Inside Oil - Wednesday December 21 2011

WEDNESDAY, DECEMBER 21, 2011  To download the full report (PDF document) please click here       SPECIAL PDF REPORT - THREAT OF IRAN SANCTIONS WORRIES OIL MARKET Iran aims to sell its biggest Asian customers oil at higher prices and on tougher terms, even as it faces the prospect of fewer sales as Western nations mull sanctioning the economic lifeline of the world's fifth largest crude exporter.  For Reuters reports on the meet, click here     COLUMN:   Money the driver in Asia response to Iran oil: Clyde Russell --Clyde Russell is a Reuters market analyst. The views expressed are his own.--  SINGAPORE, Dec 20 (Reuters) - It's often tempting to view the machinations of global oil markets through the prism of politics, ascribing actions to the strategic interests of the various states, but it's far more likely money is the driver.  That's not to say politics doesn't have an influence, witness the latest attempts by the United States and Europe to pressure Iran into giving up its nuclear ambitions.     MARKET NEWS:   Oil up on supportive economic data, supply worry NEW YORK, Dec 20 (Reuters) - Oil prices rose onTuesday, posting the biggest percentage rise since October, on supportive economic data that also lifted the euro and equities, coupled with worries about potential supply disruptions in Iran and Kazakhstan.  "The biggest driver behind today's oil rally, in our view, was the revived 'risk on' trade that featured a dramatic 300 point advance in the Dow Jones Industrials index and a pop in the euro," Jim Ritterbusch, president at Ritterbusch & Associates, said in a note that also cited the potential threats to supply.  NYMEX-Natural gas ends up, first time in 5 sessions       NEW YORK, Dec 20 (Reuters) - Front-month U.S. natural gas futures on Tuesday ended higher for the first time in five sessions, backed by technical buying after recent losses despite concerns about record high supplies and fairly mild December forecasts.  "The market has dropped sharply over the last couple of weeks and was due for a technical bounce, but with industrial demand typically slower during the holidays and no weather demand, it doesn't bode well for prices," a Pennsylvania-based trader said.  COMMODITIES-Oil, other markets rally on positive data NEW YORK, Dec 20 (Reuters) - Oil saw its biggest rally in nearly two months and prices from copper to cocoa jumped as well on Tuesday, after positive U.S. and German economic data enticed investors back into commodities.  "It's entirely to do with confidence," David Wilson, commodities analyst at Citigroup in London, said, explaining the latest rebound. "Anything that looks slightly positive generally causes a short covering rally."  GLOBAL MARKETS-Stocks, euro up on upbeat data, firm Spanish auction TOKYO, Dec 21 (Reuters) - Asian stocks and the euro rose on Wednesday after upbeat U.S. and German data and strong demand for Spanish debt, with investors' focus turning to a European Central Bank's tender as a gauge for euro zone funding strains.     "A significant uptake is all but guaranteed and that's something that could continue this 'risk-on' (mood)", said Robert Rennie, chief currency strategist at Westpac in Sydney.    Japan Nov crude oil import volume down 8.9 pct TOKYO, Dec 21 (Reuters) - The volume of Japan's customs-cleared crude oil imports fell 8.9 percent in November from the same month a year earlier, the Ministry of Finance said on Wednesday.  Japan, the world's third-biggest oil consumer, imported 17.158 million kilolitres (3.60 million barrels per day) of crude oil last month, the preliminary data showed.   US crude stocks drop sharply as imports fall -API NEW YORK, Dec 20 (Reuters) - - U.S. crude oil inventories fell heavily last week as imports fell and refiners drew down stocks for end of year tax purposes, according to weekly inventory data from the American Petroleum Institute released on Tuesday.   U.S. crude stockpiles fell 4.6 million barrels in the week to Dec. 16, more than analysts' expectations for a 2.3 million barrel fall. Crude stocks fell most in PADD 3, the Gulf Coast, dipping by almost 4 million barrels.   Cuba offshore oil rig set to arrive in Trinidad MIAMI, Dec 20 (Reuters) - A Chinese-built drilling rig that will be used in Cuba's new push into offshore oil exploration is set to arrive in Trinidad and Tobago in the coming days where it will be inspected by officials, the U.S. Coast Guard said on Tuesday.  