UPDATE 1-Ukraine May CPI to dip from April's 3.1 pct-minister

Reuters: [2008-05-17 17:34:00]

(adds quotes, details)

By Natalya Zinets

KIEV, May 17 (Reuters) - Ukraine's inflation rate will slow in May from April's 3.1 percent and the government will do everything it can to combat soaring prices, Economy Minister Bodan Danylyshyn told Reuters on Saturday.

His deputy, Iryna Kryuchkova, suggested price rises, which soared to just under 30 percent year-on-year last month, could even be negative in July and August given the prospect of a good harvest.

Fuelled by a record month-on-month rise of 3.8 percent in March, consumer price inflation has hit a cumulative 13.1 percent over the first four months of the year -- far exceeding a government target of 9.6 percent for the entire year.

"In May, it will be lower than it was in April," Danylyshyn said on the sidelines of an investment conference held in conjunction with the EBRD's annual meeting.

"And we will do everything so that it turns out that way."

Prime Minister Yulia Tymoshenko has said that price rises in the first two weeks of May stood at less than half the level recorded in the same period in April.

Officials attribute the steep increases to rises in food prices. Tymoshenko, who took office last December, also says she has inherited inflation patterns from the previous government and its pre-election increases in social benefits.

But a senior central bank official said steep rises in the price of gas imported from Russia and continued hikes towards a European market price had also impacted inflation. Ukraine now pays $179.5 per 1,000 cubic metres, from $50 in 2005.

Ihor Shumylo, director of executive director of economic issues at the central bank said he expected the gas price to rise by 50 percent in the coming years.

"Everyone knows that sooner or later Ukraine will have pay the European price," he told journalists.

Russia's gas export monopoly Gazprom <GAZP.MM> currently sells gas to its European customers at around $400. Prices fluctuate together with global prices for refined products with a lag of six to nine months.

Ukraine's inflation hit 16.6 percent throughout 2007 against 11.6 percent the pervious year. Consumer prices leapt in March, accelerating at their fastest pace since 1999. Between January and April year-on-year price growth reached 30.2 percent.

FOOD PRICES BLAMED

Prices began their rapid rise after a bad harvest last year, which boosted food costs -- 50-60 percent of the CPI basket.

Danylyshyn said the government was maintaining price controls to guard against "unjustified" increases. Other measures have included using Ukraine's state reserves of cheaper products to keep increases to a minimum.

With food prices accounting for 50-60 percent of the statistical consumer basket, the government believes a good harvest will bring down inflation figures.

"We have for the moment no reason to believe that we will have any problems with farm output. There is optimism about a good harvest," Kryuchkova said.

"This will affect food prices. We have had years with deflation in July and August and that may be the case this year. We have not ruled it out. It's in our forecasts."

But she said slow movement in extending credits to companies posed an even bigger threat to the economy.

"It is the stupor in routine credits to companies that is now slowing down normal economic development," she said. "It could be higher."

Kryuchkova said the growth forecast of 6.8 percent -- compared to 7.6 percent last year -- was unchanged.

"We will have the lowest GDP figures and the highest inflation figures in the first half. The situation can change in the second half," she said.

"I believe we will have some sort of stabilisation for several months and then growth rates will start moving up."

Experts polled by Reuters are less optimistic than the government in their forecasts -- predicting inflation of up to 21.6 percent for the year and growth of 6.0 percent. ((Kiev bureau; +380 44 244 9150; additional reporting by Sabina Zawadzki; writing by Ron Popeski; Editing by Nick Edwards; Reuters Messaging:ronald.popeski@reuters.com@reuters.net))

UPDATE 3-U.S. Energy Dept to stop adding oil to reserve

Reuters: [2008-05-16 22:40:00]

(Adds comment from senator, government selling oil)

By Tom Doggett

WASHINGTON, May 16 (Reuters) - The U.S. Energy Department said on Friday it will not add millions of barrels of oil to the Strategic Petroleum Reserve, a move sought by Congress to battle record fuel costs that in the end will likely have little impact on lowering prices.

