carriers to get through the economic downturn and slow winter season for a mid-year 2009 recovery," Neidl wrote.

This could also result in lower fares, said Carl Schwartz of Cheapflights.com.

"Many [airlines] are still locked into term fuel contracts based on 2008 prices [and] this is the number one reason they cannot bring air fares down," wrote Schwartz, in an e-mail to CNNMoney.com. "Once 2009 comes and new fuel contracts are negotiated, we will start to see some of the cost savings passed on to the traveler. We are already seeing it today."

Schwartz referred to the Wednesday announcements from British Airways and Virgin Atlantic Airways, which said they will reduce their surcharges to reflect reductions in the price of oil.

"This is the start of the fuel corrections," he said


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Oil prices affect ONGC margins

Oil and Natural Gas Corporation (ONGC) on Monday, Dec 22 said the current crude oil prices has put its margins under pressure and oil price of $75 a barrel were reasonable levels for upstream companies to keep investing.

"Today's prices are not comfortable for us. Margins are under severe pressure," said ONGC Chairman R S Sharma.

He said the company was constantly reviewing investments but has not put any of its spendings on hold.

"If the current level of prices continue, for the next four-five months we will not have to put investments on hold, but if they stay at these level for longer we will review," Sharma said.

Sharma said the current international crude oil prices were not good for new investments being made in the upstream exploration and production.

"$75 a barrel is a reasonable price for upstream companies to keep investing," he said.


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Oil rises a hope for auto bailout

Singapore: There is a hope for optimism as the oil prices has risen to near $43 a barrel on Monday, Dec 22. Due to rise in price investors looked for signs that United States interest rate cuts and a govt bailout of two key automakers could help cushion in the what may be the worst recession in decades.

Light, sweet crude for Feb delivery was up 62 cents to $42.98 a barrel in electronic trading on the New York Mercantile Exchange
by midday Monday in Singapore. The contract fell Friday by 69 cents to settle at $42.36.

The Jan contract, which expired Friday, fell $2.35 overnight to settle at US$33.87, the lowest level since early 2004. In other Nymex trading, gasoline futures rose 1.51 cents to 99 cents a gallon. In London, Feb Brent crude rose 30 cents to $44.30 a barrel on the ICE Futures exchange.

OneIndia News (With inputs from Agencies)


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Oil prices fall with few signs of economic rebound

Sioux Falis, South Dakota, U.S. (AP): Oil prices fell below $42 a barrel on Monday as reports from manufacturers like Toyota and Caterpillar pointed to a worsening global economic climate and serious deterioration in energy demand.

Light, sweet crude for February delivery fell $1.29, or 3 per cent, to $41.07 a barrel on the New York Mercantile Exchange. Crude prices have tumbled 70 per cent since peaking above $147 in July.

In London, February Brent crude shed $1.65 to $42.35 a barrel on the ICE Futures exchange.

Toyota Motor Corp projected its first-ever operating loss since it began such reports, acknowledging on Monday that its nine-year stretch of global vehicle-sales growth had stalled.

Crashing auto demand, especially in its key US market, and the profit erosion from a surging yen proved too much for Japan's top automaker, which had been booming on the success of its fuel-efficient models, including the Camry sedan and Prius gas-electric hybrid.

Caterpillar said on Monday it would cut executive pay by up to 50 per cent next year because of weakening demand.

The world's largest maker of mining and construction equipment also said it would slash pay for senior managers between 5 per cent to 35 per cent in 2009.

The world's biggest crude producers have not been able to slash output fast enough.

The Organisation of Petroleum Exporting Countries said last week it would slash production by 2.2 million barrels a day in its largest cutback ever, trying to stem the rapid price decline.


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Oil Below $40 on Bad Economic News

Oil prices tumbled below $40 a barrel Monday as reports from manufacturers like Toyota and Caterpillar  pointed to a worsening global economic climate and serious deterioration in energy demand.

Light, sweet crude for February delivery fell $2.45, or nearly 6 percent, to settle at $39.91 a barrel on the New York Mercantile Exchange. Crude prices have tumbled 70 percent since peaking above $147 in July.

Phil Flynn, an analyst at Alaron Trading Corp. in Chicago, said even the continuing cold weather and a falling dollar haven't been enough to sustain a rally.

"I think the concerns about economic weakness still seem to be overshadowing the entire complex," Flynn said.
Toyota Motor  Corp. projected its first-ever operating loss since it began such reports, acknowledging Monday that its nine-year stretch of global vehicle-sales growth had stalled.

Crashing auto demand, especially in its key U.S. market, and the profit erosion from a surging yen proved too much for Japan's top automaker, which had been booming on the success of its fuel-efficient models, including the Camry sedan and Prius gas-electric hybrid.
Caterpillar Inc. said Monday it would cut executive pay by up to 50 percent next year because of weakening demand.
The world's largest maker of mining and construction equipment also said it would slash pay for senior managers between 5 percent to 35 percent in 2009.

The world's biggest crude producers have not been able to slash output fast enough.
The Organization of Petroleum Exporting Countries said last week it would slash production by 2.2 million barrels a day in its largest cutback ever, trying to stem the rapid price decline.