Communist-ruled Cuba hopes the oil project, which is slated to begin next year, can breathe new life into its troubled economy. But it has aroused opposition in neighboring Florida, a Cuban exile stronghold, where officials worry any drilling for oil poses environmental risks.  Magellan, Copano to build Eagle Ford condensate line NEW YORK, Dec 20 (Reuters) - Magellan Midstream Partners  said on Tuesday it entered into a joint-venture agreement with Copano Energy  to deliver condensates from the Eagle Ford shale prospect in south Texas to Magellan's Corpus Christi, Texas, terminal.  Under the 50-50 joint-venture agreement, dubbed Double Eagle Pipeline LLC, the two companies will build a new 140-mile (225.3 km) pipeline that will connect to Copano's existing 50-mile line and deliver 100,000 barrels per day of condesantes to Corpus Christi by the first quarter of 2013.   Petrobras, Vale mull joint oil, mineral venture RIO DE JANEIRO, Dec 20 (Reuters) - Brazilian energy giant Petrobras  is considering a joint venture to exploit oil and fertilizer deposits in the country's northeast with miner Vale , Petrobras's head said on Tuesday.  Vale's fertilizer arm, Vale Fertilizantes, mines potash at a site in Sergipe neighboring an on-land oil and gas field belonging to Petrobras. Vale, Brazil's second-biggest company, has been in talks with Petrobras this year about extending its mining inside the limits of the area belonging to the oil firm.  Chevron reports flaring at Richmond refinery Dec 20 (Reuters) - Chevron Corp  reported flaring and the release of sulfur dioxide at its 245,271-barrels-per-day refinery in Richmond, California, in a filing with state regulators on Tuesday.    Chevron told California pollution regulators that the flaring was due to a plant upset, according to the Contra Costa County Health Department.  Total expects to see pre-war Libya oil output soon TRIPOLI, Dec 20 (Reuters) - Total  expects its oil production in Libya to return to pre-war levels as soon as next month, a company executive told Reuters on Tuesday as the oil major and other French companies campaigned for new business in the war-torn country.  "We have been at normal levels of production offshore since Sept. 23, and our field onshore will now restart. We should be back to our usual level (of output) very quickly, at the least in January," said Bernard Avignon, Total's head of exploration and production (E&P) in Libya.  Petrobras Dec. gasoline imports hit record RIO DE JANEIRO, Dec 20 (Reuters) - Brazil's state-controlled energy company Petrobras  is importing gasoline at a record 100,000 barrels per day, Supply Director Paulo Roberto Costa said on Tuesday, as car ownership increases and after a statutory biofuel blend was reduced.  Those imports equate to nearly a fourth of the 449,000 barrels of gasoline Brazil consumes daily and reflect a demand spike that occurred after the government cut gasoline's biofuel content from 25 percent to 20 percent from Oct. 1.   BEYOND THE HEADLINES:   Amerisur confident on targets, eyes expansion LONDON, Dec 20 (Reuters) - Amerisur Resources  is confident of lifting its Colombian oil production more than tenfold by the end of 2012, generating cash to fund expansion elsewhere in South America, the oil firm's chairman said in an interview.  Amerisur is on track to start drilling the first well in a planned nine well programme at its Platanillo block in southern Colombia early next year, which it believes will boost production to 5,000 barrels of oil per day (bopd) from the current level of around 400 bopd.  China shows no qualms over price of Iran oil showdown BEIJING/SINGAPORE, Dec 20 (Reuters) - China has made an audacious move to force Iran to sell it cheaper crude, disrupting the flow of over 10 percent of the Islamic Republic's exports by cutting January imports in half.  In contrast to other top Asian buyers worried about what sanctions mean for crude flows from the world's fifth-largest exporter, China has shown no public qualms about the risk that a disruption will drive up the cost of oil.       EVENTS TO WATCH TODAY (GMT)   Japan PAJ weekly oil inventory data Weekly (0300)   Japan BOJ rate decision Dec (0330)   Italy GDP prelim yy (0900)   U.S. Exist. home sales % chg Nov (1500)   U.S. Existing home sales Nov (1500)    U.S. EIA petroleum stocks Weekly (1530)   EZ Euroilstock refinery output Nov (1700)   MORE INFORMATION   Learn more about our products and services for Commodities Professionals click here Contact Thomson Reuters click here To subscribe to this and other Commodities News Briefs click here  Join our market Forums. 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