The spread between front-month oil futures and contracts for later delivery on the New York Mercantile Exchange (see Fig. 1) has widened dramatically this month. (See Fig. 2)

The widening contango frequently portends a rise in inventories. For example, in Fig. 3, it can be seen that when the discount for fronth-month crude to second-month crude widened to near $4 a barrel earlier this year, inventories jumped to 19-year highs. The relationship between inventories and the outright futures price can be seen in Fig. 4. 

German utility RWE – Europe’s fifth-largest power company and the continent’s biggest emitter of carbon dioxcide – has resorted to a new way to counter what it sees as a fundamental misunderstanding about power companies.

Its animated movie – to be shown on TV and in cinemas – is meant to show what the company is really about – and overcome the public’s distaste for an industry whose dominance has allowed it to mete out ever higher power prices.

RWE portrays itself as a colossus with trees growing on his shoulders. He dives into the sea to install tidal-power plants and repairs power lines with gentle force.

Interestingly, this leviathan has characteristics that run contrary to what RWE might want to say. It supports some of the charges consumers level against utilities and has traits utilities always deny.

Many criticize the market dominance of utilities that allows them to raise prices and give consumers little option other than to pay up.

The giant of the film is alone in what he does and seems to be in complete control of his domain. He does not have to struggle with others who want to build windmills where he wants to.

Utilities claim they are accountable and transparent – to the public as well as their shareholders. The colossus has no need to justify himself. He does whatever he does because he wants to do. He rules.

He also leaves a large question mark over at least one key issue ahead of the general election in Germany in September. Would this giant’s engineering skills be sufficient to operate nuclear power plants? 

Utilities – and the conservatives and liberals in Germany – are seeking to extend the lifespan of nuclear power plants, saying they would be safe to run at least 10 years longer.

We might emerge from our 2 minutes of viewing with the conviction they will be maintained, but at least the RWE giant is shown to be nice, extremely focused on renewable energy and always working for the benefit of its clients.

Exchange traded funds like U.S. Oil Fund LP hold an increasing share of outstanding NYMEX energy contracts. The funds allow retail investors to bet on a rise in crude oil prices, but looming U.S. CFTC regulations aimed at curbing speculation could limit their positions in the future.

The road trip, an American summer tradition, is falling victim to the recession as more Americans decide to stay home over the Fourth of July weekend, according to AAA.

The Independence day weekend is usually the busiest travel weekend of the summer driving season, but this year, the number of Americans travelling this year will drop 1.9 percent, mostly due to high prices at the pump and economic worries.

That means this year the number of people taking a Fourth of July Day trip will be the fewest since 2000:

The drop in travel isn’t nearly as severe as last year, when July 4 travel sank 10.5 percent as drivers steered away from $4 a gallon gasoline, but the recent rise in gasoline prices– about 9 percent from memorial day through June 12– are likely taking their toll on American consumers, AAA said.

Are you planning to travel over the Fourth of July weekend?

With the summer driving season, under way, American drivers are once again feeling the impact of higher gasoline prices on their wallets. Read the full story here. Martin Hogarty, a chauffeur from the Bronx, interviewed near a gasoline station on 46th St. and 10th Avenue near Times Square in Manhattan this week, said he’s paying double what he used to pay for gasoline to fill up the car he uses for his chauffeuring business, a GMC Yukon sports utility vehicle. Gasoline prices at the station stood at $2.77 a gallon.

For those who’ve decided to invest in more fuel efficient cars, however, the choice is now paying off. Jose Ferro, a cab driver who was also filling up at the 46th St. station began leasing a hybrid taxi about eight weeks ago said the higher leasing fee is already paying off as gasoline prices climb higher.

Ferro, 72, a retired television commercial producer, who has been driving a cab for about three years said he used to fork out $38-$45 to fill up the Ford he used to lease, compared with about $10 to fill up the hybrid, which means a little bit extra take-home pay.

Despite Americans’ complaints about the rising cost of gasoline, Reuters data shows that the price Americans are paying for gasoline is well below prices drivers in many other developing countries pay.

While the summer driving season has been underway for only two weeks, gasoline prices have already blown expert forecasts for highs for the summer.

