WSJ - Oil Prices Surge to $43 a Barrel On Worries Over Yukos Supply

[Klaus]

Oil Prices Surge to $43 a Barrel
On Worries Over Yukos Supply

By MASOOD FARIVAR and LEAH MCGRATH GOODMAN
DOW JONES NEWSWIRES
July 28, 2004 3:23 p.m.

NEW YORK -- Oil prices hit a record $43 a barrel Wednesday over concerns about the loss of production from Russian oil company OAO Yukos. A deadly bombing in Iraq and tepid data on U.S. energy reserves added to the concerns.

Yukos warned that Justice Ministry bailiffs told its core operating subsidiaries to cease all sales of company property, including oil. In a written response to the court order, Yukos management said this could lead to a halt in production within days. (See article1.)

Russia is the world's No. 2 oil producer and exporter. Yukos produces about 1.7 million barrels a day -- as much oil as Iraq pumped last month. The Russian government is trying to collect billions of dollars in back taxes from Yukos, a move the financially troubled company says could force it into bankruptcy.

Traders weren't sure whether Yukos's statement was valid or just a ploy meant to pressure Russia's government. Regardless, the prospect of losing nearly two million barrels a day comes at a critical time for the oil market. With the Organization of Petroleum Exporting Countries pumping close to capacity, the "market cannot afford any hiccups in supply," said Tom Bentz, an analyst at brokerage BNP Paribas Futures in New York.

On the New York Mercantile Exchange, crude-oil futures for September delivery settled $1.06 higher at $42.90 a barrel. At one point, prices touched $43.05 a barrel before quickly pulling back. The previous record was $42.45, set June 2 after terrorist attacks on a Saudi Arabian oil company.

Nymex heating oil for August gained 2.18 cents to $1.14 a gallon and August unleaded gasoline rose 5.7 cents to $1.30 a gallon. August natural gasoline added 6.1 cents to $6.05 per million British thermal units.

In an effort to rein in surging prices, OPEC agreed June 3 to increase its output ceiling by 2.5 million barrels a day -- two million barrels beginning July 1 and the additional 500,000 barrels effective Aug. 1. The increase has cut into OPEC's spare capacity. The U.S. Department of Energy estimates the group's unused capacity at one million barrels a day, most of it held by Saudi Arabia.

"I'm concerned that the world oil markets, as tight as they are with maybe one million barrels a day of spare capacity, would not be able to deal with this any more," said DOE analyst Lowell Feld. "Any disruption from Russia would be very problematic right now. Really the last thing the oil market needs is problems coming from Russia."

The news was followed by a sluggish weekly inventory report from the Energy Information Administration, the DOE's statistics branch.

Crude stocks rose for the first time in three weeks, climbing 1.2 million barrels to 300.5 million barrels. The gain left inventories near the middle of their average range, the EIA said. But the slight increase came even as imports grew by 1.4 million to a record 11.3 million barrels a day. The data also showed only a marginal build in distillates and a decline, or draw, in gasoline inventories.

DeCarlo Larry, an analyst for Barclays Capital in New York, called the data "very bullish," meaning prices could run-up even more. "We've never seen imports like this before and refinery runs were up and we still drew in gasoline," he said.

Meanwhile, a suicide car bombing killed 68 Iraqis at a police recruiting center in Baqouba, in the deadliest attack since the transfer of sovereignty to an interim government. The bombing stoked already-heightened fears that Iraq won't be able to get into a regular rhythm of producing oil.

[Klaus]

Oil Prices Surge to $43 a Barrel
On Worries Over Yukos Supply

By MASOOD FARIVAR and LEAH MCGRATH GOODMAN
DOW JONES NEWSWIRES
July 28, 2004 3:23 p.m.

NEW YORK -- Oil prices hit a record $43 a barrel Wednesday over concerns about the loss of production from Russian oil company OAO Yukos. A deadly bombing in Iraq and tepid data on U.S. energy reserves added to the concerns.

Yukos warned that Justice Ministry bailiffs told its core operating subsidiaries to cease all sales of company property, including oil. In a written response to the court order, Yukos management said this could lead to a halt in production within days. (See article1.)

Russia is the world's No. 2 oil producer and exporter. Yukos produces about 1.7 million barrels a day -- as much oil as Iraq pumped last month. The Russian government is trying to collect billions of dollars in back taxes from Yukos, a move the financially troubled company says could force it into bankruptcy.

Traders weren't sure whether Yukos's statement was valid or just a ploy meant to pressure Russia's government. Regardless, the prospect of losing nearly two million barrels a day comes at a critical time for the oil market. With the Organization of Petroleum Exporting Countries pumping close to capacity, the "market cannot afford any hiccups in supply," said Tom Bentz, an analyst at brokerage BNP Paribas Futures in New York.

