Oil Stockpiles Drop 7.2 Million Barrels

Oil stockpiles in the U.S. plunged 7.2 million barrels last week, according to the American Petroleum Institute, pushing up oil prices for the second day in a row.

The drop in inventories was the most occurring in the U.S. in five weeks.

Hurricane Isaac, according to a report from the Energy Department, could result in a decline of 4.95 million barrels. Just under 50 percent of oil production and 26 percent of natural gas production remains shut down as a result of the storm.

As for gasoline stockpiles, it was down 2.3 million barrels last week, said the American Petroleum Institute. Some analysts believe it's close to being 3 million barrels lower.

Oil for October delivery climbed as high as $96.06 a barrel on the New York Mercantile Exchange, a gain of 70 cents. Brent oil for October dropped $1.09, or 1 percent, to $113.09 a barrel on the ICE Futures Europe exchange, based in London.

Exxon Mobil (XOM) closed Wednesday at $87.33, gaining $0.21, or 0.24 percent. ConocoPhillips (COP) ended the session at $54.87, falling 1.34, or 2.38 percent. Chevron (CVX) closed at $110.77, down $0.45, or 0.40 percent.

Conoco (COP) (MMR) (CLR) (FST) (RTI) (TIE) Ratings, Price Targets

ConocoPhillips (COP), McMoRan Exploration (MMR), Continental Resources (CLR), Forest Oil (FST), RTI International Metals (RTI) and Titanium Metals (TIE) ratings and price targets.

ConocoPhillips (COP) was downgraded by UBS (NYSE:UBS) from a "Neutral" rating to a "Sell" rating.

McMoRan Exploration (MMR) was downgraded by JPMorgan (NYSE:JPM) from a "Neutral" rating to an "Underweight" rating.

Jefferies (NYSE:JEF) downgraded Continental Resources (CLR) from a "Buy" rating to a "Hold" rating.

Jefferies (NYSE:JEF) downgraded Forest Oil (FST) from a "Buy" rating to a "Hold" rating.

JPMorgan initiated coverage on RTI International Metals (RTI). They placed a "Underweight" rating on the company.

JPMorgan initiated coverage on Titanium Metals (TIE). They placed a "Neutral" rating on the company.

Chevron's (CVX) Downstream Business Unimpressive

The fact that Chevron (NYSE:CVX) had its "Buy" rating from Jefferies (NYSE:JEF) reiterated on them today isn't because of its downstream refinery business, as margins are anemic in comparison to its upstream oil and natural gas production business.

That's not to say there isn't substantial revenue in the refined products business of Chevron, as the company could have sold as much as $100 billion in refined products in 2010, although it doesn't release those figures.

Among refinded products sold are gasoline, jet fuel, gas oil and kerosene, among other products.

Estimates are refined products make up about 8 percent of the overall stock value of Chevron, mostly because of the low margin business it is. Margins have been at about 2.33 percent in the refined business for the energy giant for 2010.

In contrast, the oil and natural gas production generates margins of 53 percent.

The leading refined product sold by far was gasoline, which accounted for close to $39 billion in revenue in the segment.

Among Chevron's major competitors are BP (NYSE:BP), Exxon Mobil (NYSE:XOM), Halliburton (NYSE:HAL) and ConocoPhillips (NYSE:COP).

Chevron was trading at $103.57, up $0.32, or 0.31 percent, as of 2:05 PM EDT.

Exxon (XOM) (BP) (COP) Close Up on Oil Price Outlook

Shares of oil companies like Exxon Mobil (NYSE:XOM), BP (NYSE:BP) and ConocoPhillips all closed up Tuesday as analysts boosted their outlook on the price of Brent crude.

Morgan Stanley (NYSE:MS) increased its Brent crude projection, noting stronger demand and supply problems related to Libyan production. The brokerage lifted its 2011 Brent crude price projection from $100 to $120 a barrel a barrel and its 2012 projection from $105 to $130.

JP Morgan (NYSE:JPM) reiterated its Brent crude price estimate of $130 in the third-quarter of 2011.