Average prices at the pump on Monday were $2.62 a gallon, according to AAA, up 16 percent from just a month ago, and over the $2.50 a gallon high that AAA had forecast for the entire summer. Last week, AAA spokesman Geoff Sundstrom said the group revised its forecast for the summer high to $2.75 a gallon.

Although prices are much lower than the $4 a gallon national average a year ago, experts say the prices will hurt American consumers already hard hit by the recession.

How are higher U.S. gasoline prices affecting you? Are you cutting back on other expenses in order to keep your car fueled up? Are you considering cutting back on driving? Are you worried about prices moving a lot higher?

Rice University's Baker Institute Energy Forum Director Amy Jaffe says, like many other analysts we've spoken to this week at the 2009 Reuters Global Energy Summit in Houston, the supply and demand fundamentals for oil are not in sync. But, will oil investors continue to push prices higher through the end of 2009? Or, will they lose their shirts come December? Check out what she had to say...

What will drive oil prices for rest of '09? from Reuters TV on Vimeo.

Oil is a multi-billion dollar, multi-million barrel serious business.
But OPEC ministers hounded by a ravening press pack can be masters of jocularity when the mood takes them.
The relaxed tenor of this week’s OPEC meeting, which could cheerfully roll over existing output targets given the market was intent on rising whatever, was reflected in a high quota of light-hearted brush-offs.
Libya’s Shokri Ghanem, renowned for his impishness, told one reporter he was going “to have a cup of coffee” when asked on the day of the meeting what his agenda was.
It wasn’t quite the “keep output steady” the reporter had been after.
Questioned about the oil price, Nigerian Oil Minister Rilwanu Lukman said: “Could be better, but I can’t complain.” He could just as easily have been talking about the weather or his state of health.
The most senior minister of them all Saudi Arabian Oil Minister Ali al-Naimi was in particularly sporting mood as he sped through Viennese hotel lobbies, jogged around the Vienna Ring and declared all was right with the world.
“The price is good, the market is in good shape, recovery is under way. What else could we want?”
As the oil price climbed above $65 a barrel, its highest for more than six months, sceptical reporters asked whether the rally could be sustainable when oil inventories were still very high. But Naimi was confident the great healer would take care of excess supply. “Time takes care of everything,” he said and no-one could disagree.

OPEC’s president Angola might well be asking himself why he is paying nearly 2 million euros to belong to the oil producers’ club when the World Bank has told the nation it would be better off without it.
The Angolan energy minister, who currently holds the group’s rotating presidency, has yet to arrive in Vienna for this Thursday’s meeting of the Organization of the Petroleum Exporting Countries, which is expected to keep existing output targets unchanged.
Member countries have already agreed to lower production by 4.2 million barrels per day since last September and have been delivering around 80 percent of the promised curbs.
Now the oil price has climbed back above $60 a barrel, almost double the lows of last December, members like Angola might well sigh with relief and pump even more above their OPEC output target than they are already doing.
Last week, the World Bank said Angola’s economy would perform far better this year if the country did not limit production, as OPEC has requested, and that wasn’t taking account of the OPEC membership fee, which is heard to be the same for all members, whether they are the smallest producer Ecuador or the biggest Saudi Arabia.
Oil ministers might have saved a night or two on hotel accommodation, however, as several were expected to arrive later than originally stated and also to disappear immediately after Thursday’s meeting.
Delegates predicted it would be short and to the point, provided Angola and others unhappy with output targets did not open a Pandora’s Box of a debate on production goals.
The controls are aimed at supporting oil prices as the market is already well-supplied, but some argue a better way to boost OPEC earnings would have been to call the meeting off.
It would not be good business for Vienna hotels or struggling airlines, but it would cut the expenses and carbon emissions of the OPEC delegations and the pursuing press pack, as one weary analyst observed.
“We are forced to mention that there is an OPEC meeting this Thursday in Vienna, although there is so little to expect out of it that OPEC could have made a gesture to save its and the media’s carbon footprint by calling it off,” said Olivier Jakob of Petromatrix.

Oil prices have been trading in an unusually strong positive correlation with equities markets over the past few months on hopes that signs of an economic recovery could mean a boost for energy demand.

But with oil and product inventories swelling and little sign of demand improving in the United States and other big developed economies, analysts warn that the linkage may be hard to maintain, especially if U.S. motorists cut back on vacations this summer.