The department's decision comes after Congress this week approved legislation ordering the Bush administration to stop putting oil into the emergency stockpile until crude prices fall below $75 per barrel, far lower than current levels.

On the New York Mercantile Exchange, crude oil for delivery in June hit a record high of near $128 on Friday.

Many energy analysts believe stopping the reserve's oil shipments will have little, if any, effect on lowering fuel costs.

Michael Greenberger, director of the Center for Health and Homeland Security at the University of Maryland, said the extra supplies may provide some short-term relief at the pump.

"In the long term, gasoline prices will soon continue their rapid rise because those prices have little relationship to supply/demand factors (and) are being manipulated upward by energy traders," he said.

Republican Sen. Kay Bailey Hutchison of Texas said the department's decision was encouraging. "This is a small step, but an important one," she said.

The oil stockpile is already 97 percent full, holding almost 703 million barrels of crude at four underground storage sites in Texas and Louisiana. The reserve was created by Congress after the 1973-74 Arab oil embargo to ensure the United States has a cushion of crude to handle major supply disruptions.

The department said it would not sign contracts with energy companies to deliver up to 13 million barrels of crude oil to the reserve.

It had received bids this week to exchange millions of barrels of oil that was turned over to the government as royalties for drilling on federal leases for better qualities of crude from firms that would have gone into the reserve.

Those contracts would have delivered oil to the reserve at a rate of 76,000 barrels a day from August through December.

Separately, the department said it would not go into the market this year and buy $584 million worth of oil for the stockpile if the legislation becomes law, as is expected.

Those oil purchases would have helped to replace some of the crude the government sold from the reserve to refineries after Hurricane Katrina disrupted supplies along the Gulf Coast and flooded New Orleans in late August 2005.

The department also said it will defer some 4.2 million barrels of oil scheduled to be delivered to the stockpile from late May through July, if the legislation becomes law. About 3.7 million barrels of oil is already in route this month to the stockpile and won't be stopped.

The White House has said it will not veto the legislation, though the Bush administration had fought against halting oil shipments to the stockpile.

Congress wants the oil earmarked for the reserve to instead be put in the market to help lower record oil and gasoline prices. The administration for months had rejected calls from lawmakers to stop oil deliveries to the stockpile, saying the volumes were too small to affect prices.

In a related matter, the Interior Department said on Friday it sold 16.1 million barrels of oil worth $1.9 billion to four energy companies, boosting available supplies in the market.

The crude came from companies that turned over to the government a portion of the oil they drilled on federal lands as royalties, instead of paying cash royalties. That oil will be delivered to the companies over 6 months starting July 1. (Additional reporting by Chris Baltimore; editing by Jim Marshall) ((tom.doggett@thomsonreuters.com; + 1 202 898-8320; Reuters Messaging: tom.doggett.reuters.com@reuters.net)) Keywords: USA OIL/STOCKPILE

Canadian spot gas falls before long weekend

Reuters: [2008-05-16 22:07:00]

CALGARY, Alberta, May 16 (Reuters) - Canadian spot natural gas prices fell for a second session on Friday amid prospects for middling demand this long weekend due to mild weather in most big markets.

Spot gas at the AECO storage hub in southeastern Alberta averaged C$9.45 a gigajoule, down 18 Canadian cents from Thursday. Deals were discussed in a range of C$9.48-C$9.80.

Most business was done through Monday, the Victoria Day holiday in Canada.

Alberta gas has drifted down 3 percent since Wednesday, when it hit 28-month high on fears of tight North American supplies due to a delay in the restart of a 1 billion cubic feet a day U.S. Gulf production platform.

The Independence Hub is expected to be back in service in the middle of next month, rather than this month.

Environment Canada called for above-normal temperatures in southern Alberta until Monday, when they will be slightly below average.

Toronto temperatures are forecast at a few degrees under the seasonal average through Tuesday, although not at values that would generate much heating demand.

