All of the PowerShares DB Crude Oil ETNs are based on a total return version of the Deutsche Bank Liquid Commodity Index-Oil (the "Index") which is designed to reflect the performance of certain crude oil futures contracts plus the returns from investing in 3 month United States Treasury bills. The Long ETN is based on the Optimum Yield™ version of the Index and the Short and Double Short ETNs are based on the standard version of the Index. The Optimum Yield™ version of the index attempts to minimize the negative effects of contango and maximize the positive effects of backwardation by applying flexible roll rules to pick a new futures contract when a contract expires. The standard version of the index, which does not attempt to minimize the negative effects of contango and maximize the positive effects of backwardation, uses static roll rules that dictate that an expiring futures contract must be replaced with a contract having a pre-defined expiration date.
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Democratic Senator Bob Menendez, the Chairman of the Senate Foreign Relations Committee, said the panel will look to tighten sanctions on Iran this week.
Menendez made his comments yesterday, after talks between the P5+1 world powers and the Persian nation over the latter's nuclear program stalled over the weekend.
Menendez's aim is prevent the U.S. from making too many concessions too quickly, with his stance reflecting widespread Congressional skepticism about the deal that was under discussion. Israel has also continued its criticism of the proposals.
WTI crude is -0.1% at $94.48, while Brent is +0.2% at $105.27.
High-level ministerial talks between Iran and the P5+1 world powers over the Persian nation's nuclear activities have ended without a preliminary agreement in which the country would curb its program in a return for an easing of sanctions. France objected that the proposals didn't do enough to limit Iran's program.
Of particular concern is a heavy-water reactor that Iran has been building in Arak and which would produce plutonium.
However, the sides believe they've made enough progress to hold another round and they'll go at it again in ten days, although not at the ministerial level.
Analysts had said that oil prices could plunge if an agreement were to have been reached this weekend, as seemed possible on Friday.
ClearView Partners' Kevin Book predicts Brent crude oil futures could fall as much as $12/bbl if a deal is reached to remove sanctions, which have kept ~1M bbl/day of Iranian crude out of the world market.
While a deal looks promising, the politics remain tricky; giving Iran some relief on sanctions in return for a halt to its nuclear program isn't popular in Congress or with allies including Israel.
Iran and the P5+1 world powers are close to an agreement in which the Persian nation would halt the most advanced elements of its nuclear program, including the production of weapons-grade fuel, in return for a limited easing of the sanctions that have badly hurt its economy.
The deal, which could be announced today, won't at this stage include a lowering of banking and oil sanctions, although the international negotiators could allow Iran to access $50B in crude export revenue that has been frozen in European and Asian banks.
Israel is opposed to the agreement, as are some U.S. legislators, with a Senate committee continuing to prepare a set of tough new sanctions despite the progress of talks.
WTI is flat at $94.24 a barrel, while Brent is also little changed at $103.46.
Easier monetary policy from the ECB is doing little for the commodity sector as it's being more than offset by the big Q3 GDP number in the U.S. (never mind the number will undergo a number or revisions, and we're already nearly halfway through Q4).
Gold is off 1% to $1,303 and WTI crude oil continues to provide its own easier policy, slumping 0.7% to $94.15. In the Philadelphia area at least, drivers are about ready to see a "2 handle" at the pump (UGA) for the first time in a while.
The Permian remains the largest U.S. oil producer, with output averaging ~1.3M bbl/day and rising, but it's also the most expensive U.S. shale formation in which to drill - meaning the boom could become a bust if crude moves near $70/bbl, as some analysts predict.
If oil drops to $80, wells in some parts of the Permian will become money-losers; wells drilled in the Cline Shale and Northern Mississippian Lime layers of the Permian need $96 oil to break even.
The API late yesterday reported a 3M barrel build in domestic supplies, a number the EIA is expected to confirm in its own report at 10:30 ET.
WTI crude (USO) is off 1.9% to $96.48, the lowest price since late June. Brent crude (BNO) isn't off nearly as much and the spread between the two has widened to a 6-month high of about $12 per barrel.
Behind the stock build and lower U.S. prices could be refinery maintenance shutdowns. Fewer runs mean lower demand for crude, but also mean less product - gasoline and distillate supplies are both expected to print lower in the EIA report.
