By 1306 GMT, the pan-European FTSEurofirst 300 <.FTEU3> index of top shares was down 0.4 percent at 884.79 points after trading between 879.97 and 888.23 points.

“Morgan Stanley’s operating loss per share looks on the high side, compared to others in the sector. I think Morgan Stanley’s paying back public aid has distorted results; it is not known if this has been incorporated into analysts’ expectations of the results,” said Heino Ruland, strategist at Ruland Research.

Bank shares took the most off the index after Morgan Stanley reported its third consecutive quarterly loss and Wells Fargo reported rising credit losses.

“The continuing decline in asset quality is a worry, and whilst they are making money in other areas it just goes to show that conditions in the consumer segment are still evidencing headwinds,” said Paul Chesterton, senior sales trader at CMC Markets.

Barclays , BNP Paribas , UBS and Lloyds Banking Group were down 1.5-3.8 percent.

Miners were also heading lower. BHP Billiton fell 2.8 percent after the world’s largest miner reported a 10 percent fall in iron ore output to 27.048 million tonnes after its operations were hit by mining fatalities and flooding in Australia.

Energy stocks were down as crude slipped 1.5 percent. BP , Royal Dutch Shell , Premier Oil and Total were 0.8-2.8 percent weaker.

On the upside, drug makers added most points to the index. GlaxoSmithKline gained 0.3 percent after it beat expectations with its second-quarter earnings and said momentum in the second half would pick up on the back of flu vaccine sales.

Across Europe, the FTSE 100 <.FTSE> index was down 0.3 percent, Germany’s DAX <.GDAXI> was down 0.4 percent, and France’s CAC 40 <.FCHI> was down 0.8 percent.

July 22 (Reuters)

Oil rose towards $71 a barrel on Friday after Nigerian rebels said they blew up a wellhead in a Royal Dutch Shell oilfield and as equity markets rallied on perceptions the global recession was easing.

The move followed a 2 percent gain on Thursday and put oil on course for a 7 percent gain this week, buoyed by prospects for an economic recovery that has lifted prices from below $40 over the past four months.

The release of the June consumer sentiment index by the Reuters/University of Michigan Surveys of Consumers later on Friday was expected to reflect a mildly improving outlook for the U.S. economy, auguring well for ailing world energy demand.

U.S. first-quarter gross domestic product shrank less than estimated, suggesting the downturn was easing.

By 1110 GMT, benchmark August U.S. crude oil was up 50 cents per barrel at $70.73, having hit a high of $71.29, up $1.06. London Brent rose 46 cents to $70.24.

Nigeria’s Movement for the Emancipation of the Niger Delta (MEND) said it attacked the wellhead in the Afremo oilfield because the military had gone on a “punitive expedition” in Delta state shortly after President Umaru Yar’Adua announced an amnesty offer for rebels.

SHUT IN PRODUCTION

The military denied carrying out any such campaign.

Shell said it was investigating reports of an attack on its Afremo platform B facility, which had already been shut down following an attack on the Trans Escravos pipeline in February.

Afremo was one of the sites MEND also said it had attacked in a triple raid on Sunday. It described the field as being 14 miles from an export terminal through which crude oil from Shell’s Forcados fields is pumped.

Pipeline bombings, attacks on oil and gas installations and the kidnapping of industry workers over the past three years have prevented Nigeria from pumping much above two thirds of its installed oil output capacity of 3 million barrels per day.

The intensity of recent attacks in Nigeria have taken the oil market by surprise and tightened West African oil supplies.

“Attacks by the MEND have forced foreign oil companies to shut at least 133,000 barrels per day of Nigerian production in the last month,” MF Global said in its daily note to clients.

Iranian tension has also supported oil. About 20 people have died in protests after Iran’s June 12 presidential election, the most serious unrest since the 1979 Islamic revolution.

Fuelling oil’s rise, Exxon Mobil said its huge Baytown refinery suffered an operational glitch that triggered flaring, sparking worries the largest U.S. oil refinery could tighten gasoline stockpiles during this summer’s peak demand driving season.

