Wednesday, June 8, 2011

Oil Gains as OPEC Fails to Agree Quotas; U.S. Supplies Decline

June 9 (Bloomberg) -- Oil rose for a third day in New York after OPEC failed to reach an agreement on production targets for the first time in at least 20 years and U.S. crude inventories fell more than analysts forecast.

Futures gained as much as 0.7 percent after climbing 1.7 percent yesterday. The Organization of Petroleum Exporting Countries will maintain its current output for now, said Mohammad Aliabadi, the acting Iranian oil minister and OPEC president. A Gulf delegate said June 7 that the group would increase production targets. A U.S. government report showed crude supplies dropped the most since December.

"You may start to see higher oil prices as the question mark over future supply grows larger," said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicted oil will average $113 a barrel in the third quarter. "There is now some question arising as to how willing OPEC is to step in and fill the breach."

Crude for July delivery rose as much as 73 cents to $101.47 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.46 at 11:12 a.m. Sydney time. The contract yesterday climbed $1.65 to $100.74, the highest settlement since May 31. Prices are up 36 percent the past year.

Brent crude oil for July delivery was at $118.16 a barrel, up 31 cents, on the London-based ICE Futures Europe exchange. The contract yesterday climbed $1.07, or 0.9 percent, to $117.85. It was the highest settlement since May 4.

Proposed Increase

The European benchmark contract traded at a premium of $16.73 a barrel to U.S. futures today. The difference between front-month contracts in London and New York reached a record $19.54 on Feb. 21. It averaged 76 cents last year.

Saudi Arabia, OPEC's biggest producer, Kuwait, Qatar and the United Arab Emirates were ready to supply more oil to the market, according to Saudi Arabian Oil Minister Ali Al-Naimi. The four nations proposed a 1.5 million barrel-a-day increase from the current 28.8 million, he said.

Libya, Angola, Ecuador, Algeria, Iran and Venezuela were opposed to higher limits, according to Naimi. Iraq is exempt from the targets. The 11 members subject to quotas produced 26.22 million barrels a day last month, 1.375 million more than pledged, according to Bloomberg News estimates.

IEA 'Disappointed'

OPEC's failure to agree shows that some members have limited spare capacity, JPMorgan Chase & Co. analysts including Lawrence Eagles wrote in a note yesterday. It will be a "stretch" for Saudi Arabia alone to add the 1.9 million barrels a day needed to meet the 30.87 million barrels in third- quarter demand OPEC forecasts for its oil, the analysts said.

The International Energy Agency is disappointed that OPEC failed to agree on an increase in output, it said in an e-mailed statement. "Ongoing supply disruptions, as well as the fragile state of the global economy, call for a prompt increase in supply," the Paris-based group said.

Brent has advanced 24 percent this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and spread to Libya. The fighting in Libya has removed about 1.5 million barrels a day of output from market.

U.S. crude stockpiles decreased 4.85 million barrels to 369 million last week, the biggest decline this year, according to the Energy Department. A 1.38 million-barrel drop was forecast, according to the median of responses in a Bloomberg News survey of 14 analysts.

Gasoline supplies climbed 2.21 million barrels to 214.5 million, according to the Energy Department. They were forecast to rise 1.1 million barrels, the Bloomberg News survey shows.

Global oil demand will climb to 89.18 million barrels a day during the third quarter, the highest level of 2011, the U.S. Energy Department said June 7.

Prices declined for options betting on lower oil. The most- active contract yesterday was the July $95 put, which fell 30 cents to 38 cents. The most-active call option, a bet that prices will rise, was the July $105 call, which climbed 10 cents to 41 cents.

--Editors: Paul Gordon, Jane, Ching Shen Lee

Lightning strike sends 77 Camp Shelby cadets to hospital - WLOX-TV and WLOX.com - The News for South Mississippi

CAMP SHELBY, MS (WLOX) -

Camp Shelby is sending 77 Air Force Cadet personnel to local hospitals in the Hattiesburg area for medical evaluation after being in the area of a lighting strike.

The strike happened at a training site on Camp Shelby around 2 p.m. There were four personnel in a closer vicinity of the lighting strike.

Camp Shelby officials said all personnel are responsive and in stable condition. They're being taken to hospitals for further medical evaluation.

Watch for more on this breaking story later today on WLOX.com and WLOX News.

77 Air Force Personnel Sent To Hospital In Mississippi

Camp Shelby Joint Forces Training Center is currently sending 77 Air Force Cadet personnel to local hospitals in the Hattiesburg area for medical evaluation after being in the area of a lighting strike at a training site

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OPEC Talks Break Down, No Deal to Lift Oil Supply - CNBC

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Fitch may cut U.S. to restricted default in August | Reuters