But oil trader and analyst Stephen Schork said in order for OPEC to adhere to its January quota, the cartel first must adhere to its November cut of 1.5 million barrels a day.

"Given crude oil's weakness since OPEC's announcement, it is safe to assume the market is a bit skeptical regarding the group's ability to comply," Schork wrote in his daily publication, The Schork Report.

OPEC leaders say if crude prices do not return to around $70, exploration and production could be cut. That, many experts warn, could lead to future price shocks when the economy rebounds.

On Sunday OPEC President Chakib Khelil told Algeria's state radio that OPEC was willing to further cut production as much as was necessary to stabilize oil prices.

OPEC has had a difficult time staying ahead of an unprecedented deterioration in demand as a recession spreads across the globe.
"Large stockpiles of crude throughout the (Organization for Economic Cooperation and Development), falling demand in China and negative refining margins make it difficult to see how such supply-driven initiatives can have a near-term positive effect on crude prices," said Addison Armstrong, director of market research at Tradition Energy.

The January contract, which expired Friday, fell $2.35 to settle at $33.87, the lowest level since early 2004. With U.S. stockpiles rising at the key storage facility in Cushing, Oklahoma, the price dropped as brokers and traders attempted to unload supply for whatever price they could get.
"There's so many prompt barrels sitting around that that's really sitting on the market right now, especially the near contracts," said Michael Lynch, president of Strategic Energy & Economic Research. "The cuts are really going to have an effect somewhere around February, March."
Even gas prices, which have tumbled from summer highs above $4, have not led to increased demand as millions of Americans lose jobs and cut back on spending.

The national retail average price for a gallon of regular gas fell a half penny to $1.663 a gallon overnight, according to auto club AAA, the Oil Price Information Service and Wright Express. Oil industry analyst Trilby Lundberg said that's the lowest price in nearly 5 years.
Gas is about 29 cents a gallon below what it was a month ago and more than $2.44 below where it was in July when prices peaked at $4.11 per gallon.

The nation's lowest price was $1.37 in Cheyenne, Wyo., according to a national survey released Sunday. In the continental United States, the highest price for a gallon of gasoline, on New York's Long Island, was less than half the record prices seen in July.
Natural gas prices are plummeting as well.

"The combination of strong supply growth and rapidly declining demand has caused an ugly natural gas outlook to turn much worse," Raymond James analyst J. Marshall Adkins wrote in a research note Monday.

Manufactures are slashing production, further eroding prices for natural gas that is used to power machinery.
Natural gas for January delivery fell 2 cents to $5.315 per 1,000 cubic feet.

In other Nymex trading, gasoline futures slipped 8.3 cents to settle at 88.6 cents a gallon and heating oil fell 5 cents to settle at $1.3415 a gallon.
In London, February Brent crude tumbled $2.68 to $41.32 a barrel on the ICE Futures exchange.


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Oil price falls help drag FTSE down

Oil majors BP and Royal Dutch Shell dragged the FTSE-100 lower as further falls in crude oil prices overnight depressed the energy companies. BP gave up 8.75p to 496p while Royal Dutch Shell 'B', the version owned by most UK investors, fell 43p to 1653p.

Drugs major AstraZeneca was also among leading fallers, surrendering 84p to 2627, after the US Food and Drug Administration demanded more information on its application to sell a new version of its schizophrenia treatment Seroquel XR.

BT led blue-chip fallers, dropping 8.3p to 131.5p as its shares went 'ex-dividend', while retailing and consumer-facing stocks continued to be depressed by the bleak outlook for the retail sector. Thomas Cook fell 3.3p to 173p, Carnival fell 25p to 1452p and InterContinental Hotels and Home Retail Group gave up 4.25p to 205p.

Overall, the FTSE-100 finished down 31.4 points at 4224.04, with sentiment also depressed by the triple-digit fall overnight on Wall Street and fresh falls in Tokyo and Hong Kong.

Ian Murrell, head of equity sales at stockbroker Wills & Co, said: "Any Santa Claus rally has well and truly been stolen."

Among mid-caps, consumer loans group Cattles rebounded 1.5p to 12p after Tuesday's sell-off, while events firm ITE Group firmed 2.5p to 60.25p as an acquisition gave it control of Turkey's leading travel and tourism exhibitions organiser.

But Forth Ports gave up 9.5p to 940p, as broker UBS cut its share price target for the stock from 1240p to 1000p, while brewing and pubs group Greene King lost 11.5p to 414.75p as it went 'ex-dividend'.

Lower down, gold and coal mines investor Cambrian Mining hardened 3.5p to 22p after agreeing an all-share offer worth £28.8million from Western Canadian Coal Corp, while miner Triple Plate Junction rose 0.75p to 1.375p on news Canada's Newmont Mining may buy a 10 per cent stake.

Innovation Group rallied 0.05p to 5.73p after Altium Securities analyst Jonathan Imlah urged clients to buy. Mr Imlah said the insurance software and outsourcing firm, a former member of the FTSE-Mid 250, was worth a fresh look following a contract win.