Firmer Asian stocks on the back of Wall Street’s rally also lent support, with shares outside Japan climbing 1.4 percent and Japan’s Nikkei up 0.8 percent.

European shares advanced in early trade.

A further boost came from a fall in the dollar against most major currencies on Friday as investors shifted funds back into risky assets after the Federal Reserve this week appeared to confirm it would keep interest rates low for a while.

The Reuters/University of Michigan final June consumer sentiment index, due at 1355 GMT, is expected to show a reading of 69.0 compared with 68.7 in the May report, a Reuters poll of economists showed.

LONDON, June 26 (Reuters)

U.S. gasoline stocks rose by 3.9 million barrels in the week to June 19, well above analysts’ forecasts, as refiners cranked up output in the midst of the summer driving season.

Distillate stocks hit 10-year highs, while crude stocks showed a steep drop.

U.S. crude traded down 55 cents to $68.69 per barrel at 2:00 p.m. EDT (1800 GMT), reversing earlier gains. London Brent crude fell 49 cents to $68.31 a barrel.

“Crude futures are back down on the weight of a stronger dollar,” said Mark Waggoner, Excel Futures President from Huntington Beach, California. “The EIA inventory report also showed large increases in gasoline and distillate stocks and that’s dragging down crude.”

The U.S. dollar rose broadly and jumped against the Swiss franc as traders reported the Swiss National Bank was intervening in the market by selling the currency for dollars and euros. The rising dollar can pressure commodities denominated in the greenback.

Optimism over a potential economic recovery boosting flagging fuel demand has lifted oil prices from below $40 a barrel.

However, crude imports by No. 3 consumer Japan fell by 18.8 percent in May against last year, according to government data. EIA data showed total U.S. demand down 6.6 percent in the four weeks to June 19, compared with year-ago levels.

GEOPOLITICAL CONCERNS

Multiple militant attacks on pipelines and oil installations in OPEC member Nigeria recently have forced production stoppages at sites run by Agip , Chevron and Royal Dutch Shell , stoking supply concerns.

A senior official said Nigeria’s president will propose a 60-day amnesty program for militants in the Niger Delta on Thursday, in an effort to end years of attacks on Africa’s biggest oil and gas industry.

Traders were also keeping an eye on the worst civil unrest in 30 years in Iran, the world’s fifth-largest oil exporter, over a disputed presidential election.

Iran’s Supreme Leader Ayatollah Ali Khamenei declared on Wednesday that a disputed election result would stand.

NEW YORK, June 24 (Reuters)

U.S. crude rose 49 cents to $71.76 a barrel by 1515 GMT, having topped $72 earlier. London Brent crude gained 45 cents to $71.51 a barrel.

Nigeria’s main militant group MEND said Friday it had attacked a pipeline operated by Italy’s Agip , close on the heels of previous attacks on facilities operated by Royal Dutch Shell and Chevron . Together, the attacks have cut at least 133,000 barrels of daily output.

Rebels in Nigeria, the world’s seventh-largest oil exporter, have been carrying out attacks on the oil industry for years in what they claim is a struggle aimed at spreading the region’s energy wealth to the poor local communities.

Oil prices also got support from political turmoil in Iran, the world’s fifth largest exporter, in the wake of its presidential election.

“We will see support continue to come from Iran and Nigeria. There is no immediate supply threat from Iran but in Nigeria, (there) is an actual physical disruption,” oil analyst Olivier Jakob of Petromatrix said.

Analysts said gains on Wall Street, fed by optimism that the worst of the economic recession was over, encouraged commodity buying by brightening the outlook for demand.

Oil prices have nearly doubled since February on signs of a potential economic recovery but the pace of the rally has sparked concerns prices are not well supported by fundamentals.

Adding to optimism in oil markets, the U.S. Transportation Department said on Friday Americans drove more miles in April than they did a year earlier, marking the first monthly rise in U.S. highway travel in more than a year.

