Inside Oil - Thursday January 05 2012

THURSDAY, JANUARY 05, 2012  To download the full report (PDF document) please click here     MARKET NEWS:   Oil gains a second day after EU reaches Iran sanctions agreement NEW YORK, Jan 4 (Reuters) - Brent crude rose for the second straight session Wednesday, closing at a seven-week high after the European Union reached a preliminary agreement to ban imports of Iranian crude, escalating tensions in the West's standoff with Tehran that has gripped oil markets for weeks.  "India, China and some other Asia countries may end up getting a reduced price on Iranian oil and that could be good for their economies, but European countries will have to find other sources," said Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut.   Natural gas gains 3 pct on cold, back over $3/mmBtu NEW YORK, Jan 4 (Reuters) - U.S. natural gas futures rose more than 3 percent on Wednesday, backed by short covering amid frigid weather in the Northeast and settling above $3 per million British thermal units for the first time in three sessions. "The weather has turned decidedly colder for a few days as an Arctic blast hits portions of the East Coast. This has resulted in acting as a floor in natural gas prices at the moment with a modest amount of short covering taking place," said Energy Management Institute's Dominick Chirichella.  Strong start to 2012 but Europe remains a worry NEW YORK, Jan 3 (Reuters) - Commodities began 2012 with a bang as a key market benchmark posted its largest gain in three months on Tuesday, but the unresolved European crisis and fears of last year's volatility continuing made analysts wonder if it was too early to rejoice.  "Funds are now investing again, taking a bit more risk after   a poor year" in 2011, said Peter Fertig, analyst at Europe's Quantitative Commodity Research. Shares, euro dip on Europe;French bond auction eyed TOKYO, Jan 5 (Reuters) - Asian shares and the euro eased on Thursday as concerns about the ability of euro zone countries to refinance their huge public debt dampened investor risk appetite ahead of a French bond auction later in the day.  "Europe still lacks a credible mechanism to rekindle growth, and without growth the crisis can only intensify," said Russell Jones, analyst at Westpac Bank.     China's CNPC says 2011 oil output rises to 107.5 mln T SHANGHAI, Jan 5 (Reuters) - China National Petroleum Corp (CNPC) produced 107.54 million tonnes of crude oil in 2011, up 2.13 million tonnes from the year before, the country's largest oil and gas producer said on its website on Thursday.  The company said its total oil and gas reserves had increased to more than 1 billion tonnes, without giving a specific number.  Chavez says Exxon should pay Venezuela damages CARACAS, Jan 4 (Reuters) - President Hugo Chavez on Wednesday scoffed at an arbitration ruling ordering Venezuela to compensate Exxon Mobil for nationalizing its assets, and said the U.S. oil giant should pay the OPEC nation for "robbing" the country.   An arbitration panel of the International Chamber of Commerce awarded Exxon  $908 million for claims linked to the 2007 takeover of the Cerro Negro heavy oil project following years of legal wrangling with the socialist government.  Suncor, others lift veil on pipeline support CALGARY, Alberta, Jan 4 (Reuters) - A quintet of Canada's largest oil sands producers has contributed money and signed shipping deals in support of Enbridge Inc's  Northern Gateway pipeline to the Pacific Coast, according to documents filed days before hearings into the contentious proposal are due to start.  Suncor Energy Inc , Cenovus Energy Inc , Nexen Inc , Total SA  and MEG Energy Corp  came forward on Wednesday for the first time with their interests in the C$5.5 billion ($5.42 billion) project in National Energy Board filings.  Ecuador plaintiffs to seek Chevron damages abroad QUITO, Jan 4 (Reuters) - Ecuadorean plaintiffs who won an $18 billion environmental case against Chevron Corp  will pursue legal action against the company overseas in a bid to collect the damages, their lawyer said on Wednesday.  An appeals court in the OPEC nation upheld a ruling on Tuesday that the U.S. oil giant should pay up, after a local judge found it guilty last February of polluting the Amazon jungle and damaging the plaintiffs' health. US crude stocks dip with imports on tax play Jan 4 (Reuters) -  U.S. commercial crude oil stockpiles likely dropped slightly last week on lower imports as refiners kept trimming stored supplies for year-end tax purposes, an expanded Reuters poll ahead of weekly industry and government reports showed on Wednesday.   Averaging views of eleven analysts surveyed, domestic crude oil inventories were forecast down 200,000 barrels.  HollyFrontier says plans Utah refinery expansion HOUSTON, Jan 4 (Reuters) - HollyFrontier Corp  announced on Wednesday a $225-million expansion project to add 14,000 barrels per day (bpd) in crude oil processing capacity at its 31,000 bpd Woods Cross, Utah, refinery by late 2014.  To provide oil for the expanded refinery, Holly signed a 10-year deal with Newfield Exploration Co  to supply 20,000 bpd of black- and yellow-wax crude from the nearby Uinta Basin.  Sudan to slap fees on oil flows from South Sudan KHARTOUM, Jan 4 (Reuters) - Sudan will impose monthly fees on crude oil flowing from the newly-independent south until the two nations reach an agreement on transport payments, Sudan's President Omar al-Bashir said on Wednesday, in a hardening of Sudan's position.  Bashir, addressing a delegation from the Sudanese parliament, said landlocked South Sudan was benefiting for now from an absence of mandatory transport fees but that its stance in talks showed it was not serious about reaching an agreement.  Obama faces political heat if Keystone rejected-API WASHINGTON, Jan 4 (Reuters) - The head of the top U.S. oil and gas lobbying group said on Wednesday that the Obama administration will face serious political consequences if it rejects a Canada-to-Texas oil sands pipeline that has been opposed by environmental groups.  Jack Gerard, president of the American Petroleum Institute, said TransCanada's  Keystone XL pipeline would definitely play a role in this year's national elections.     BEYOND THE HEADLINES:   EU agrees embargo on Iranian crude BRUSSELS/TEHRAN, Jan 4 (Reuters) - European governments have agreed in principle to ban imports of Iranian oil, EU diplomats said on Wednesday, dealing a blow to Tehran that crowns new Western sanctions months before an Iranian election.  The prospective embargo by the European Union, along with tough U.S. financial measures signed into law by President Barack Obama on New Year's Eve, form a concerted Western campaign to hold back Iran's nuclear programme.  Sinopec, Total pour $4.5 bln into U.S. shale Jan 3 (Reuters) - China's Sinopec  and France's Total SA  made major purchases in the U.S. energy sector on Tuesday, pouring $4.5 billion into deals to buy into booming production from shale rock formations.   The ventures showed that the global appetite for U.S. energy assets remained strong, with foreign oil and gas producers eager to invest in several of the mostly undeveloped fields that are believed to hold billions of cubic feet of natural gas and liquids.   Exxon to sell Tonen stake in retreat from Japan-sources TOKYO, Jan 4 (Reuters) - Exxon Mobil  plans to sell most of its 50 percent stake in Japanese refiner TonenGeneral Sekiyu KK  and unload other assets in Japan in a roughly $5 billion deal, sources with knowledge of the matter said.  The deal will mark a retreat from the world's third-largest economy by the U.S. oil giant, which is focusing its resources globally on exploration and production and shifting away from so-called downstream assets, such as its sales network in Japan.          EVENTS TO WATCH TODAY (GMT)   GERMANY RETAIL SALES YY REAL NOV (0700)   BRAZIL INDUSTRIAL OUTPUT YY NOV (1100)   U.S. EIA NATURAL GAS STOCKS WEEKLY (1530)   U.S. EIA PETROLEUM STOCKS   WEEKLY (1600)   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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