The weather story is similar for the U.S. Midwest and Northeast, major markets for Canadian gas, according to AccuWeather.com.

Alberta's main pipeline system ran at 14.6 bcf, about 50 million cubic feet above the target set by operator TransCanada Corp <TRP.TO>. Producers delivered about 10.7 bcf to the pipeline network and players injected nearly 1.5 bcf into the province's storage facilities.

In futures, the New York Mercantile Exchange June contract fell 30 cents, or nearly 3 percent, to settle at $11.094 per million British thermal units, pressured by rising supplies, weaker cash prices and the fairly mild U.S. weather forecasts, traders said.

Canadian export prices were also lower. Spot gas at Niagara, Ontario, most of which is shipped to the U.S. Northeast, dropped 15 cents to average $11.84 per mmBtu.

In the West, spot gas at Huntingdon-Sumas on the British Columbia-Washington border fetched $10.38 an mmBtu, also down 15 cents.

($1=$1.00 Canadian)

AECO forwards: 05/16/08 05/15/08

Bal. May C$9.29-9.34 C$9.47-9.52

June C$9.40-9.45 C$9.78-9.83

Nov.'08-Oct.'09 C$9.44-9.49 C$9.53-9.58 (Reporting by Jeffrey Jones; editing by Rob Wilson) ((jeff.jones@thomsonreuters.com; +1 403 531 1624; Reuters Messaging: jeff.jones.reuters.com@reuters.net)) Keywords: MARKETS NATGAS CANADA

*TOP NEWS* Energy

Reuters: [2008-05-16 22:05:00]

For news and data, double-click on the codes in brackets. 
Access to some items may depend on subscription level. 
> European Power and Gas                            [TOP/ELE] 
............................................................... 
TOP STORIES 
> Oil hits record, Saudi hike fails to stem rally    [nSP206543] 
> U.S. Energy Dept to stop adding oil to reserve    [nN16420032] 
> Goldman sharply raises oil price forecast         [nL16867930] 
> Ecuador leader says OPEC should mull higher output[nN16108346] 
> Ecuador urges OPEC to up output for poor          [nN16420792] 
> Japan begins talks to expand gasoline exports to US [nT336841] 
> Complex climate treaty challenges experts         [nL16907194] 
BUSH IN SAUDI 
> Saudis slightly increase oil output as Bush visits[nN16383084] 
> Saudi oil min says meet any oil demand from custom[nDXB000257] 
> Saudi ready to pump more oil, sees no need-US aide[nL16181676] 
> U.S. says to help Saudi protect its oil           [nL16875089] 
TOTAL 
> Total shuts Dutch refinery diesel unit til June   [nL16656177] 
> Total CEO sees Saudi refinery project over $10 bln[nL16689400] 
> Total CEO says to use cash on new oil projects    [nL16581711] 
> Total CEO sees N.Sea field coming onstream soon   [nL16431289] 
MARKETS 
> NYMEX crude ends above $126, extending record run [nN16574659] 
> Tight diesel to keep at premium to gasoline - ESAI[nN16436218] 
> ENERGY WEEK-Record oil drives other fuels to peaks[nL16102755] 
> NWE products-Mixed, diesel edges up, fuel steady  [nL16776973] 
REFINERIES 
> Shell restarts Martinez hydrocracker - source     [nN16423237] 
> Saudi Aramco, Conoco moving forward on refinery   [nN16413133] 
> BP Texas City alky, FCC expected back next week - [nN16405322] 
> China reopens Sichuan refinery, replenishes fuel  [nPEK321680] 
ANALYSIS 
> Reliance mega-refinery to redraw fuel trade routes [nSP178916] 
CORPORATE NEWS 
> British Energy gets bid approaches, shares jump   [nL16387334] 
> PetroChina names new president, other appointments[nHKG238054] 
> Western majors escape new Kazakh oil export duty  [nL16847980] 
Latest ICE Market report                 [O/L] Latest NYMEX 
Latest ICE Market report                 [O/L] 
Latest NYMEX market report               [O/N] 
Latest European cash oil products report [PRO/E] 
Latest European cash crude report        [CRU/E] 
................................................................ 
 LIVE PRICES & DATA 
 ICE Brent          <0#LCO:>  ICE Gas oil               <0#LGO:> 
 NYMEX Crude         <0#CL:>  NYMEX Heating oil          <0#HO:> 
 NYMEX gasoline      <0#RB:>  Brent,Dubai paper <0#BRT-><0#DUB-> 
 .............................................................. 
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 .............................................................. 
    HOW TO FIND INFORMATION YOU NEED 
 | <REUTERS>  |  <NEWS>  |  <PHONE/HELP>  |  <EQUITY>  | 
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 Page editor: 646-223-6200; New York Desk 
 ............................................................... 
Keywords: MARKETS ENERGY TOPNEWS 
    

