Morning Petrospective – November 30, 2011

il prices were higher yesterday as a number of Fed governors and analysts brought up the topic of QE3, again, with a number of handicappers now saying that we should expect to see QE3 added to the mix by December 9^th. If that was not bullish enough, there were warnings from Teheran that any attack on its nuclear program would bring a retaliatory strike on Turkey’s Nato radar systems. Traders were also talking about the possibility of the European Central Bank (ECB) deciding to be the lender of last resort in Europe, which most observers seemed to feel would solve the issue once and for all.

Yesterday’s most visual source of market strength came from images of Iranian demonstrators burning the British embassy in Teheran. Students were reportedly the leading element in the violent demonstrations against British sanctions, but in any event of this nature, one has to assume that Iran’s Revolutionary Guard has had a hand. As it was, the students were members of the plainclothes militia Basij, which is a volunteer task force loyal to the Revolutionary Guards. The US and UK immediately condemned the storming of the compound and demanded that the Iranian government act “with the utmost urgency” to protect what is tantamount to British territory in Teheran. It was the biggest breach of a sovereign diplomatic compound in Iran since the 1979 storming of the US Embassy, which led to a hostage crisis lasting 444 days.

By Tuesday evening, Iranian security forces had secured the area around the compound. Iranian police reportedly used tear gas against the demonstrators and claim to have arrested several of the protestors.

Despite the official Iranian government position that it respects foreign embassies and the international rules protecting them, a number of conservative Iranian legislators said that the violent outbreak was in reaction to Britain’s long history of “meddling in Iran’s affairs.” As far as many Iranians are concerned, the latest round of international sanctions – which actually seem to have touched a nerve in Teheran – are attempts to interfere with Iran’s internal decisions to promote a peaceful nuclear power program. On Sunday, Iran’s parliament had voted to downgrade Britain’s diplomatic status to the level of a diplomatic attaché and evicted Britain’s ambassador.

We are not exactly sure on what level this is supposed to inspire Westerners to the conclusion that sanctions are wrong and Iran as a nuclear (energy) power would be a force for reason and moderation.

This week’s SpendingPulse figures on gasoline consumption were bearish longer-term.

The DJIA was up 32.62 to 11,555.63 yesterday, and that helped support higher oil prices.

FMX Newswire

FMX Newswire is an overnight news summary designed to meet the needs of professional energy traders. The content is to-the point, professional grade and not widely reported in the mainstream media. All sources are professional respected firms and newspapers.

Bloomberg

• Crude Rises in New York After Fed, Other Central Banks Reduce Swap Rates.
• Cairn’s 2011 Greenland Drilling Program Ends With Two Abandoned Wells.
• China, Japan Clash With EU Over Aviation CO2 Curbs at Summit.
• Group Five Forms Part of $1.1 Billion of Solar and Wind Plant-Build Bids.

Bentek Energy

• Supply/Demand Balance Analytic Report – US Demand Increases 4.7 Bcf/d From Higher Res/Comm Needs.
• Industrial End Users Analytic Report – Demand Sample Down for First Time in a Week.
• Power Burn Analytic Report – Southwest Power Burn Demand Remains Firmly Below Normal.
• Nuclear Plant Status Analytic Report – Exelon’s Clinton Station Trips During Refueling Shutdown.

Platts Oil

• NYMEX January natgas futures trading at $3.589/MMBtu, down 4.4 cents from Tuesday's $3.633/MMBtu settlement, as of 8:43 a.m. EST.
• Suezmax freight rates out of West Africa climb on shrinking tonnage.
• India's Chemoil Adani to start bunker fuel supplies at Goa from Jan.
• EU single energy market not possible by 2014, according to Supergrid chief.

Technical Recap

Crude Options Report / Straddle Runs

NG Options Report

Market Prices

Premium Subscriber (click here to register):

Volumes & Open Interest

End Of Day Straddles

Settlements

To view our energy news and articles on your PDA or mobile device, click here.