He told clients: "It is significant in that it shows that the business continues to win new deals and new clients in spite of the ongoing volatility of the share price. The more such deals the group announces, the more attractive it will be to potential suitors and the more likely some conclusion will be reached with the private equity approaches that emerged last week."

Blue Oar Securities dived 4p to 9p after bidding consortium Evolve's after-hours announcement on Tuesday that it has won a majority of acceptances for its £15.4million offer for the broker. Evolve's shares were unchanged at 9p — valuing Blue Oar shares at 9.225p each under the takeover.


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Oil officers' strike from January 7

New Delhi: Public sector oil firm executives will strike indefinitely from January 7 against "minuscule wage hikes" approved by the government. The strike may cripple fuel supplies and do irreparable  damage to oilwells as executives said the government had "betrayed their trust" while approving the wage hike last  month. The Oil Sector Officers Association, an amalgamation of  officers' unions of 14 state-run oil firms, said the wage hike  approved by the government in November worked out to Rs 3,989  per month at the entry level and Rs 2,217 at the highest  le-vel. "We have been left with no option but to resort to a strike because of a series of betrayals," OSOA president Amit Kumar said. 

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Diesel costs Rs 13/L to cos

Diesel that costs Rs 32 a litre in Delhi actually costs Rs 13 as the companies are making a profit of almost Rs 3
a litre.

These calculations are admittedly simplistic and do not take into account other products such as kerosene, jet fuel, cooking gas, naphtha, etc., that are produced along with petrol and diesel and have a bearing on the final cost of each product. However, there won't be big difference between these figures and the figures worked out by the industry.

With crude to slide more in coming days as slowdown gets a firmer grip and pushes demand down, the question is: When will our pump prices go down further? ToI has repeatedly said this will happen just before the elections are announced, possibly around February.

In the meantime, the government is looking to rejig the petro-tax regime to make way for lower prices without hurting oil marketing companies that have accumulated huge losses during the extended run of high crude prices.


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Oil looks cheap, but investors are wary

A flight into cash during the credit crisis has helped drive oil and other commodity prices down so steeply that they are a potential "buy" for pension funds with a longer view.

But timing is everything.

"People are sitting on cash -- big lumps of it," said Mark Mathias, chief executive of commodity fund manager Quantum Asset Management. "Everyone is worried about when to go back in. Long-term, oil is cheap, but who knows where it goes in the short term."

Investors are searching for evidence that could signal whether the global downturn may be near to the bottom.

In these troubled times, the Baltic Freight Index has become a key leading indicator of economic vitality.

"The Baltic Freight Index is the electro-cardiogram for the world economy," said Hilary Till, principal, Premia Capital Management.

The Baltic Exchange's main sea freight index .BADI has risen over the last 10 days, but prices to ship commodities are still near their lowest in more than two decades.

"When you are in an extreme state, the things you follow are indicators for the overall health of the world trading system or the banking system," said Till, who is also research associate at the EDHEC Risk and Asset Management Research Center.

MORE DE-LEVERAGING

Investors have dumped commodities along with other financial assets after a crisis in the banking system seized up global markets and tipped the world economy into recession.

There is still more de-leveraging to come.

"Liquid assets are still in the firing line to be sold," said Mathias. "I think a lot of pension fund money left the (commodity) indexes in general, but quite a lot is actively planning to come back in."

If pension fund investors come back, they would be more likely to opt for more dynamic strategies rather than long-only investments in commodity indexes, which are used to gain access to the asset class.

"Some investors are looking at non-directional stuff, such as market-neutral hedge funds," said Mathias.

The California Public Employee Retirement System, for example, may consider investment strategies in commodities beyond commodity indexes such as the S&P GSCI .SPGSCITR.


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Oil falls back below $39 a barrel

More bad economic news from the US has sent oil prices falling back below $39 a barrel.

US light, sweet crude for February delivery fell to $38.53 a barrel in electronic trading on Nymex.

Data on Tuesday showed that US new home sales had fallen to a near 18-year low in November.

Bad economic data in the US has been making traders worry about how much the demand for oil will fall in the world's biggest economy.

Attention now turns to the weekly inventories figures from the US Energy Department, which are due out later on Wednesday.

The inventories figures give an indication of how much consumption of oil has declined.

Oil prices have fallen 74% from their peaks in July.


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Fuel prices will be reduced -Murli Deora

KOCHI: Union Minister for Petroleum and Natural Gas Murli Deora said here on Monday that the government would soon take steps to reduce the prices of petroleum products.

Delivering the inaugural address at the felicitation of Hibi Eden, president of the National Students Union of India, Mr. Deora said the government might also consider reducing the prices of LPG cylinders.

The Minister said oil prices in the international market had come down to $37 to $38 a barrel.

He said the government had already reduced the prices of petroleum products in view of the cut in international prices.


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Fuel price cut fails to halt taxi fare hike

CHANDIGARH: With fear psychosis ruling the world, decrease in the inflation rate in India has warmed up many a hearts this winter. But its benefits have not yet completely reached the 'aam aadmi', at least not in the city.