NYMEX crude ends above $126, extending record run

Reuters: [2008-05-16 22:03:00]

NEW YORK, May 16 (Reuters) - U.S. crude oil futures rose on Friday, settling above $126 for the first time, fueled by Goldman Sachs raising its second-half 2008 price forecast, the weakening dollar and concerns over tight supply.

News Saudi Arabia has boosted output to compensate for other producer declines helped keep prices off their early surge to an intraday record high near $128.

On the New York Mercantile Exchange, June crude <CLM8> rose $2.17, or 1.75 percent, to settle at $126.29 per barrel, after trading from $124.04 to a record $127.82.

Goldman Sachs <GS.N> raised its forecast for average second half 2008 oil prices to $141 a barrel. [ID:nL16867930]

"After trading fairly close to yesterday's close overnight, oil prices jumped up this morning after Goldman Sachs raised its forecast," Mike Fitzpatrick, vice president at MF Global, said a note.

Saudi Arabia has boosted oil output by 300,000 barrels per day to meet demand and compensate for other producers' lower output, Saudi Oil Minister Ali al-Naimi said. [ID:nDXB000258]

"The Saudis are adding but in effect they are trying to help President Bush, but in reality they are not increasing the OPEC total because they are compensating for shortfalls," said Nauman Barakat, senior vice president at Macquarie Futures USA.

"But the Saudi news and the SPR plan put a top on today's move," Barakat added.

The U.S. Energy Department said it will defer some 7.9 million barrels of crude oil scheduled to be delivered to the SPR through July, if legislation Congress passed this week to halt shipments becomes law. [ID:nWAT009502]

The dollar fell as a plunge in U.S. consumer confidence raised fears of economic contraction and lowered expectations that the Federal Reserve will raise interest rates this year.

In London, July Brent crude <LCON8> rose $2.36 to settle at $124.99 a barrel, trading from $122.71 to $126.34.

Tight distillate supplies should keep Atlantic Basin diesel at an unseasonal premium to gasoline going into the summer driving season, Energy Security Analysis Inc said Friday in its market outlook. [ID:nN16432408]

NYMEX June heating oil <HOM8> rose 8.04 cents, or 2.22 percent, to settle at $3.7028 per gallon, trading from $3.6322 to $3.7115. Heating oil hit a record $3.7228 on Wednesday.

June RBOB <RBM8> rose 5.77 cents, or 1.82 percent, to settle at $3.2235 a gallon, trading from $3.1658 to a record $3.2438.

The heating oil crack spread <0#CL-HO=R> ended at $29.22, up from Thursday's $28.02 finish. The RBOB crack spread <0#RB-CL=R> ended at $9.09, up from $8.84 on Thursday.

For a list of recent refinery and unit shutdowns and restarts, click [REF/US]. (Reporting by Robert Gibbons; Editing by Christian Wiessner) ((Email: robert.gibbons@thomsonreuters.com; + 1 646 223 6059; Reuters Messaging: robert.gibbons.reuters.com@reuters.net)) Keywords: MARKETS ENERGY NYMEX