CL Redux

http://www.reuters.com/article/2011/02/21/us-markets-oil-idUSTRE71192R20110221?pageNumber=2
Oil soars on Libya violence, WTI shorts cover
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"The biggest concern is current contagion spreading to Saudi Arabia," said Michael Hewson, a market analyst at CMC Markets, adding that "markets hate uncertainty and will act first, think later."


The turmoil is complicating OPEC's effort to maintain a stable oil price, with ministers gathering for a producer-consumer conference in Riyadh seeking to keep the focus on fundamentals rather than geopolitical risk.

"We're much more focused on how the market balance is -- is it sufficiently supplied? And the answer is 'yes, abundantly.' Therefore, does the situation warrant any kind of intervention? I don't think so," said Deputy Saudi Oil Minister Prince Abdulaziz bin Salman Al-Saud.

He also reiterated the long-held Saudi view that $70 to $80 was the fair price for oil.
 
If you are so confident , why didn't you take LONG at 96.50 when it retraced $2 from 98.50 to 96.50 And stayed there for hours :D
Quote from schizo:

Unless you're an idiot (rhetorically speaking :D), 100 is a given. We'll most likely hit it tomorrow.
More...
 
http://www.tkfutures.com/crude_oil.htm

Maximum Daily Price Fluctuation

Crude Oil Futures: $10.00 per barrel ($10,000 per contract) for all months.

If any contract is traded, bid, or offered at the limit for five minutes, crude oil futures trading is halted for five minutes.

When trading resumes, the limit is expanded by $10.00 per barrel in either direction.

If another halt were triggered, the market would continue to be expanded by $10.00 per barrel in either direction after each successive five-minute trading halt.

There will be no maximum price fluctuation limits during any one trading session.

Hi / Lo Limit
http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

$10 per contract.

April 2011 high limit = 99.71

March 2011 high limit = 96.20
 
http://money.cnn.com/2011/02/21/markets/libya_oil_unrest/index.htm?hpt=T1

1/ The world consumes 87.5 million barrels of oil day.

-By contrast, Russia produces 10.1 million barrels per day,
-while the United States produces 9.8 million barrels per day,
- Saudi Arabia, currently observing OPEC production quotas, produces 8.57 million barrels per day.
- Libya produced about 1.65 million barrels per day of crude oil in 2010, making it Africa's third-largest crude producer

Those numbers include oil from ethanol, natural gas liquids and other products.

2/ In addition, Libya sits atop large reserves of oil and gas that have yet to be developed. Libya holds around 44 billion barrels of oil reserves -- the largest in Africa -- according to Oil and Gas Journal, an industry publication.

U.N. sanctions in place since 1992 had prevented most Western oil firms from operating in Libya after agents from the country's intelligence service were implicated in the 1988 bombing of Pan Am flight 103, which killed 270. The sanctions have left most of the country's natural gas reserves, along with a lot of its oil, fairly undeveloped.

The sanctions were lifted in 2004, after Libya said it was disbanding its nuclear program and finished cooperating in the Pam Am case. In 2006, the United States officially took Libya off its list of states that sponsor terrorism. That opened the door for renewed investment in the oil and gas sector.



3/ "The markets are responding to the uncertainty of how far this political unrest could spread, and whether other producing countries could be implicated," she said.

In particular, she said traders are watching the situation in Bahrain, where antigovernment protests could "spill over" into Eastern Saudi Arabia.

While a complete shut down of production in Libya is unlikely, Wyman warned that the situation there remains highly uncertain and could become even more unstable if the nation's leader, Moammar Gadhafi, is deposed.

4/ "Although Libya is an OPEC member, it is still a relatively small player," said Julian Jessop, an economist at Capital Economics. Libya, he added, ranks ninth on the list of output among the 12 members of the Organization of Petroleum Exporting Countries.

"In principle, any shortfall on global markets could easily be offset by an increase in output from Saudi Arabia," he said, adding that the OPEC leader is currently producing 3 million barrels per day less than its estimated capacity.
 
Quote from InvestVision:

If you are so confident , why didn't you take LONG at 96.50 when it retraced $2 from 98.50 to 96.50 And stayed there for hours :D
More...