Even 25 days after reduction in the fuel prices, radio cabs and school bus operators have refused to bring down the fares, despite being the first ones to increase it. Till February, schoolbuses were charging something between Rs 450 and 500 per student, but these were steeply increased by Rs 50-70 per student. Radio cabs started charging an extra Rs 3 per km after price hike.

"We cannot decrease the fares now, other expenses too have also increased. In fact, we are mulling hiking it further by Rs 20 per child if the administration fails to address our grievances," Chandigarh School Bus Operators' Association president Manjit Singh said. In case of radio cabs, before February the fare for the first km was Rs 15 and after that it was charged at Rs 12 per km, but after price hike a flat rate of Rs 15 per km was fixed by administration. UT transport secretary Ram Niwas said he would ask for the file to be reviewed. State Transport Authority secretary Vandana Dasodiya said the fares should come down, but at present there is no such proposal. "We will definitely think over it," she added.

But taxi operators are not ready to share their pie with the customers. A spokesperson of the Indus Cabs said fares are justified as they have to bear other expenses. Echoing his views, Mega Cab branch head Arvind Kumar said they have no such plans right now. "The fare hike was not related to petrol prices. UT administration had promised to increase fare on a national pattern," he added.


dwarakesh

The Centre would effect a further reduction in petroleum prices next month, Union Minister for Petroleum and Natural Gas Murli Deora said here today.

A decision on reduction of prices of petroleum products would be taken before February 2009, Deora, who visited the famous Sree Krishna temple here, said.

Proposal on supply of cooking gas through pipelines was also under consideration in view of the shortage of LPG cylinders, he added.

Earlier this month, the government had reduced the price of petrol by Rs 5 per litre and diesel by Rs 2 per litre with effect from 6 December.

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Fuel price cut in Jan: Deora

Kerala: The Centre would effect a further reduction in petroleum prices next month, Union Minister for Petroleum and Natural Gas Murali Deora said in Guruvayur on Tuesday.

A decision on reduction of prices of petroleum products would be taken before February next, Deora, who visited the famous Sree Krishna temple, said.

Proposal on supply of cooking gas through pipelines was also under consideration in view of the shortage of LPG cylinders, he added.


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Govt to slash petrol, diesel, cooking gas prices

A sigh of relief awaits as the government announced that it may cut petrol and diesel prices further and slash cooking gas prices in the next two to three weeks. "We will try to reduce the prices of petrol and diesel in the next 2-3 weeks," Petroleum Minister Murli Deora told reporters at the AICC headquarters here.

The extent of reduction is still not known. The Government on Dec 5 had announced Rs 5 per litre and Rs 2 a litre reduction in petrol and diesel prices, respectively because of the low time global crude prices.

When asked about cooking prices, Deora said, "There was loss on that count to the government." He, however, hinted at a reduction of Rs 20-25 per cylinder.

OneIndia News

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Oil steady under USD 49


Oil was steady under USD 49 on Wednesday, after weak U.S. economic data sparked a bout of profit-taking overnight, outweighing escalating tensions in the Middle East and widening supply cuts from the Russian gas row.

The market will be watching for weekly inventory data from the U.S. energy department due later on Wednesday, which are forecast to show a jump in stockpiles, and U.S. December employment data, to be released on Friday.

"The EIA weekly inventory numbers and the U.S. unemployment data will be key for near-term price direction," said Jim Ritterbusch, president of Ritterbusch & Associates.

"If we see any surprises from the EIA stats, it's likely to be bearish rather than bullish."

U.S. crude for February delivery was up 6 cents a barrel at $48.64 by 0300 GMT, while London Brent was up 7 cents at $50.60.

Data released on Tuesday showed that pending sales of U.S. homes dropped in November to their lowest level in at least seven years and that the country's services sector shrank for the third consecutive month in December.

A report from the U.S. Energy Information Administration due later is likely to show fuel stocks rising as demand slows, with crude oil inventories seen up 900,000 barrels last week, and distillates and gasoline supplies also expected to have increased.

Further clues about future demand from the world's largest oil consumer will come when U.S. Labor Department unveils December non-farm payroll and unemployment data on Friday.

Oil prices have risen nearly 50 percent since the intraday low of $32.40 reached on Dec. 19, boosted by worries over supply disruptions from Israel's deepening incursion into Gaza, Russia's gas row with Ukraine, and mounting evidence of OPEC's compliance with production cuts.

Israel and Hamas studied a proposal by Egypt for a ceasefire in the Gaza Strip on Wednesday that won immediate backing from the United States and Europe.

But Israeli officials also said ministers would discuss a major escalation of their 12-day-old offensive that would push troops deep inside Gaza's cities and refugee camps in their bid to end rocket fire into Israel by Islamist militant groups.

While the conflict does not directly threaten any oil supplies, unrest in the Middle East can bolster prices because countries in the region pump about a third of the world's oil.

Also adding support was Russia's deepening dispute with Ukraine over natural gas prices, which triggered supply disruptions to parts of Europe. This echoed a similar spat three years ago that raised questions about Russia's reliability as an energy exporter. Evidence of OPEC members implementing the group's biggest ever output cuts also grew on Tuesday as Kuwait and Iran told customers of bigger supply curbs this month in a bid to prop up prices.

