Follow

October 5, 2011

Energy Data Highlights

Crude oil futures price 10/3/2011: $77.61/bbl down$2.63 from week earlier down$3.97 from year earlier Natural gas futures price 10/3/2011: $3.617/mmBtu down$0.165 from week earlier down$0.183 from year earlier Retail gasoline price 10/3/2011: $3.433/gal down$0.076 from week earlier up$0.701 from year earlier Retail diesel price 10/3/2011: $3.749/gal down$0.037 from week earlier up$0.749 from year earlier Weekly coal production 9/24/2011: 21.193 million tons down0.015 million tons from week earlier down0.611 million tons from year earlier

Natural Gas/ Power News

EIA Storage Release 9/29/11 (Actual): +111 Bcf Previous Week: +89 Bcf -2.7% Change from 1 Year Ago +0.2% Change 5-year Average North Dakota Bakken Shale infrastructure projects reach $3 billion mark About $3 billion worth of infrastructure projects are on the drawing boards in North Dakota's Bakken Shale play to monetize the natural gas produced in association with oil, which otherwise would be lost to flaring, operators and state officials said in interviews. About 134,000 Mcf/d, or almost one third of the gas produced in North Dakota, is flared because of the lack of infrastructure to take

the gas away or otherwise monetize it, Bruce Hicks, assistant director of the Oil and Gas Division of the North Dakota Industrial Commission said in an interview Monday. Hicks said it is currently uneconomical to capture the gas produced in association with Bakken Shale oil production, given the dearth of gas-related infrastructure in the 17,000-square-mile region. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/6545222 Energy bills need support from environmentalists: US Sen. Graham Bills promoting offshore drilling and nuclear energy are unlikely to advance in Congress without support from coalitions that include environmentalists, Republican South Carolina Senator Lindsey Graham told a group of Southern governors and fellow senators Tuesday. Incentives for the nuclear industry and efforts to speed offshore drilling in Virginia are unlikely to advance without the involvement of environmentalists, Graham said at a meeting of the Southern States Energy Board in Alexandria, Virginia. He said support from a bipartisan group of governors could put pressure on Congress to act on energy policy. "If Congress could have a breakthrough on anything, which doesn't look very likely, energy might be it," because of voter concerns about high energy costs, he said. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6553404 Saudis may import gas due to rocketing Mideast demand: Gazprom Soaring demand for natural gas in the Middle East could turn oil giant Saudi Arabia into a gas importer before the end of the decade, a senior official from Russian Gazprom said Tuesday. Demand for LNG in the region could grow tenfold in the next 10-15 years, Frederic Barnaud, managing director of Gazprom Global LNG, said in a presentation made on his behalf at the Middle East Petroleum and Gas Conference. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8417326 Kogas says to ramp up Russia gas imports gradually; has plans to reexport State-run Korea Gas Corporation, which signed an agreement with Russia's Gazprom to buy 10 Bcm/year of gas for a 30-year period starting 2015, said Tuesday it would gradually raise its purchase of Russian natural gas to the agreed volume instead of taking the full amount at one go, and without saying at what level it would start."We plan to gradually increase by 1 million mt/year [of LNG equivalent] to reflect domestic demand," he said. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8417183

Crude Oil News

OPEC Daily Basket Price 10/4/2011- $98.59 (10/3/2011 $99.65)

Recent Rig Counts Change from Prior Count Date of Prior Count Change Date of from Last Last Year's Year Count

Area

Last Count

Cou nt

U.S. Canada

30 Sept 1990 11 30 Sept 510 11

-1 5 +33

23 Sept 11 23 Sept 11 July 2011

+331 +197 +81

1 Oct 10 1 Oct 10 August 2010

Internatio August 1183 nal 2011

http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm

Oil Climbs for First Time in Four Days on Surprise Drop in U.S. Stockpiles Oil rose from its lowest in a year in New York after a surprise drop in crude stockpiles and on signs the U.S. may take further steps to sustain an economic recovery. Futures rose as much as 3.7 percent after sliding 7.9 percent in the past three days. Crude inventories dropped 3.1 million barrels last week, the American Petroleum Institute said yesterday. An Energy Department report today was forecast to show a gain of 1.5 million barrels. Federal Reserve Chairman Ben S. Bernanke signaled yesterday hell push forward with further expansion of monetary stimulus if needed. http://www.bloomberg.com/news/2011-10-05/oil-climbs-for-first-time-in-four-dayson-surprise-drop-in-u-s-stockpiles.html

Goldman Sachs: U.S. crude prices at $109 in 2012 U.S. crude oil futures will hit $109 a barrel in 2012 as new pipelines, rail lines and other infrastructure help relieve bottlenecks at a central gathering hub in Oklahoma and carry more oil from Canada and the northern U.S. to refiners on the Gulf Coast and elsewhere, according to a Goldman Sachs forecast. The prediction represents a drop from the investment banks previous forecast of $123.50 a barrel and reflects the increasingly anxious outlook for the global economic recovery. The bank also trimmed its 2012 Brent price estimate to $120 a barrel from $130 amid growing fears of a European financial crisis. Still, as U.S. prices rise, the gap will narrow between West Texas Intermediate, the leading U.S. benchmark crude, and Europe-traded Brent, which has at times in the past year traded at nearly $20 a barrel more than WTI, the investment bank said. http://fuelfix.com/blog/2011/10/04/goldman-sachs-u-s-crude-prices-at-109-in2012/