NEW YORK, June 19 (Reuters)

European shares hit a one-week trough on Thursday, led lower by banks, as poor corporate results and fresh signs of deteriorating global economic outlook overshadowed a compromise deal on a massive U.S. stimulus plan.

By 0949 GMT, the FTSEurofirst 300 index of top European shares was down 1.5 percent to 791.78 points after falling as low as 787.14. The index is down 4.8 percent this year after plunging 45 percent in 2008.

Banks were among the top fallers on the index, with Commerzbank falling 5.4 percent, Credit Agricole down 3.5 percent and Societe Generale declining 3.4 percent.

Energy shares were also under pressure as crude prices eased to trade below $36 a barrel — down 75 percent from a record high near $150 just seven months ago. BP , Royal Dutch Shell , Repsol and Tullow Oil shed between 0.3 and 1.3 percent.

Governments are using “historically strong medicines to try to revive a patient that is looking very weak at the moment and so far almost everything that has been used has failed to work,” said Henk Potts, strategist at Barclays Stockbrokers.

Investors hoped the measures would support in the long term, but there was a lot of nervousness before they saw the results of the U.S. government’s efforts on the economy, he added.

The pessimism over a compromise deal on a $789 billion U.S. package, which helped Wall Street shares to gain overnight, evaporated after investors scrutinised a raft of disappointing corporate results and macroeconomic data.

Figures showed Japanese wholesale prices dropped in the year to January, the first drop in five years, bringing the world’s second-largest economy closer to its second bout of deflation in a decade as the economy slipped deeper into recession.

Earnings results also hurt sentiment.

Swiss engineering group ABB posted an 88 percent fall in fourth-quarter net profit, oil major Total reported an 8 percent drop in profits due to lower oil prices and output, while banking group KBC booked a $3.4 billion loss due to writedowns.

RIO TINTO STAKE

“Asides from the stimulus package, the big news has been the large stake in Rio Tinto (RIO) being sold to Chinalco,” said Andrew Turnbull, senior sales manager at ODL Securities.

“The deal is said to be the largest overseas deal by the Chinese and really does show how desperate for cash Rio Tinto has become,” he said.

Rio Tinto will sell $12.3 billion in asset stakes to Chinalco and raise a further $7.2 billion by issuing China’s top aluminium maker convertible notes to cut debt, the global miner said. Rio shares were up 1.2 percent.

The negative market sentiment spread to other sectors such as mining, electricity, telecommunications and retail.

Miners, struggling due to falling prices and slowing demand of metals, fell again. BHP Billiton , Anglo American (AAL), Xstrata (AXTA) and Antofagasta (ANTO) fell between 0.8 percent and 3.3 percent.

Among electricity companies, Enel dropped 2 percent and Renewable Energy slipped 1.4 percent.

France’s EDF fell 7 percent after it posted a dip in 2008 core earnings, hit by a larger-than-expected 1.2 billion euro ($1.55 billion) charge related to French regulated tariffs.

Britain’s BT Group dropped more than 5 percent after its core earnings slumped 9 percent in the third quarter and pre-tax profits slumped 81 percent.

Among gainers, French carmaker Renault rose 5.9 percent after it dropped its once sacrosanct 2009 profit targets and said it would focus on cutting inventories this year.

Across Europe, the FTSE 100 index, Germany’s DAX and France’s CAC 40 were down 1.1-1.9 percent.

LONDON, Feb 12 (Reuters)

As prices have recently touched lows of $33.20 per barrel, inexpensive oil has caused severe problems for Venezuela’s Hugo Chavez and Iran’s President Mahmoud Ahmadinejad. Chavez just invited oil companies Chevron (NYSE: CVX), Royal Dutch Shell (NYSE: RDS.A) and Total S.A. (NYSE: TOT) back into the country. And Ahmadinejad is fighting re-election troubles caused by a government used to surpluses and excess cash.

Apparently inefficient state-run energy companies can’t squeeze out profits like the professionals. And when they aren’t screwing production up, Russia has proven that it can simultaneously show the world it’s a bully – in addition to cutting off it’s income stream.