I DID. Will close position @102. (I think it may take 7-10 days max)
 
You're Dreaming If You Think OPEC Can Boost Oil Production At Will
http://www.businessinsider.com/spare-capacity-theory-2011-2

1/ David Fyfe of IEA Paris earlier today attempted to calm world oil markets, by reminding that in the OECD there are over 1.6 billion barrels of oil in inventory. By marshaling these western supplies of already-pumped, above-ground oil, the world could gain a new source of oil for up to one year, at a rate of 4 mbpd (million barrels per day). There are a few sticky issues surrounding such a claim. Not least of which is that oil markets regard drawdowns of above-ground inventories as a reason to send prices even higher. But that point aside, let’s consider what Fyfe did not claim: the head of IEA’s oil markets division did not claim that Non-OPEC oil producers, which account for nearly 60% of world oil supply, could lift supply to make up for the Libyan disruption. That’s no surprise. Non-OPEC oil production has already peaked, and couldn’t increase supply either tomor

2/ In the graphic to the left we see the latest publicly available charts for OECD inventories, from the 18 January Oil Market Report from IEA. Note that in the bottom chart what’s being accounted for is not only the 1.6 billion barrels of crude that Fyfe refers to, but another 1 billion barrels of oil products. That said, the scale of these large numbers can be a tad misleading. They represent in part just the normal flows of the global oil market and are a snapshot of oil as it flows from production, to refining, and to distribution. For a different measure, these same levels of inventory represent 57.5 days of supply. Which the IEA itself says are the lowest in the past two years.

3/ In truth, the spare capacity that the world cares about—that the oil futures market cares about—is not the inventory level. But rather, actual production capacity that can be brought on immediately. You can see the problem, from a price standpoint. If the world loses Libya’s 1.5 mbpd production for 90-120 days, and starts drawing down above-ground inventories, this only makes the inventory cushion that much thinner for any new supply disruptions. The question on the mind of the oil market therefore is not Mr. Fyfe’s 1.6 billion barrels of crude, but whether countries like Kuwait, the U.A.E. and especially Saudi Arabia or even Russia can lift supply. Immediately

4/ Even if OPEC is indeed sitting on 1-3 mbpd of spare capacity, it’s not clear for how long they can both increase production, and export that production to the world. Not only has Saudi Arabia’s production not increased in the past five years, but, Saudi is increasingly using its own oil for its own population. The result? Flat, to declining exports of oil from Saudi
 
Gaddafi Defies Revolt With Tanks, Planes

http://www.cnbc.com/id/41711876?__source=otbrn|outbrainext|&par=otbrn&__source=otbrn|outbrainext|&par=otbrn

Libya's Muammar Gaddafi used tanks, helicopters and warplanes to fight a growing revolt, witnesses said on Tuesday, as the veteran leader scoffed at reports he was fleeing after four decades in power.


Mustafa Ozer | AFP | Getty Images
Demonstrators hold up a banner featuring Libyan leader Moamer Kadhafi reading 'Kadhafi is a murderer' as they stage a protest outside the Libyan embassy in Istanbul on February 21, 2011

Warplanes bombed portions of the capital Tripoli on Tuesday in new attacks in the Mediterranean coastal city, and mercenaries fired on civilians, Al Jazeera reported.

In the eastern town of Al Bayda, resident Marai Al Mahry told Reuters by telephone that 26 people including his brother Ahmed had been shot dead overnight by Gaddafi loyalists.

"They shoot you just for walking on the street," he said, sobbing uncontrollably as he appealed for help.

Protesters were being attacked with tanks and warplanes, he said.

"The only thing we can do now is not give up, no surrender, no going back. We will die anyways, whether we like it or not. It is clear that they don't care whether we live or not. This is genocide," said Mahry, 42.

Hundred of refugees streamed into Egypt on Tuesday, piled onto tractors and trucks, describing a wave of killing and banditry unleashed by the revolt.

"Five people died on the street where I live," Mohamed Jalaly, 40, told Reuters at Salum on his way to Cairo from Benghazi.

"You leave Benghazi and then you have ... nothing but gangs and youths with weapons," he added.

"The way from Benghazi is extremely dangerous," he said.
 
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