Oil Trades Near Six-Month Low on Rising Stockpiles, Iran Talks

Sept. 20 -- Crude oil traded near a six-month low in New York after plunging yesterday on signs rising fuel stockpiles and protracted negotiations over Iran's nuclear program have prompted investment funds to cut their holdings. Oil posted its biggest fall in four months after U.S. President George W. Bush said he will give European diplomacy a chance to end the dispute with Iran, the world's fourth-biggest oil producer. A government report later today will probably show U.S. fuel stockpiles, already above average, extended their gains of the past month. ``The mentality of the market has changed,'' said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California. ``We've got rising stockpiles, the summer driving season is over'' and worries about Iran are ``falling by the wayside.'' Crude oil for October delivery was at $61.74 a barrel, up 8 cents, in after-hours electronic trading on the New York Mercantile Exchange at 8:35 a.m. in Singapore. The contract, which expires today, fell $2.14, or 3.4 percent, to $61.66 a barrel yesterday, the lowest close since March 21 and the biggest one-day decline since May 15. The more actively traded November contract was at $62.24, up 7 cents, in after-hours trading, after falling 3.7 percent yesterday. Oil futures reached a record $78.40 a barrel on July 14. Prices have fallen 21 percent the past two months as U.S. stockpiles rose and the United Nation's Aug. 31 deadline for Iran to stop uranium enrichment passed without sanctions being imposed.

French Initiative

French President Jacques Chirac yesterday proposed the suspension of plans for sanctions against Iran if the Islamic republic also suspended its enrichment during negotiations. The U.S. agrees with the French strategy and will ``come to the table,'' once Iran has suspended its enrichment, Bush said yesterday. The U.S. has ``no objection'' to Iran's pursuing of a truly peaceful nuclear power program, he said. ``The Bush speech was tame relative to what a lot of us expected,'' Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York, said yesterday. He ``appears to have moved to the European position.'' Hedge funds may also be selling futures after seeing others lose money in the energy market and as the pace of the decline in oil has accelerated, analysts and traders said. ``We can't know that for sure but I think some of that probably is happening,'' Excel's Waggoner said. ``The trend is now down and you go with the trend.''

Amaranth

Amaranth Advisors LLC, a hedge-fund manager overseeing about $9.5 billion, told investors Sept. 18 that its two main funds fell an estimated 50 percent this month because of a plunge in natural-gas prices. ``The Amaranth debacle has spread to other markets to an extent,'' Aaron Kildow, a broker at Prudential Financial Derivatives LLC in New York, said yesterday. Hedge-fund managers and other large speculators have cut their bets on rising oil prices for each of the past four weeks, according to the Commodity Futures Trading Commission. Net long positions, the difference between bets on rising prices and bets on falling prices, fell by 22 percent to 37,020 contracts in the week ended Sept. 15. Short positions rose to their highest since March 14. ``These funds can go short as quickly as they went long,'' Jason Schenker, an economist with Wachovia Corp. in Charlotte, North Carolina, said yesterday. ``I think the most important thing at the moment is how lush product inventories are.''

Stockpiles

An Energy Department report today will probably show U.S. supplies of distillates, including diesel and heating oil, rose by 1.8 million barrels last week, their sixth straight gain, based on the median estimate from a News agency survey of 16 analysts. Inventories held 144.6 million barrels the week before, 12 percent more than the five-year average for the period. Gasoline supplies probably rose for a fifth week, gaining 650,000 barrels according to analyst survey. Inventories held 207 million barrels on Sept. 8, 3.8 percent higher than the five-year average. Gasoline for October delivery was at $1.5090 a gallon in after-hours trading, after falling 4.8 percent to $1.5038 yesterday, the lowest close since Feb. 22. October heating oil was at $1.6980 a gallon, after falling 2 percent to $1.6916 yesterday, the lowest close since March 10. [From Internet]

Best wishes,

Suman Mukherjee

India.

Note: The effect of the Coup in Thailand is expected to have least NEGATIVE EFFECTS on the Asian Markets, as happened in the 1990s. This is because the last( outgoing government) was a vanguard of reforms but very corrupt--as it gave favours to the Prime Minister's family and near ones. This coup has been welcomed by a lot of reformists in Thailand and hope it will make Thailand more Strong, more Vibrant, Less corrupt, more Open and more Resilient. The last Prime minister took a number of initiatives to counter the rise of China as a Major Economic Power in Asia i.e. it was matching Chinese competition in all sphere in a more effective way...But the temporary uncertainty will remain and this is pulling down the Asian Markets--the stock markets world-wide do not like uncertainty.