It's the first time below the century mark for U.S.crude since July and is at least partly being blamed on dull demand thanks to refinery maintenance work. At the same time, domestic output is surging thanks to shale production.
November crude is off nearly $1 this morning and more than $10 since Labor Day to $99.85 per barrel.
AAA's daily report has national regular gasoline prices down to $3.349 per gallon vs. $3.486 a month ago and $3.676 a year ago.
Saudi Arabia, Kuwait, the United Arab Emirates and Qatar produced record amounts of oil on aggregate in each of the last three months as they offset problems with supplies from Iran, Libya and Nigeria.
The Gulf states produced 16.4M barrels a day in Q3, which is worth over $150B when prices are above $100 a barrel.
"Despite the (U.S.) shale revolution, the Middle East is and will remain the heart of the global oil industry for some time to come," says Fatih Birol, the International Energy Agency's chief economist.
The U.S. purchases almost 60M barrels a month from the Gulf even though American production has soared.
The Energy Information Administration will suspend the weekly publication of the Petroleum Status Report, which comes out on Wednesdays, after furloughing staff on Friday because of the government shutdown.
With its crude oil and gasoline data, the report is key for traders, who will now have to rely on commercial studies from organizations such as the American Petroleum Institute. The problem is that the API report is incomplete, while paying subscribers receive it earlier than everybody else.
The EIA will also presumably suspend its natural gas inventory report, a study that is released on Thursdays.
The move lower — which happened in the space of 2 minutes and sent the yellow metal to a three-month low — is being blamed on a market order to sell 5K gold futures contracts, Nanex tells CNBC.
"About 2,700 went off and tripped the stop logic, halting gold futures for 10 seconds while liquidity replenished. When enough liquidity returned (after 10 seconds), the balance of about 2,300 completed," Nanex remarked.
The move appears to have affected silver, platinum, and even oil.
Non-OPEC supplies are expected to increase by a near-record 1.7M barrels per day to 56.4m next year, says the IEA in its monthly report. In addition to the big supply number, the IEA also slightly trimmed its world demand estimate - now seeing an increase of 1.1M barrels to 92M barrels per day.
"If the IEA picture on the supply side is correct, there is a real risk that Brent prices (BNO) will drop below $100 a barrel during 2014," says analyst Hannes Loacker.
WTI crude -1.3% to $101.64. Brent -0.3% to $111.45.
The head of the Supreme Security Committee for Tripoli says the group, called the Libya Revolutionaries Operations Room, took Zaidan based on false information that an arrest warrant had been issued for him.
Zaidan's kidnapping highlights the difficulty that Libya has had in restoring law and order since the fall of Muammar Gaddafi in 2011.
Nymex crude oil is +0.4% to $102.04, Brent is +0.7% to $109.75.
Major energy companies with interests in Libya, which has Africa's largest proven oil reserves, include Marathon Oil (MRO), Hess (HES), ConocoPhillips (COP), Eni (E), Shell (RDS.A, RDS.B), Exxon (XOM), Repsol (REPYY.PK), Total (TOT) and Apache (APA).
As Gulf coast states prepare for the advance of tropical storm Karen, BP says it is shutting in all of its oil and natural gas production in the deepwater Gulf of Mexico, and Anadarko (APC) says it has removed all workers and shut in all production at its eastern Gulf facilities.
Last year, BP produced 214K bbl/day from the Gulf, making it the largest producer in the region.
Shell (RDS.A, RDS.B), Exxon (XOM), Chevron (CVX), Marathon Oil (MRO) and Murphy Oil (MUR) are all removing non-essential workers from their offshore facilities.
Seven major refineries with a combined capacity of 1.8M bbl/day - ~10% of the U.S. total - are in Karen's path; Phillips 66 (PSX) and Valero (VLO) say they're continuing to monitor the storm's progress.
Crude oil price gains remain subdued, as WTI +0.2% to $103.50/bbl and Brent +0.1% to $109.07.
Oil prices are up only modestly, as WTI +0.7% to $104.01/bbl and Brent +0.6% to $109.63; prices have been pulled down by the U.S. government shutdown, declining geopolitical risks and positive inventory data released earlier this week, but the storm is helping oil prices find support.