The producer cartel has cut output three times since September, in a bid to halt the market's slide.

But analysts said oil's rally was likely to be short-lived, especially once the February contract expires later this month. "We're in a bear-market rally -- I'm not really convinced that we won't re-test the lows of $30 over the next few weeks," Ritterbusch added.

"It won't take much to send the market right back down again -- some resolution to the geopolitical situation, negative employment numbers on Friday, and if the equity markets head south again."


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Oil prices rise, but demand worries remain: analyst

Oil prices rose slightly in Asian trade on Thursday after slumping a day earlier in a reflection of underlying weak demand, analysts said.

New York's main futures contract, light sweet crude for February delivery, was up 14 cents to 42.77 dollars a barrel on the New York Mercantile Exchange.

Brent North Sea crude for February delivery gained eight cents to 45.94 dollars a barrel.

"The bleak demand picture is not going away," said Jonathan Kornafel, Asia director of Hudson Capital Energy, a trading firm.

He said recent price rises caused by conflicts in the Gaza Strip and Nigeria, as well as a Russia-Ukraine gas row, could not mask the inherent low demand for oil, which was clearly shown in a substantial stockpile increase in the United States.

The US Department of Energy said Wednesday that stockpiles of crude grew by 6.7 million barrels last week, far higher than analyst predictions of 700,000 barrels.

Kornafel expected oil to trade between 38 and 45 dollars a barrel this week, but said prices could drop "as much as 10 to 12 dollars" if the Israel-Hamas conflict and the Russia-Ukraine gas dispute are resolved.

Oil prices soared in the first half of last year, reaching record highs above 147 dollars a barrel in July, before the global downturn slashed world demand for energy and pulled prices lower.

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PSU oil strike enters second day

New Delhi: The consumers across the India have hit by the PSU oil strike. The threat of fuel supply disruptions loomed large as the strike by oil PSU officers entered the second day on Thursday, Jan 8. The oil and gas production was hit as the officers of 13 oil PSUs did not go to work.

The Oil Sector Officers Association, an amalgamation of officers' unions of 14 state-run oil firms, had told the govt that its members will stop work indefinitely from Jan 7 against the 'minuscule wage hikes'.

Unlike previous times, this time the unions are all united and firm on their resolve to strike work as executives said the govt had 'betrayed their trust' while approving the wage hike.
Oil Sector officers Association leadership continued to remain underground with no fresh arrests happening.

Two ONGC officers association members were arrested on Wednesday, Jan 7 and there have been no further arrest. "As of now we are maintaining fuel supply at petrol pumps and continue operating aviation services at airports but if the strike continues for another one or two days there are bound to be dry ups at petrol pumps," Indian Oil Corporation Chairman Sarthak Behuria told a news agency

Behuria said aviation refuelling services were being discharged at some airports with a slight delay as only one shift of normal staff was present doing the refuelling. Gail Chairman UD Choubey said the nation's main trunk pipeline Hazira-Vijaypur-Jagdishpur (HVJ) continued to remain out of operation as ONGC failed to supply natural gas.

ONGC Chairman R S Sharma is likely to visit Hazira later in the day and would attempt to convince the company officers to resume production from the main gas field in the Western offshore.

OneIndia News

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Oil strike halts natural gas supply to industries

Defying High Court orders, oil PSU executives on Wednesday stopped work forcing stoppage of natural gas supplies to industries on the nation's main trunk pipeline but aviation services and fuel supplies continued to be normal.

'The strike is total in all oil PSUs except Hindustan Petroleum. The strike began at 0600 hrs,' Oil Sector Officers Association (OSOA) President Amit Kumar said at New Delhi.

Officers of Oil and Natural Gas Corp stopped natural gas supplies from the country's largest field in Mumbai offshore, forcing a shutdown of the Hazira-Vijaipur-Jagdishpur pipeline.

'Gas supply pressure from ONGC fields started reducing from 0230 hrs and came to a grinding halt at 0600 hrs, forcing us to cut supplies on HVJ," GAIL Chairman U D Choubey said.

'GAIL is maintaining supplies to priority sector from the volumes already available in the pipeline.' ONGC also stopped most of the gas supplies from privately operated Panna/Mukta and Tapti fields as the fuel from these passes through its processing units and pipelines.

Only 1.5 million standard cubic meters per day out of 18 mmscmd was being supplied. The strike was most visible in ONGC, Amit Kumar's parent firm, while it has no impact in HPCL. Indian Oil Corp, the nation's largest refiner, was maintaining aviation services but operations at four of its refineries were impacted.

'Aviation services are working normally. Our petrol pumpsare also operating normally,' IOC Chairman Sarthak Behuria said. But Haldia refinery has taken a complete shutdown while its Panipat, Mathura and Koyali refineries was under cooling down -- a process before the units are completely shutdown.

'In Haldia, all units are being shutdown but at the other three refineries some units will continue to operate, a company official said.