And things certainly don’t seem to be getting any better for these three. OPEC just released its 2009 demand forecast that spells out a dismal outlook for the coming year. But it’s not just low demand.

Oil inventories are at all time highs, “contango” opportunities abound, and OPEC hasn’t cut production anywhere near to where it needs to be to level out prices. And even if it did, the “bad boys,” mentioned above, would still be pumping it out at full speed to meet their obligations.

Lets fact it, oil could be down for much longer than they expect.

Source: Oil – U.S. State Department’s Newest Ally

Exxon Mobil, the largest U.S. oil company, earned $14.8 billion, or $2.86 per share, a 58% increase from the $9.41 billion, or $1.70 per share it earned in the third quarter of 2007. Exxon Mobil’s record-setting profit was enough to beat analyst expectations of $2.38 a share, according FactSet Research data.

Exxon Mobil beat its own record for the largest quarterly profit for a U.S. company, which it had previously set in the second quarter of 2008 with a gain of $11.68 billion.

Royal Dutch Shell PLC (ADR: RDS.A, RDS.B) also announced third quarter earnings today, beating Bloomberg’s average analyst estimates. Europe’s largest oil company saw a 22% increase in profit to $8.45 billion from $6.9 billion in the same period the year prior.

During the quarter, oil averaged $118 per barrel. But crude prices have since slipped nearly $80 from a record high of more than $147 per barrel in July, which means Exxon Mobil’s string of record-setting profits could end in the fourth quarter.

While profits will likely dip in the near-term, analysts remain bullish on the long-term prospects of oil majors.

“The oil majors are coming all above expectations, which means they have resilient qualities,” Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh, told Bloomberg News. “They show the benefit of being an integrated company, and they have the flexibility to weather the storm.”

High oil prices helped the oil majors to beat Wall Street expectations, despite production declines during the quarter. Exxon Mobil’s production dropped 8.2% during the quarter, while Shell’s output slumped 6.6%.

“This is a good outcome but some investors will be disappointed by the sluggish production volumes,” Tony Shepard, an analyst at London-based broker Charles Stanley, told the International Herald Tribune, speaking of Shell’s results. “Given the fall in the oil price, an issue for all oil and gas companies is current levels of capital expenditure.”

Exxon Mobil reaffirmed its capital spending budget of $25 million over the next five years, regardless of the subsequent trend of oil prices. However, Shell announced it would delay moving forward with developing its Athabasca oil-sands project in Alberta, Canada due to increased costs.

Source: Exxon Mobil Posts Record $14.8 Billion Profit, Shell Tops Estimates

Violence has shut about 20% of Nigeria’s oil production since early 2006.

“The market is so concerned about supply that just about any headline can unnerve traders,” said Phil Flynn, of Alaron Trading. “Once prices began moving higher, there was a massive move to purchase futures.”

Also yesterday, the International Energy Agency said it will attend talks convened by Saudi Arabia on June 22 between producers and oil-consuming countries in an environment of record oil prices.

“We would welcome an opportunity to act collectively to reassure the market about future demand and supply balances in order to change the perception of extended tightness,” said IEA Executive Director Nobuo Tanaka.

Source:  Oil Rallies as Roller Coaster Continues - Nigeria Moves to Stabilize Production

Supplies fell further than expected, with a 4.56 million decline to 302.2 million barrels last week, the U.S. Energy Information Administration announced. At the same time, refineries operated at just 88.6% capacity, a decline of 1.1% from the week prior. Most analysts had expected a mean capacity increase of 0.3%, according to a
Bloomberg News survey.

“This move was sparked by the very bullish crude inventory number,” Daniel Flynn, a broker with Alaron Trading Corp. in Chicago, told Bloomberg. “Falling inventories make us vulnerable to disruptions. The cheap dollar is only adding fuel to the fire.”

The high cost of oil is dampening demand of already overstretched U.S. consumers. U.S. demand declined 1.3% in the four week ended June 6, the energy department said.