Energy Puts at Two-Year High as No Bottom Seen in Crude: Options Options protecting against declines in U.S. energy stocks have surged to the mostexpensive level in 30 months versus contracts on the Standard & Poors 500 Index, amid concern oil will extend losses as the economy slows.Implied volatility for three-month options on the Energy Select Sector SPDR exchange-traded fund is 12.5 points more than the level for the SPDR S&P 500 ETF Trust and almost

double the average since March 2009, according to data compiled by Bloomberg. For Exxon Mobil Corp., the worlds largest publicly traded oil company, bearish options are trading at the highest level relative to bullish ones since November 2008. Its a pure play on the commodity, and the thinking is with a dramatic slowdown in growth, there will be a collapse in demand, Jack Ablin, who helps oversee $55 billion as chief investment officer for Chicago-based Harris Private Bank, said in a telephone interview yesterday. The sentiment is really that we dont know if theres going to be a recession and so theres not a lot of demand for those stocks right now. http://www.businessweek.com/news/2011-10-05/energy-puts-at-two-year-high-asno-bottom-seen-in-crude-options.html Canada urges EC against stigmatizing oil sands in new fuel standards Fuel produced from oil sands risks unfair treatment alongside heavy crudes with similar emissions, Canada's natural resources minister said Tuesday, responding to the European Commission leveling higher standards on refined oil sands and oil shale. "We don't want to see the oil sands stigmatized," Joe Oliver said after a speech at the National Press Club in Washington. "All we're saying is these discussions should be based on science and economics." The EC on Monday decided to set a higher carbon value for fuels derived from oil sands compared with fuels refined from conventional crude. The proposal goes to member countries for approval in coming months. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6553416 As Economies Slow, Price of Gas Falls The sharp slump in oil prices over the last few months is finally beginning to bring relief at the gasoline pump, with the price of a gallon of regular gasoline dropping nearly a penny a day over the last four weeks. Gasoline cost an average of $3.41 nationwide on Tuesday, according to the AAA Daily Fuel Gauge report, down from more than $4 a gallon in some states in May. And with the global economy weakening further, prices for both oil and gasoline are likely to fall further in coming days, analysts say. http://www.nytimes.com/2011/10/05/business/energy-environment/as-economiesslow-price-of-gas-falls.html?_r=1

EPA will give some states, companies more time on cross-state rule The Wall Street Journal reported Tuesday night that the Environmental Protection Agency will give some states and power plant operators more time to comply with the Cross State Air Pollution Rule set to begin on January 1. According to the report, the EPA will propose allowing certain states and companies to emit more pollutants than previously permitted from 1 percent to 4 percent above the levels set when the rule was finalized in July. http://fuelfix.com/blog/2011/10/04/report-epa-will-give-some-states-companiesmore-time-on-cross-state-rule/ Oil Market Lurches from Exuberance to Panic

Oil markets have swung from irrational exuberance in the first half of the year to increasingly irrational pessimism in recent weeks. Participants risk exaggerating the risk of a deep and prolonged recession hitting demand in both the advanced economies and emerging markets. Blind swings from hope to fear usually lead to temporary mispricing, creating opportunities for those willing to take the other side. Estimating the recession risk is perhaps the most important trade in the oil markets right now... The current dread about recession and plunging oil prices is the mirror image of the February-April panic about prices spiking as market participants worried about supply disruptions spreading from Libya across the whole of the Middle East. Back then, the option market exaggerated the risk of supply disruptions-- confusing a possibility with something much closer to a high probability. Now the market is in danger of exaggerating the risk of a deep recession and a large drop in oil consumption. http://www.commodities-now.com/news/power-and-energy/8139-oil-marketlurches-from-exuberance-to-panic.html Shell Probe May Keep Oil Refinery Shut Through Mid-October Singapores investigation of a Sept. 28 fire may force Royal Dutch Shell Plc to keep its largest oil refinery shut at least through the middle of October. The offshore Pulau Bukom refinery, which exports 90 percent of its products to the Asia-Pacific region, may be closed for a minimum of several weeks, according to Purvin & Gertz Inc., an energy consultant. Standard Chartered Plc estimated yesterday a complete shutdown may last for as long as a month. http://www.businessweek.com/news/2011-10-05/shell-probe-may-keep-oilrefinery-shut-through-mid-october.html Halliburton to recruit ex-NASA workers Halliburton Co. will host a job fair Wednesday for former aerospace industry workers recently put out of a job by the end of NASAs Space Shuttle program, marking the latest attempt by the oil and gas industry to recruit from the highly skilled pool. The oil field services giant said it is searching for several types of engineers, software testing and developers, scientists, auditors and other functions, noting that many aerospace professionals share the same skills, training and safety knowledge as those in the oil fieldBaker Hughes, another major oil field services provider, has also held a job fair for the ex-NASA workers, and other oil and gas industry firms have been recruiting among their ranks. http://fuelfix.com/blog/2011/10/04/halliburton-to-recruit-ex-nasa-workers/

Weather

Philippe May Become Atlantic Hurricane Soon, Storm Center Says Tropical Storm Philippe in Atlantic waters southeast of Bermuda is expected to become a hurricane in the next day or so, the National Hurricane Center said. The storm, about 580 miles (930 kilometers) from Bermuda, is moving west-northwest at 6 miles per hour with 65 mph winds, the Miami-based center said in its latest advisory. A turn to the north is forecast for later today as the storm intensifies, then to the northeast by tomorrow, with no threat to land.

http://www.bloomberg.com/news/2011-10-05/philippe-may-become-atlantichurricane-soon-storm-center-says.html

Tropical Storm PHILIPPE http://www.nhc.noaa.gov/text/refresh/MIATCPAT2+shtml/290842.shtml

6 to 10 Day Outlooks

Temperature

Precipitation

8 to 14 Day Outlooks Temperature

Precipitation