On the New York Mercantile Exchange, crude-oil futures for September delivery settled $1.06 higher at $42.90 a barrel. At one point, prices touched $43.05 a barrel before quickly pulling back. The previous record was $42.45, set June 2 after terrorist attacks on a Saudi Arabian oil company.

Nymex heating oil for August gained 2.18 cents to $1.14 a gallon and August unleaded gasoline rose 5.7 cents to $1.30 a gallon. August natural gasoline added 6.1 cents to $6.05 per million British thermal units.

In an effort to rein in surging prices, OPEC agreed June 3 to increase its output ceiling by 2.5 million barrels a day -- two million barrels beginning July 1 and the additional 500,000 barrels effective Aug. 1. The increase has cut into OPEC's spare capacity. The U.S. Department of Energy estimates the group's unused capacity at one million barrels a day, most of it held by Saudi Arabia.

"I'm concerned that the world oil markets, as tight as they are with maybe one million barrels a day of spare capacity, would not be able to deal with this any more," said DOE analyst Lowell Feld. "Any disruption from Russia would be very problematic right now. Really the last thing the oil market needs is problems coming from Russia."

The news was followed by a sluggish weekly inventory report from the Energy Information Administration, the DOE's statistics branch.

Crude stocks rose for the first time in three weeks, climbing 1.2 million barrels to 300.5 million barrels. The gain left inventories near the middle of their average range, the EIA said. But the slight increase came even as imports grew by 1.4 million to a record 11.3 million barrels a day. The data also showed only a marginal build in distillates and a decline, or draw, in gasoline inventories.

DeCarlo Larry, an analyst for Barclays Capital in New York, called the data "very bullish," meaning prices could run-up even more. "We've never seen imports like this before and refinery runs were up and we still drew in gasoline," he said.

Meanwhile, a suicide car bombing killed 68 Iraqis at a police recruiting center in Baqouba, in the deadliest attack since the transfer of sovereignty to an interim government. The bombing stoked already-heightened fears that Iraq won't be able to get into a regular rhythm of producing oil.

[Klaus]

Oil Prices Surge to $43 a Barrel
On Worries Over Yukos Supply

By MASOOD FARIVAR and LEAH MCGRATH GOODMAN
DOW JONES NEWSWIRES
July 28, 2004 3:23 p.m.

NEW YORK -- Oil prices hit a record $43 a barrel Wednesday over concerns about the loss of production from Russian oil company OAO Yukos. A deadly bombing in Iraq and tepid data on U.S. energy reserves added to the concerns.

Yukos warned that Justice Ministry bailiffs told its core operating subsidiaries to cease all sales of company property, including oil. In a written response to the court order, Yukos management said this could lead to a halt in production within days. (See article1.)

Russia is the world's No. 2 oil producer and exporter. Yukos produces about 1.7 million barrels a day -- as much oil as Iraq pumped last month. The Russian government is trying to collect billions of dollars in back taxes from Yukos, a move the financially troubled company says could force it into bankruptcy.

Traders weren't sure whether Yukos's statement was valid or just a ploy meant to pressure Russia's government. Regardless, the prospect of losing nearly two million barrels a day comes at a critical time for the oil market. With the Organization of Petroleum Exporting Countries pumping close to capacity, the "market cannot afford any hiccups in supply," said Tom Bentz, an analyst at brokerage BNP Paribas Futures in New York.

On the New York Mercantile Exchange, crude-oil futures for September delivery settled $1.06 higher at $42.90 a barrel. At one point, prices touched $43.05 a barrel before quickly pulling back. The previous record was $42.45, set June 2 after terrorist attacks on a Saudi Arabian oil company.

Nymex heating oil for August gained 2.18 cents to $1.14 a gallon and August unleaded gasoline rose 5.7 cents to $1.30 a gallon. August natural gasoline added 6.1 cents to $6.05 per million British thermal units.

In an effort to rein in surging prices, OPEC agreed June 3 to increase its output ceiling by 2.5 million barrels a day -- two million barrels beginning July 1 and the additional 500,000 barrels effective Aug. 1. The increase has cut into OPEC's spare capacity. The U.S. Department of Energy estimates the group's unused capacity at one million barrels a day, most of it held by Saudi Arabia.

"I'm concerned that the world oil markets, as tight as they are with maybe one million barrels a day of spare capacity, would not be able to deal with this any more," said DOE analyst Lowell Feld. "Any disruption from Russia would be very problematic right now. Really the last thing the oil market needs is problems coming from Russia."

The news was followed by a sluggish weekly inventory report from the Energy Information Administration, the DOE's statistics branch.

Crude stocks rose for the first time in three weeks, climbing 1.2 million barrels to 300.5 million barrels. The gain left inventories near the middle of their average range, the EIA said. But the slight increase came even as imports grew by 1.4 million to a record 11.3 million barrels a day. The data also showed only a marginal build in distillates and a decline, or draw, in gasoline inventories.

