U.S. oil imports ship largely from the Middle East around the Cape of Good Hope in Africa and across the Atlantic

News & Finance
by Anthony Herring
June 27, 20150 comments

 US stocks rose early in the week, with the Nasdaq hitting records two straight days on an apparent breakthrough in the marathon Greek talks, with the debt-wracked country signalling important concessions on pensions and some other matters.

The Dow Jones Industrial Average shed 68.93 points (0.38 percent) in the week to 17,947.02.

The broad-based S&P 500 lost 8.38 (0.40 percent) at 2,101.61, while the tech-rich Nasdaq Composite Index dropped 36.49 (0.71 percent) to 5,080.51.

Stocks moved hand and glove with our impression of the success and failure of the Greece talks, said Art Hogan, chief market strategist of Wunderlich Securities.

By Friday, Greek Prime Minister Alexis Tsipras was speaking of the latest EU demands as ultimatums and blackmail, raising the odds of a messy Greek debt default at the end of the month.

Petróleo Brasileiro S.A. Petrobras (NYSE:PBR) gained 4.21% to $9.41,  SandRidge Energy, Inc. (NYSE:SD) declined -4.58% to $0.95,  Hercules Offshore, Inc. (NASDAQ:HERO) dropped -11.22% to $0.25,  Whiting Petroleum Corp. (NYSE:WLL) declined -1.42% to $35.46,  Nabors Industries Ltd. (NYSE:NBR) inclined 2.64% to $14.40,  Northern Oil and Gas, Inc. (NYSEMKT: NOG) dipped -2.55% to $6.88,  TransAtlantic Petroleum Ltd. (NYSEMKT:TAT) declined -4.07% $5.18.

The El Niño event increasing storm potential in the Pacific Ocean is likely to disrupt oil shipments around the globe, spelling higher gas prices at the pump and rising costs at the grocery store.

Commodities traders are already factoring in a rise in oil prices, according to the Financial Times. Thats because any interruption in shipping routes is a major cost on transportation. And when the cargo being shipped is oil, food and consumer goods are also likely to see inflated prices.

U.S. oil imports ship largely from the Middle East around the Cape of Good Hope in Africa and across the Atlantic. The Atlantic hurricane season this year is expected to be calmer than normal, so imports wont likely be constrained.

Middle East to Asia shipping routes, however, are transPacific, making them vulnerable to storms. U.S. exports also travel largely via the Pacific. (U.S. laws mostly ban exporting crude, however petroleum liquid exports are on the rise to Central and South America, as well as Asia.)

Oil prices are currently in a holding pattern as are gasoline prices. Even though prices tend to spike in summer months during the U.S.s high domestic driving season, there is an over supply of fuel on the market right now. The U.S. has record inventories and OPEC countries are pumping without constraint.

After the 2006/2007 El Niño event, energy prices jumped 58%. Food rices also rose. A similar price swelling could evolve this year. The trend is for commodities prices to parallel significant weather events and disruptions.

A petroleum pipeline company said Friday that oil from a Santa Barbara, California, spill spread more than 100 miles to Los Angeles County beaches.

Plains All American Pipeline said that oil from its pipeline was found as far away as Redondo Beach.

The Houston-based Company and state officials said earlier in the week that oil from the May 19 spill had reached Manhattan Beach, two miles north of Redondo.

After being told that we first could get the results, then we were told we couldnt get the results, here they are published and no one in our staff knew about these results coming out, Wolf said, referring to the information released Friday by the company.

Crude oil ended below $60 a barrel as near-record U.S. production prolonged an oversupply amid the lowest trading volatility in eight months.

U.S. crude stockpiles remain 84 million barrels above the five-year average for this time of the year. The nation pumped near the fastest pace in more than three decades even as the rig count dropped. A measure of future price fluctuations slipped to the lowest level since October.

Oil’s rebound from a six-year low has faltered on signs a global glut will persist as rising prices spur output. The Organization of Petroleum Exporting Countries has pumped more than its quota of 30 million barrels a day for the past 12 months as the group seeks to defend market share against higher-cost producers.

“We are still pumping at a near-record level and production hasn’t been affected by the rig count yet,” said Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut. “The longs are waiting for something to drive prices higher but they don’t have the correct fundamental picture.”

WTI for August delivery slipped 7 cents to settle at $59.63 a barrel on the New York Mercantile Exchange. Total volume was 53 percent below the 100-day average at 2:50 p.m. Prices were little changed for the week.

U.S. Supply

Brent for August settlement gained 6 cents to $63.26 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at a premium of $3.63 to WTI, compared with $3.05 on June 19.

Crude inventories in the U.S., the world’s biggest oil consumer, decreased for an eighth week to 463 million barrels through June 19. Production was close to the record of 9.61 million barrels a day from two weeks earlier. Rigs drilling for oil fell by three this week to 628, the least since 2010.

“The market appears to have been set on cruise control,” Miswin Mahesh, an analyst at Barclays Plc in London, said in a report. “Yet the glut has not gone away.”

The CBOE Crude Oil Volatility Index, which measures oil price fluctuations using options of the U.S. Oil Fund, closed at 29.26 on Thursday. The U.S. fund, the biggest U.S. exchanged-traded fund, holds front-month WTI futures.

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Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.