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Strategies & Market Trends : Natural Resource Stocks -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (41013)	7/6/2006 11:38:27 AM
From: DeplorableIrredeemableRedneck	Respond to of 108697

Oil surges to 23-year high Crude hits US$75, could reach $80: analysts Article Tools canada.com Jacqueline Thorpe, National Post Published: Thursday, July 06, 2006 TORONTO - Oil prices surged past US$75 a barrel to a new record yesterday, amid predictions they could reach US$80 before the end of the year due to drum-tight supplies and rising political tensions. Crude oil jumped US$1.26, or 1.7%, to US$75.19 a barrel on the New York Mercantile Exchange -- the highest close since oil futures began trading on the exchange in 1983, which could make for another painful summer for drivers at the pump. Earlier, it popped to a high of US$75.40, eclipsing a peak set in April as fears over the nuclear ambitions of Iran and North Korea began to escalate. "I think you're headed up on oil prices now," legendary Texas oilman T. Boone Pickens said yesterday in an interview on CNBC. Mr. Pickens, chairman of hedge fund BP Capital Management and a former oil executive, has been correctly predicting rising oil prices for the past two years. Those increases have been passed on to consumers in the form of a similar rise in the price of gasoline. Canadians were paying an average of $1.084 a litre for gasoline across the country this week, according to MJ Ervin & Associates, just off a recent high of $1.104 in April. Increasing tensions surrounding Iran's nuclear program, the war in Iraq and sabotage in Nigeria may further spur oil prices up to US$80 a barrel, said Mr. Pickens, who oversees more than US$4-billion in assets. Yesterday, concerns over Iran rose to the fore again, while North Korea's July 4 missile testing also spooked markets. Iran was expected to meet with the European Union yesterday for talks aimed at ending its nuclear enrichment program, but Tehran cancelled at the last minute. The meeting was rescheduled until today. Markets fear any escalation of tension that could disrupt supply from the world's fourth-largest crude oil exporter or through the Strait of Hormuz off Iran's coast. Roughly 14 million of the 85 million barrels of oil the world consumes each day travels through the Strait. "If there was ever a jugular vein of the global economy, that would be it," said Bart Melek, senior economist at BMO Capital Markets. Markets are also worried that tensions over North Korea could escalate, potentially interrupting supply routes into energy-hungry Asia. Underlying the uncertainty is the fact that strong global growth has kept demand robust, despite rocketing prices. Analysts believe the U.S. Federal reserve may soon be done raising interest rates while growth in China continues to barrel along. Supply, meanwhile, remains exceedingly tight. "The underlying reason why crude oil prices are so high and why there's so much volatility is because of the very low surplus capacity situation globally," said Carol Crowfoot, president of GLJ Energy Publications in Calgary. "Until that situation improves, it appears the market is going to react strongly to any kind of concerns regarding supply." Spare global capacity is only running at about 1.3 million barrels a day while Ms. Crowfoot said OPEC producers Indonesia, Iraq, Nigeria and Venezuela are currently unable to pump much more crude. "When you look at OPEC and they're producing 750,000 barrels a day less today than a year ago, you know you've got a tight supply situation," Mr. Pickens said on CNBC. Tight refining capacity will also push gasoline prices higher, Mr. Pickens said. "It's going to get tighter and tighter," he added. "When you see refineries operating at 94%, I don't know how much equipment can hold up operating at 94% of capacity. That's calling on those refineries to work beyond maybe their capacity for an extended period of time." Analysts said a slowdown in the U.S. or Chinese economy are the only real catalysts that could bring prices down. "We're starting to see some cracks in [U.S.] growth," Ms. Crowfoot said. "Gasoline is about US65 cents a gallon higher from a year ago." With files from Bloomberg News jthorpe@nationalpost.com

To: isopatch who wrote (41013)	7/6/2006 11:46:49 AM
From: JimisJim	Read Replies (2) \| Respond to of 108697

Bought VLO and TSO on news... TSO is taking a hit today as they announce attempt to acquire TX refinery and taking on debt to do it -- they'd just worked down debt ratio from 69% to 35% last year and people are fearful of them taking on new debt... anyway, added to core position in TSO @ 72.40 (original postion long @ 69.50)... Opened new position in VLO @ 65.70 just because... they are down today and have wanted to open a position (not sure how long)... Not sure how long these positions are... perhaps swing trades, but in theory, I like being long refiners this year and will at least be swing trading these two with possible core LTHs also. Also looking for punished offshore drillers right now. I have a lot of exposure to land drillers with NBR and GW, but looking to replace positions in RIG, GSF... possibly DO and/or NE and NBL. Jim