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Fuel bunks in Chennai run dry

Several fuel bunks in Chennai reported dry since last evening putting vehicle- users to inconvenience. The outlets ran out of petrol and diesel as they did not stock up adequate stock.

A staff of a petrol bunk said that since the fuel prices were expected to be reduced by the Central government, the petrol bunks stored less fuel.

'If there were a price cut, we would end up in a loss selling the products at a rate lesser than the purchase price,' he said.

The official dismissed the view that the fuel crunch was apparently caused by the ongoing nationwide lorry strike. It was only the strike by oil PSUs executives that had caused the fuel shortage, The demand for fuel doubled with panic buyers rushing to the bunks.

The bunks had started to receive many number of customers who bought three to four times more than their normal stock, said a person working at a bunk in suburban Tambaram. 

However, the vehicular- users were in trouble as they found it difficult to get their regular requirement of fuel.

R Venkatraman, a 65- year- old ailing person, residing at Nungambakkam, said he had to cancel his visit to a doctor for a regular check- up as his car ran out of fuel.

'I checked out at some of the bunks located in my area, but could not find fuel anywhere. Hence I remained at home, without meeting the doctor,' he said.

As the rush for petrol and diesel continued, it led to a rise in patronage of public transport. The vehicle population on the road was less, but the EMUs and public buses were tightly packed with passengers


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Petrol pumps run dry; talks with PSU execs fail

New Delhi:
The Petroleum Secretary has admitted that 60% petrol pumps across the country have already dried up owing to the indefinite strike by oil PSU executives that entered its second day on Thursday.

Although the oil companies have taken strict action against the striking executives, yet the problem seems to be gaining magnanimous proportions with the employees refusing to budge from their stand. ONGC has already sacked 64 employees, Indian Oil 3 and even GAIL is said to have given ultimatum to its agitating workers.

Speaking about the shortage of the gas and electricity supply in the national capital, Petroleum Secretary said about 80 percent of the petrol pumps went out of stocks, but those of Hindustan Petroleum were operating normally as the company is not part of the agitation. 100 petrol pumps in Mumbai have also dried up.

Fuel supplies in many other parts of the country have been affected as well.

Talks with Oil Sector Officers Association, the umbrella body of 14 state-run companies, failed on Thursday even as reports from several parts of the country said petrol pumps were running dry and aviation refuelling operations were getting delayed because of the absence of officers.

"We have been managing the situation till now, but there are supply constraints," IOC Chairman Sarthak Behuria said. "If the strike continues, we may also see dry-outs from tomorrow."

There were reports of long queues at petrol pumps and delays in delivery of domestic LPG cylinders.

"The petrol pumps are running low on inventory in anticipation of a petrol and diesel price cut," he said, adding that senior management personnel have been deployed at airports to refuel airplanes.

The Government, however, maintained that the situation was still manageable. "Some shortages can be there but the situation is under control," said S Sunderasan, Additional Secretary to Petroleum Ministry

Petrol pumps in Bengal hit by oil sector officers' strike
With oil sector officers' strike entering the second day on Thursday, several pumps in the city and elsewhere in the state went dry as supplies failed to arrive from depots of IndianOil Corporation and Bharat Petroleum Corporation.

"Several IOC and BPCL pumps in the city have gone dry due to non-supply of petrol and diesel from their depots and if such a situation continues, many petrol stations will have no stock by tomorrow," West Bengal Petroleum Dealers Association Tusher Sen said.

He said he had apprised Chief Secretary Ashok Mohan Chakraborty of the situation and asked him to take necessary steps.

Association Secretary Joydeb Sarkar said that petrol pumps of Hindustan Petroleum were receiving supplies as their officers were not participating in the strike.

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Over 90,000 hit by lorry strike

MADURAI: As the nation-wide indefinite strike called by All-India Motor Transport Congress (AIMTC) from Sunday midnight entered its third day on Wednesday, the livelihood of over 90,000 people in the district has been affected.

"Around six racks (360 compartments containing goods) are standing in the Railway Goods Shed in Madurai without goods getting unloaded. They contain rice, grains, pulses, wheat, urea and other commodities," Madurai Lorry Owners' Association president, C. Sathiah, told The Hindu here on Wednesday.

In Madurai district alone, more than 60,000 people such as drivers, cleaners and loadmen were directly dependent on the lorry sector with another 30,000 such as mechanics being indirectly connected.

Over 1,000 lorries enter the district every day with 350 of them having national permit and coming from other States. Every day, another 2,000 lorries operate inside Madurai district. The commercial loss suffered by the district owing to the strike amounted around to Rs. 60 crore every day, he said.

"We (lorry owners) are also losing crores of rupees. The Government must take all steps to meet our demands and end the strike," he said. Most of the parcel booking services in the city has stopped taking orders.

The main demand of the truckers, he said, was the immediate reduction of diesel prices by Rs. 15 and petrol prices by Rs. 20. The value added tax (VAT) on diesel should be made uniform at 4 per cent across the country.

The excise duty and customs charges on tyres must be halved to 35 per cent and import of cheaper radial tyres, used for withstanding heavy loads, from China should not be restricted, Mr. Sathiah said.