Goldman Sachs (NYSE:GS) raised it projection for Brent crude from $105 to $120 a barrel for 2011, and for 2012 from $120 to $140 a barrel.

BP closed Tuesday at $44.37, jumping $0.34, or 0.77 percent. ConocoPhillips closed at $71.91, up $0.58, or 0.81 percent. Exxon ended the session at $81.29, rising $0.62, or 0.77 percent.

BP (NYSE:BP), Anadarko (NYSE:APC), Conoco (NYSE:COP) Surge on Rising Oil Prices

BP (NYSE:BP), Anadarko (NYSE:APC), Conoco (NYSE:COP) all rose Thursday on the inflationary measures implemented by the Federal Reserve via QE2, which drove the overall commodity market up, along with companies within each sector, including the oil producers.

Commodity prices in general increased, including silver, which increased to over $26 an ounce. Gold prices surged to all-time record highs again, approaching the $1,400 an ounce mark. Aluminum moved up to its highest levels since April, and silver surpassed $26 an ounce.

Light, sweet crude for December delivery settled the day up $1.80 a barrel on the New York Mercantile Exchange at $86.49.

BP closed at $43.91 Thursday, rising $1.54, or 3.63 percent. Anadarko surged to close at $65.96, gaining $2.32, or 3.65 percent. Conoco was up $61.25 at the end of the trading session, increasing by $1.84, or 3.10 percent.

ConocoPhillips (NYSE:COP) Drops on Lower Production in Third Quarter

ConocoPhillips (NYSE:COP) beat earnings estimates for the third quarter but still got punished on lower production, generating questions on future
performance.

For the quarter, earnings per share rose to $1.50, beating Street estimates by 5 cents a share, and doubling last year's earnings in the same quarter.

Earnings for the quarter rose to $3.06 billion, or $2.05 a share. Last year they generated earnings of $1.5 billion, or 97 cents a share.

Lowering costs and higher commodity prices drove the performance for Conoco in the quarter, but lower production could weigh on shares and performance, as there is only so low costs can be lowered, and no guarantees as to prices going forward.

Production would need to rise to build confidence in the future performance of the energy giant.

CEO Jim Mulva commented on the quarterly results, saying, “We had a good
quarter and operated as expected. Our plans to improve returns through
disciplined capital spending, reducing debt and repurchasing shares are on
track.”

As far as natural gas production, that's not necessarily a negative situation, as lower natural gas prices would cause Conoco to decrease margins and earnings.

Oil exploration and production dropped to 1.72 million barrels a day, which is more concerning for shareholders and potential investors.

Revenue for the latest quarter increased to $49.5 billion, beating estimates of $45.59 billion, and the $41.27 billion in revenue last year.

BP (NYSE:BP), Conoco (NYSE:COP), Exxon (NYSE:XOM), Total (NYSE:TOT), Shell (NYSE:RDS-A), Apache (NYSE:APA) Land North Sea Licenses

Major oil companies like BP PLC (NYSE:BP), Royal Dutch Shell SA (NYSE:RDS-A), ConocoPhillips (NYSE:COP), ExxonMobil Corp. (NYSE:XOM), Total SA (NYSE:TOT) and Apache Corp. (NYSE:APA) were awarded gas and oil licenses by the British government to drill in the North Sea.

According the the government, 83 companies were awarded 144 licenses to drill for oil and gas in over 268 blocks in the region.

Although a lower number of licenses were awarded than the previous round of licensing in 2008, where 192 were offered, another 99 blocks entailing up to 45 licenses will be available after more research is done on them.

Oil production in British waters have dropped by about 5 percent annually since peaking in 1999 at 2.6 million barrels a day. In the next five years, even with an estimated 20 billion barrels of oil equivalent estimated to be left in the North Sea, production is expected to drop to about 1 million barrels a day.

In 2009-2010, 1.36 million barrels a day are being produced in British waters.

Conoco's (NYSE:COP) Partner Karoon Gas Selling South American Assets

ConocoPhillips' (NYSE:COP) partner Karoon Gas Australia Ltd. will reportedly sell 1.03 million shares of its South American assets to raise up to $773 million for the purpose of funding exploration.

