By Duncan Sutherland- Exclusive to Crude Investing News

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Prices down again on NYMEX

Welcome to Benchmark! This space will provide a weekly analysis of news, trends, outlooks and quirks in the global oil sector. If you are looking for news related to heavy oil or natural gas more specifically, please check out our sister sites at www.heavyoilinvestingnews.com ^[2] and www.gasinvestingnews.com ^[3].

Prices see a down turn

This past week saw a draw down of barrel prices on the NYMEX. If your investments include significant exposure outside the commodities sector this is welcome news. The retreating price was largely caused by less demand ^[4], especially in the United States. Tightening wallets are appreciably restricting the summer road trip season and customers are generally driving less.

Hurricane Dolly prompted some precautionary shutdowns in the Gulf of Mexico, but workers were already returning Thursday morning. Only five percent of the region's oil production was shut down ^[5], with Exxon Mobil (NYSE:XOM), Andarko (NYSE:APC), Apache (NYSE:APA), Chevron (NYSE:CVX), Shell (NYSE:RDS.A) and El Paso Corporation (NYSE:EP) the most affected. It bears repeating that hurricane season will be an independent variable in oil and gas prices through to November.

Positive results, yet not up to market expectations

The barrage of Q2 reports this week held good news for most oil companies. Though individual companies out or underperformed the sector, some widely applicable trends were visible. Santos Limited (NASDAQ:STOSY) is a good example of these patterns. High oil prices boosted revenue from previous years despite a decline in production ^[6]. Although production was stable or increasing for many other companies, Santos illustrates the power of surging barrel prices to move bottom lines.

A counter-trend can be observed for companies with large refining units. ConocoPhillips (NYSE:COP) announced ^[7] record earnings, but underperformed market expectations as energy prices sapped refining profit. Oil's steady rise since last fall floated some indexes like the S&P/TSX, while depressing indexes ^[8]in the US, Hong Kong and elsewhere. The recent price slide inverted these results ^[9], with the S&P and the Canadian dollar weakening as US markets gained.

Future of US bill in balance

Election year politicking in America may kill the Stop Excessive Energy Speculation Act, which could mandate a more active Commodity Futures Trading Commission ^[10] and introduce limits on trading in paper barrels and speculative trading in overseas markets from the US. The Democratic Party controls the House and Senate but not by wide enough margins to prevent parliamentary delays and debates on amendments. Also, Republicans have suggested a large number of amendments to the bill, including a removal of the Congressional moratorium on offshore oil exploration. The GOP is trying to maneuver the Democrats into voting against offshore exploration, which enjoys wide public support.

The bill might gain momentum if today's story about the CFTC and Optiver Holding has legs. Optiver and some of its subsidiaries stand accused of manipulating crude ^[11], heating oil and gasoline futures on the NYMEX in the spring. Paradoxically, the CFTC's action has prompted speculation that it was seeking to prevent the regulation by appearing more vigilant than it has been to date.

Nigerian militants continue to threaten supply

Trouble continues in the Gulf of Guinea off West Africa. Nigeria, America's fifth largest supplier ^[12]of crude oil, has proven unable to accommodate or eliminate the loose confederation of militants known as the Movement for the Emancipation of the Niger Delta (MEND). Instead, MEND appears to be increasing its strength and widening its reach. In June, the group stormed ^[13] an offshore rig, demonstrating a new capability. The group simply issued a communiqué ^[14] stating that it will attack major pipelines within the next month, then promptly followed it up by kidnapping a group of foreign oil workers. Time will tell whether President Umaru Yar'Adua can negotiate, buy off, or crack down on MEND to assuage the worries of oil consumers.

Thanks for reading, and Benchmark should be a biweekly (Monday and Thursday) column moving forward. If you are new to Dig Media's sites, you might want to also check this one out http://www.heavyoilinvestingnews.com/20-green-oil.html ^[15]