He also called for scrapping the service tax on transportation.

sajiv

Oil strike on: 20 officers suspended, 2 arrested

NEW DELHI: Defying a stay order by the Delhi High Court, the Oil Sector Officers' Association (OSOA) went on an indefinite strike from Wednesday morning.

This led to disruption in supply of gas to priority areas, including power plants, impacting work in four main Indian Oil Corporation refineries and forcing shutdown of the Hazira-Vijaipur-Jagdishpur pipeline.

The government came down strongly on the agitating employees and suspended 20 oil sector officers — 11 from the Oil and Natural Gas Corporation (ONGC), and three each from Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited and Gas Authority India Limited (GAIL) — and arrested two ONGC officers for participating in the strike.

Union Home Minister P. Chidambaram reviewed the situation arising out of the strikes by oil sector executives and truckers at a meeting with the Cabinet Secretary, the Petroleum Secretary and the Transport Secretary. Petroleum Secretary R.S. Pandey said IOC had deployed Territorial Army personnel to man its installations at Mumbai and Delhi airports to ensure that air traffic is not disrupted.

The IOC said the Haldia refinery was completely shut down while its Panipat, Mathura and Koyali refineries were in the "cooling down" phase — a process before the units are completely shut down.

OSOA president Amit Kumar claimed the strike was total in all oil PSUs except Hindustan Petroleum. However, reports suggested that in BPCL the striking employees were divided while it had no impact on Hindustan Petroleum Corporation.

sajiv

Heavy rush outside petrol pumps in Assam

Heavy rush was witnessed outside petrol pumps in Assam with security intensified in and around these installations as the indefinite nation-wide oil officers strike entered the third day on Friday.

Police and para-military forces have been deployed outside petrol pumps as heavy rush leading to minor scuffle in front of some outlets were reported in Guwahati and other parts of both lower and upper Assam.

Official sources said here that petrol pumps have been directed to provide oil to the consumers in a rationed manner so that the supply can be stretched but more than 50 per cent of the petrol pumps have gone dry in the state.

Consumers, too, have been urged to maintain restrain and restrict use of fuel and use public transport where possible.

Meanwhile, ONGC's upper Assam operations remained suspended with crude flow from Nazira to Barauni in Bihar suspended, sources said.

ONGC's association for scientific technical officers (ASTO) secretary Manoj Bhagawati claimed that the strike has resulted in losses to the tune of Rs 3500 crore during the last two days and "this amount alone can pay the difference deamded as hike for the next five years".

Bhagawati, along with three other officers of the Assam assets, were placed under suspension for participating in the strik.

sajiv

Oil prices slip as US unemployment jumps

VIENNA, Austria – Worries about global economic growth and a U.S. jobs report showing unemployment is at its highest in 16 years pushed oil prices lower Friday.

Friday's labor market report stoked fears that the world's largest economy has not yet reached a bottom, with the U.S. unemployment rate bolting to 7.2 percent in December, the highest since early 1993.

The report was even more dismal when viewed over the whole year, with the U.S. economy losing 2.6 million jobs in 2008. That was the most since 1945, when nearly 2.8 million jobs were lost, although the number of jobs in the U.S. has more than tripled since then.

Light, sweet crude for February delivery was down $1 at $40.70 barrel by midday in Europe in electronic trading on the New York Mercantile Exchange. The contract overnight fell 93 cents to settle at $41.70.

Before being depressed by economic news, oil prices had risen earlier this week to above $48 on worries the conflict in Gaza could engulf the oil-rich Middle East.

Lebanese militants fired at least three rockets into northern Israel on Thursday, threatening to open a new front for the Jewish state as it pushed forward with an offensive against Hamas in the Gaza Strip that has killed about 700 people. Israel responded with mortar shells.

"Some traders may be nervous fighting could spread," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. "Iran has been racheting up the rhetoric."

Top Iranian leader Ayatollah Ali Khamenei said Thursday his country would not spare any effort to assist Hamas, though he banned hardline student groups from carrying out suicide bombings in Israel.

An Iranian Revolutionary Guard commander earlier this week called on Islamic countries to use oil as a weapon to end the fighting in Gaza.

Oil prices fell the previous two trading sessions on expectations a severe global economic slowdown will undermine crude demand and evidence that an increasing number of OPEC members were cutting back on production.

Focusing on OPEC, oil and energy consultants KBC Market Services said it appeared "OPEC is now doing enough on supply to compensate for the fall in global oil demand."

"However, the market may not be convinced of sufficient compliance until OPEC production data for January become available early next month."

Part of the subdued market mood Friday also appeared to stem from dire economic warnings from U.S. President-elect Barack Obama.

On Thursday, Obama said the recession in the U.S. could "linger for years" unless Congress approves a spending package and tax cuts that will cost as much as $1 trillion.

Dismal reports from retailers also heightened fears that consumer demand will continue to weaken.

Wal-Mart, the largest retailer in the U.S., slashed its fourth-quarter earnings forecast and reported sales below analyst expectations. Department store operator Macy's Inc. said it will close 11 stores in nine states — affecting 960 employees — and also lowered its forecast for the fourth quarter.