The stake equals 31.9 percent of their assets, a little higher than the company was looking to divest of when they revealed the possibility of a sale last month.

Karoon has said they wanted to retain 70 percent to 75 percent of the asset.

Shares of Karoon Petroleo & Gas SA will be priced sometime in November, and will raise a minimum of $621 million.

According to a filing with the Australian stock exchange, the money will be used to fund five exploration projects in Peru and seven in Brazil.

This is also a change in direction from the early part of summer, when Karoon has talked of listing on the Brazilian stock exchange to raise capital.

ConocoPhillips is a partner with Karoon in a gas project off the coast of northwestern Australia.

Marathon (NYSE:MRI), Holly (NYSE:HOC) Upgraded to "Buy" on Strong Refinery Margins

While Deutsche Bank (NYSE:DB) believes the refining industry needs to be shrunk in the U.S., there is good news for companies like Marathon (NYSE:MRI) and Holly (NYSE:HOC) serving in that capacity, as margins are up and earnings will follow as a result.

Both companies were upgraded to "Buy" on enhanced margins.

Deutsche Bank said, "Demand is weak and expected to never attain its previous peaks; but more refining capacity has been added. The need is to retire refineries, a slow and painful aging process for a twilight industry. However in this note we list the many positive factors that have driven US refining margins, particularly in the MidCon, towards the upper end of the 2000-2010 range. Long MidCon: Raise Marathon to BUY, Holly to BUY, re-iterate ConocoPhillips (NYSE:COP) BUY, Frontier (NYSE:FTO) BUY, CVR Energy (NYSE:CVI) BUY."

It seems Deutsche is wrong concerning oil refinery capacity, which has caused problems in the past in the U.S. when a number of them were shut down.

BP (NYSE:BP), Chevron (NYSE:CVX), Transocean (NYSE:RIG), Exxon (NYSE:XOM), Conoco (NYSE:COP), Shell (NYSE:RDS-A), Diamond (NYSE:DO), Hercules (Nasdaq:HERO) Have 100s of Wells Waiting for Approval in Gulf

Although BOEMRE director Michael Bromwich has said ther are only 10 new wells waiting for permits in the Gulf of Mexico, companies like BP (NYSE:BP), Chevron (NYSE:CVX), Transocean (NYSE:RIG), Exxon (NYSE:XOM), Conoco (NYSE:COP), Shell (NYSE:RDS-A), Diamond (NYSE:DO) and Hercules (Nasdaq:HERO) in fact have hundreds of wells waiting to be approved.

The disingenuous figures put forth by Bromwich are so small because hundreds of wells haven't been approved to enter into the permitting process.

There are 69 exploration and development plans are backlogged, just sitting there awaiting action, with each one including three to five wells, according to senior vice president and general counsel of Hercules, James W. Noe. And that was as of August 17. Since then no figures have been released, suggesting far more waiting to have decisions made.

Since the moratorium was lifted on October 12, there have only been six permits approved by the Bureau of Ocean Energy Management, Regulation and

Enforcement, and those were only in shallow-water areas, not the deepwater sections which allegedly have had the moratorium lifted.

I say allegedly because the regulations and permits are effectively having the same results as if a moratorium were still in place for deepwater drilling.

BP (NYSE:BP), Chevron (NYSE:CVX), Conoco (NYSE:COP), Exxon (NYSE:XOM) Met with Ken Salazar on Safety Issues

BP (NYSE:BP), Chevron (NYSE:CVX), Conoco (NYSE:COP) and Exxon (NYSE:XOM) met recently with Interior Secretary Ken Salazar and Michael Bromwich, among others, over creation of new organization to improve safety measures in the industry through the establishment of best practices guidelines and new technologies related to the industry.

The new entity would be called the Ocean Energy Safety Institute, and would include the Coast Guard, regulators and industry representatives. The technological side would include using funds to do research and develop certain technologies to help the industry.

Interior spokeswoman Kendra Barkoff said about the meeting, “Secretary Salazar, Deputy Secretary David Hayes and Director Bromwich met with industry representatives today to discuss strategies for further developing and making available blowout containment capabilities moving forward.”