However, demand is rapidly increasing in emerging markets such as China, where oil imports shot up 25% last month from the same period a year ago. Imports to the Asian nation increased to 16.2 million metric tons in May, which is about 3.8 million barrels a day, the Beijing-based Customs General Administration of China announced on its Web site yesterday.

“The big crude draw is obviously bullish, but more importantly for the oil markets, the dollar is falling and that could send us back to near $140 a barrel,” Mark Waggoner, president of Excel Futures in Huntington Beach, Calif., told Reuters.

Other factors contributed to the price jump, as well. Nigeria continues to experience production problems due to attacks from the Movement for the Emancipation of the Niger Delta (MEND), which has made life particularly difficult for oil majors such as Royal Dutch Shell PLC (ADR: RDS.A, RDS.B) by bombing pipelines and kidnapping workers.

Russia, the world’s second-largest oil supplier, is also experiencing problems. At a presentation in London yesterday, BP PLC (ADR: BP) Chief Executive Officer Tony Hayward said Russian output would continue to fall without changes to the current tax policy of the Russian government.

“Russian authorities are responding” with fiscal regime changes, though it may take “a couple of years to reverse the current trend,” Hayward said.

High Oil, High Gas, Weak Economy

If oil stays near $140 per barrel, gas prices could easily top $4.75 a gallon by the Fourth of July holiday, Mark Zandi, chief economist at Moody’s Economy.com (MCO), said in a recent research note.

And while the thought of gas at almost $5 per gallon is distressing enough, Money Morning’s Investment Director Keith Fitz-Gerald thinks gas prices could go even higher. In fact, U.S. motorists could easily be looking at $7 a gallon gasoline within just two years. And that could have a disastrous impact on the U.S. economy.

“The bottom line is that the effect on the economy is going to be a lot worse than anyone’s talking about right now,” said Fitz-Gerald, a longtime energy bull who recently boosted his oil-price projection to $225 a barrel. “The bottom line is this: Until someone develops a truly [interchangeable] alternative for oil and gasoline – something that works the same, costs the same and is just as effective – Americans are just going to have to face the fact that over time they’re going to pay more.”

By fixating on near-term prices, and near-term fallout, Fitz-Gerald says that investors and economists alike are missing the bigger point: Long-term – or at least until a true replacement for oil is found – the U.S. economy is going to be badly stung, and U.S. consumers who don’t take steps to protect themselves are looking at a markedly reduced standard of living.

Moody’s Economy.com’s Mark Zandi agrees.

“Unless oil prices soon recede and Washington changes its views and acts to shore up the housing market and broader economy, the outlook for 2009 will weaken further in coming months,” Zandi said.

Zandi added that the U.S. Federal Reserve “will sacrifice near-term growth for the sake of stable prices and the economy’s longer-term prospects” and that the high cost of oil will prevent any further interest rate cuts.

But don’t look for gas prices to move up in a straight line to $5, $6 and $7 a gallon, Fitz-Gerald says. Prices will continue to fluctuate. There will be rallies, and retrenchments, as is the case with the price of any commodity.

But prices will rise, as there is still no truly “fungible” – interchangeable – replacement for petroleum. That’s what’s needed, Fitz-Gerald says.

In the interim, investors should: be “long” on oil and other commodities; have alternative-energy-related investments; and look for profit plays in ancillary sectors, Fitz-Gerald says.

Source: Oil Price Soars $5 on Reduced Supply, Gas Could Head Much Higher

Traders were clearly in a profit-taking mood yesterday, after crude soared by nearly 5% last week.

Oil is “getting heavy after last week,” said John Kilduff, of MF Global. “We saw parabolic action [last week] and signs that we may have made a top.”

The market shrugged off supply concerns. In early Tuesday in electronic trading, oil topped $133 a barrel after Royal Dutch Shell confirmed an attack on one of its pipelines claimed by a separatist group in the key Niger Delta. Shell said some production had been stopped to contain an oil spill.

Also ignored was a report that Iran’s exports fell by about 200,000 barrels per day, through the period ended May 20, with the National Iranian Oil company saying the phenomenon was seasonal and was to be made up later.

Source: Crude Retreats