"Demand is bad — that's the underlying reality," Chu said. "Unless there's a major shock, the market will likely drift back down below $40."

In other Nymex trading, gasoline futures slipped by less than a penny to fetch $1.09 a gallon. Heating oil fell more than 5 cents, selling at $1.47 a gallon while natural gas for February delivery lost more than 7 cents at $5.51 per 1,000 cubic feet.

In London, February Brent crude was a $44.81 a barrel on the ICE Futures exchange


sajiv

Petrol pumps start drying up

In a direct fallout of the strike by oil officers' association, over 50 per cent of the retail outlets of various state-run oil companies, especially the Indian Oil Corporation (IOC) and Bharat Petroleum Chemicals Limited (BPCL), ran dry in the region today even as panic-struck people took to hoarding of petrol and diesel, from wherever it was available.

The situation was worse in Chandigarh, Patiala, Ludhiana, Hoshiarpur and Ferozepur. JP Khanna, the chief of Punjab Petroleum Dealers Association, said almost 70 per cent of the pumps in these districts had gone dry by the evening. Serpentine queues of customers were seen outside filling stations across the region.

Seeing the huge rush and the limited stock, many petrol stations started rationing fuel supply and people were declined fuel for more than Rs 500 per vehicle.

"Most of the pumps within the city limits are running dry. The situation worsened post panic buying by customers and the demand shot up by over 50 per cent today. People are now visiting petrol pumps located outside the city limits to get their tanks filled," Harjit Singh Atwal of Atwal Filling Station in Patiala said. Though diesel supply remained satisfactory on account of its lesser demand, petrol (both normal and its premium version) stock began drying up post afternoon today. LPG supply was also hit in several parts of Punjab.

Notably, most of the petrol pumps in Punjab, Haryana and Jammu and Kashmir had declined to stock up fuel supply ahead of the oil officers' strike as they apprehended a cut in prices. Meanwhile, the outlets owned by Hindustan Petroleum Corporation Limited (HPCL) did brisk business in the region today in view of their employees not going on strike. Says Ashok Thapar, who runs a HPCL retail outlet in Moga: "I have sent a much higher indent to the oil company today. The running dry of IOC and BPCL pumps has proved a boon for us."

nithyasubramanian

#48



MUMBAI: Petrol, diesel and cooking gas prices may be cut further to bring them in line with international rates, Petroleum Minister Murli Deora said. The government might reduce petrol prices by Rs.5 per litre, diesel prices by Rs.3 per litre, cooking gas (LPG) prices may be cut by Rs.20-25 per cylinder.
The exact quantum of the cut is expected to be announced in a week.
The announcement comes three days after the minister said that the government may announce another cut in fuel prices soon.
Fuel prices were last cut Dec 5 after global crude oil prices plunged.
In Delhi, Ashok Badhawar, president of the Federation of All India Petroleum Traders, told he had come to know of an impending price cut but did not know the details.
"We have heard that the minister has announced a price cut. As of now we do not know by how much," said Badhawar.
Thanks and Regards
- Nithya Subramanian
Kenvivo Communications
http://nithya-subramanian.blogspot.com/

sajiv


Strike off, but city stuck

New Delhi: Oil sector officers called off their strike on Friday evening but only after the day saw empty roads and kilometre-long queues outside the few fuel stations not left dry. Sweta Dutta took a round

HP e-fuelling station, near Jangpura Flyover
Having run into three "out of stock" petrol pumps, we pulled into this fuel station with perhaps the longest line of vehicles. With some 30 cars waiting ahead of us, all to get their car tanks full, we knew we had to be patient but, at least, it could be worth the wait.

Could be, for Friday had scores of tales of motorists snaking ahead in the lines, only to be shown the "out of stock" sign as their turn inched closer.

As the queue snailed on, a couple of young boys handed out pamphlets. One of them was a tempting alternative: it suggested buying battery-operated REVA cars. The others were mostly lucky-draw contest slips for customers, certainly the only positive side of the wait.

While the promoters idled around, the petrol pump workers and traffic police personnel deployed to manage the rush had a harrowing time. Some even shared their complaints with any customer willing to lend an ear. "I went home at 11 last night and returned 6.30 this morning," a traffic policeman said, getting set for a tea break at the kiosk near the petrol pump. "The rush doesn't seem to end."

"I have been surviving on just tea. Put the bill on the petrol pump," the policeman told the kiosk owner.

The latter, Hari Kishen, had his own cup of woe to stir meanwhile: "This strike has cost me heavy. Most customers are busy pushing their vehicles and unwilling to lose their place in the queue, so hardly anyone has had tea or any snack all day. My regular customers have also vanished due to the rush."

Customers seemed to care little. As groups moved ahead and got their tanks filled up, finally, they rejoiced with friends made in the hour-long pull up to the refuelling counter.

Ritesh Kumar, who waited in the line with his bike for more than an hour, was disappointed even after stocking up: he was denied extra petrol in cans he was carrying. "I could not have brought both my car and bike, so I came with a couple of jerry cans. But they are not giving loose petrol, which means I will have to come back with my car and wait another two hours."