Some talk about whether or not the government will help fund the initiative has started, and in our view this shouldn't be something taxpayers should have to pay for.

Let the industry pay for things that could help improve operational safety, led by those that understand what's needed and the stakes at risk.

Other than ensuring compliance, the government should have no other role in the matter.

As far as proposed taxes on the industry, that wasn't included in the discussions, but that as well needs to be dropped so American consumers aren't hit with increased energy costs, which is what the outcome of more taxes would be.

When the government taxes any industry, it's the people who end up paying for it with higher costs.

BP (NYSE:BP) Acquires Cargoes from Conoco (NYSE:COP), Trafigura Beheer BV

BP (NYSE:BP) bought two cargoes, each one including 150,000 barrels of gasoil. The gasoil, which has 10 parts per million of sulfur, will be loading from November 11 to November 15.

Cost for the cargo was $2.10 a barrel premium against prices of gasoil with 0.5 percent sulfur.

BP acquired one cargo from ConocoPhillips (NYSE:COP) and the other from Trafigura Beheer BV.

After oil prices rose this week, the Asian gasoil crack, which is how the processing profit is measured when converting Dubai crude into fuel, dropped.

ConocoPhillips (NYSE:COP) Approved for Jasmine Development

ConocoPhillips (NYSE:COP) has been given approval by the UK to begin development on the Jasmine gas/condensate discovery in the North Sea. Production is scheduled to begin in the fourth quarter of 2012.

Paul Warwick, ConocoPhillips president, UK and Africa, said: “Developing Jasmine to tie in effectively to J-Block’s existing infrastructure demonstrates that companies on the UK continental shelf still have opportunities to maximize production of their reserves and can continue to add value directly or indirectly to the UK supply chain. The development is another step towards our strategy of prolonged and efficient production from the North Sea.”

The discovery, which is one of the largest in the waters over the last several years, will at its peak production produce 88,000 barrels oil equivalent on a daily basis.

Will Conoco (NYSE:COP), BP (NYSE:BP) Alaskan Pipeline Go Forward?

A recent article in the Financial Times of London where Conoco's (NYSE:COP)chief executive officer Jim Mulva said the company may have to "reaccess" the Denali pipeline it is proposing to develop with partner BP (NYSE:BP).

The comment was based upon the enormous amount of natural gas reserves in the lower 48 states, which Conoco spokesman John McLemore commented on saying: "Clearly, shale gas (in the Lower 48) has changed the dynamics of natural gas in North America."

He added that there hasn't been a new review of the project launched.

This gave the idea to some that maybe the pipeline deal will be put on hold or abandoned, but McLemore said the company is continuing on with the work on the project.

Mulva did say after his comments to FT that natural gas still remains an "attractive" investment for the company, although it seems he's starting to think longer term than he was in the past.

This coming Monday McLemore said Conoco will look closely at natural gas prices over the long term, supply projections, response of the market and tax issues.

It sounds like in the shorter term things aren't looking nearly as good because of the huge supply for the pipeline, and it'll be interesting to see if that affects the timing of starting the pipeline, if it gets built at all by Conoco and BP.

Another factor is a competing proposal from Exxon Mobil (NYSE:XOM) and TransCanada to built a pipeline serving the same region.

Conoco (NYSE:COP) Signs Exploration Agreement with Petrobangla

ConocoPhillips (NYSE:COP) announced they've signed an exploration deal with Petrobangla, the Bangladesh state-run energy company. The deal will be for two blocks in the Bay of Bengal, where Conoco can explore for hydrocarbons, subject to signing a production sharing contract.

That has been held up because of ongoing disputes between Myanmar, India and Bangladesh.

Conoco should get clearance because the specific blocks they're going to explore in aren't within the specific disputed territory, although India and Myanmar have objected to some portions of the two blocks in question.

Bangladesh has filed a suit with the International Court of Justice in The Hague, while they communicate with their two neighbors in hopes of settling the issue.

Based on existing consumption rates, Bangladesh said their gas reserves could run out by 2014-2015, and the exploration and resultant production is estimated to take about five years to bring results.