DeCarlo Larry, an analyst for Barclays Capital in New York, called the data "very bullish," meaning prices could run-up even more. "We've never seen imports like this before and refinery runs were up and we still drew in gasoline," he said.

Meanwhile, a suicide car bombing killed 68 Iraqis at a police recruiting center in Baqouba, in the deadliest attack since the transfer of sovereignty to an interim government. The bombing stoked already-heightened fears that Iraq won't be able to get into a regular rhythm of producing oil.

[PARAGON]

I wish I could raise my fees every time I had a worry come up.

They raise the price amid fears but slowly lower the price over time, reaping the profits. If that is not profiteering and gouging, what is.

[KenP]

Can you say ANWR?
http://www.petroleumnews.com/pnads/323718845.shtml

Alaska governor committed to drilling offshore ANWR strat well

Kay Cashman

Petroleum News publisher & managing editor

Alaska Gov. Frank Murkowski has decided to continue to pursue drilling a stratigraphic test well offshore the Arctic National Wildlife Refuge.

“We’re still evaluating the project (and) …. looking for ways to move it forward,” Becky Hultberg, the governor’s press secretary, told Petroleum News July 20 when she was asked about the July 9 deadline set by the state for commitments from oil and gas companies to join an ANWR strat well drilling consortium. Hultberg said the project was important to the governor.

She had no comment when asked how many companies had committed by July 9 to participating in the project.

She did say that no decision had been made on whether to continue permitting the project, which would be essential if the well were to be drilled during the upcoming Beaufort Sea winter drilling season.

Hultberg said the state Division of Oil and Gas needed “to sit down with ASRC Energy Services E&P Technology,” the contractor in charge of permitting the ANWR strat well, and discuss the project.

[Klaus]

Russia Says Yukos Can Ship Oil
Amid Asset Freeze in Tax Case

Market Concerns Abate,
But Kremlin Shows No Sign
Of Letting Up on Producer
By GREGORY L. WHITE
Staff Reporter of THE WALL STREET JOURNAL
July 30, 2004

MOSCOW -- Russian officials confirmed Thursday that OAO Yukos can continue to produce and ship oil despite asset freezes ordered in its back-taxes case, reassuring nervous world energy markets somewhat. But the Kremlin offered no further sign that it would ease pressure on the embattled oil giant.

Oil markets jumped Wednesday, leading to 21-year highs for crude-oil futures in New York, after Yukos said a recent court order could be interpreted as requiring Russia's No. 1 oil producer to cease pumping. Late Wednesday, a government official accused Yukos of overdramatizing the situation. On Thursday, oil markets relaxed somewhat, and U.S. benchmark crude futures in New York fell 15 cents to $42.75 per barrel.

At the same time, Yukos has yet to hear from court officers on whether it would get permission to gain access to cash in bank accounts through which much of its export revenue flows. It had hoped to get permission Thursday, but company officials said no word came. Yukos has warned that without access to the accounts, it will run out of cash by the middle of next month.

Publicly, Yukos officials remain upbeat about their prospects for working out a deal with the government to pay off the taxes without bankrupting the company.

"I still feel that there are proactive things that can be done to save the company," Chief Executive Stephen Theede said Wednesday after a visit to the company's Siberian oil fields. "As soon as I stop believing that, we might as well give up." In a news release Thursday, he said he "remains hopeful" a "satisfactory resolution of the tax issues" can be achieved.

But a person close to the company said another settlement offer to Kremlin officials this week appears to have gone unanswered. On Wednesday, Mr. Theede said: "There haven't been any substantive discussions that have taken place that would lead us to believe there is a willingness to work with the company toward a settlement."

Many of Yukos's accounts and assets were frozen under court orders as part of the process of collecting a 99 billion ruble ($3.39 billion or €2.82 billion) claim for back taxes for 2000. Mr. Theede said the company will have paid about $700 million by the end of this week.

Tax authorities say the company owes another 98 billion rubles for 2001, and that additional charges are likely for later years. Yukos denies it underpaid taxes, but has offered to pay as much as $8 billion over two years to settle all tax claims. The government so far hasn't responded to the offer.

For the moment, Yukos continues to produce oil and operate normally, according to company officials. Mr. Theede said the company's $1.9 billion capital-spending program for this year hasn't been substantially cut but is under review.

Yukos shares rebounded 19% Thursday after plunging 20% a day earlier.

Russian officials say they are going ahead with plans to sell Yukos's main unit -- a Siberian giant that produces one million barrels of crude a day -- to pay off the tax debts. Yukos officials say selling the unit would likely bring the whole company to a halt.

[KenP]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> Yukos shares rebounded 19% Thursday after plunging 20% a day earlier. <HR></BLOCKQUOTE>
And the price of crude?