ConocoPhillips will spend close to $111 million for the two blocks.

ConocoPhillips (NYSE:COP), Marathon (NYSE:MRO) Exports Given OK to Continue

The Alaskan Energy Department has given ConocoPhillips (NYSE:COP) and Marathon Oil (NYSE:MRO) approval to go ahead and continue to export liquefied natural gas from their plant located at Nikiski.

It was an issue in the first place because some were worried over the possibility the exports could result in shortages in the Southcentral region of Alaska.

Both companies asked for their export license, which was going to expire in March, to be extended for another two years.

The two companies export the liquefied natural gas from the plant to Asian markets.

Nikiski processes natural gas from Cook Inlet into liquid.

ConocoPhillips' (NYSE:COP) Board Declares Quarterly Dividend of $0.55

The board of directors of ConocoPhillips (NYSE:COP) announced Wednesday they've declared a quarterly dividend of $0.55 a share for its shareholders, an annualized return of $2.20 a share.

For shareholders of record at the close of business on on October 29, 2010, the dividend will be payable on December 1, 2010. October 27, 2010 is the ex-dividend date.

The dividend has a 3.7 percent yield.

Conoco closed Wednesday at $59.70, gaining $0.91, or 1.55 percent.

Morgan Stanley (NYSE:MS) Downgrades Conoco (NYSE:COP) to "Underweight"

With September being such a strong month for equities, many companies across a number of sectors have been downgraded on valuation. ConocoPhillips (NYSE:COP) was among those downgraded, as Morgan Stanley (NYSE:MS) lowered the rating of the company from "Equal Weight" to "Underweight."

Morgan said they liked the strategy of Conoco, but all of that is already priced into the stock in their estimation, and don't see much room for growth at their current multiples.

They recommend Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), as they offer an improved risk/reward scenario for investors, according to Morgan Stanley.

Conoco closed Friday at $57.86, gaining $0.43, or 0.75 percent.

A price target of $56 is maintained on Conoco.

Exxon (NYSE:XOM), Chevron (NYSE:CVX), BP (NYSE:BP), Conoco (NYSE:COP) On High Oil Supplies

Oil inventories increased by about one million barrels last weak, pushing the share prices of majors like Exxon (NYSE:XOM), Chevron (NYSE:CVX), BP (NYSE:BP), Conoco (NYSE:COP) all down on the day, although Exxon rebounded some as the day went on.

The big blow was analysts had been looking for a drop in oil inventory of about 1.5 million barrels, creating the 2.5 million oil barrel miss.

For indices tracking the energy sector, the NYSE Arca Oil Index (AMEX:XOI) fell $7.04 to 1,001.85, a drop of 0.70 percent; the Amex Natural Gas Index gained $0.70, or 0.14 percent, rising to $513.77 at 3:41 PM EDT; while the Philadelphia Oil Service Index dropped slightly to $189.62 as of 3:43 PM EDT.

BP was at $38.18, falling $0.41, or 1.06 percent at 3:31 PM EDT; Conoco fell to $56.09, losing $0.43, or 0.76 percent at 3:34 PM EDT; Exxon rose slightly to $61.59, gaining $0.05, or 0.08 percent at 3:44 PM EDT, and Chevron fell to $79.34, dropping $0.41, or 0.51 percent as of 3:45 PM EDT

BP (NYSE:BP) Joins Exxon (NYSE:XOM), Shell (NYSE:RDS-A), Conoco (NYSE:COP) and Chevron (NYSE:CVX) Response Group

It took them awhile, but they've finally done it, BP (NYSE:BP) said it will become part of the oil spill rapid response group which already includes Exxon Mobil (NYSE:XOM), Royal Dutch Shell (NYSE:RDS-A), ConocoPhillips (NYSE:COP) and Chevron (NYSE:CVX).

The group is called the Marine Well Containment Co., and will be operated by Exxon Mobil.

BP said their technical people and underwater well containment equipment will be made available to the group.

The companies said in the past they're going to spend about $1 billion to train teams and make equipment to respond to any possible future oil spill.

Last week they started promoting their work, which will have the equipment on standby in case they're needed.