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November 10, 2011

Energy Data Highlights

Crude oil futures price 11/8/2011: $96.80/bbl up$4.61 from week earlier up$9.74 from year earlier Natural gas futures price 11/8/2011: $3.745/mmBtu down$0.036 from week earlier down$0.345 from year earlier Retail heating oil price 11/7/2011: $3.877 /gal up$0.027 from week earlier up$0.799 from year earlier Crude oil inventories 11/4/2011: 338.1 mmbbl down1.4 mmbbl from week earlier down26.8 mmbbl from year earlier Weekly coal production 10/29/2011: 21.634 million tons up0.475 million tons from week earlier up1.154 million tons from year earlier http://www.eia.gov/

Natural Gas/ Power News

EIA Storage Release 11/3/11 (Actual): +78 Bcf Previous Week: +92 Bcf -0.4% Change from 1 Year Ago +5.6% Change 5-year Average Poland Shale Tests Show Europe Unlikely to Match U.S. Boom, Bernstein Says

The first results from wells in Poland show Europe is unlikely to match the U.S. boom in shale gas, analysts at Bernstein Research said. Two wells in Polands Baltic basin, where hydraulic fracturing was used to release gas, flowed at rates below the those seen at fields in the U.S., in part because of pressure in the shale rock, Bernstein said. Hydraulic fracturing, or fracking, is a technique that uses water, chemicals and sand to open fissures in rocks. The development of shale fields in Poland, considered Europes best prospect for so-called unconventional gas, will be further held back by a lack of land, water and drilling rigs, Bernstein said. Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) are among producers drilling in Poland. http://www.bloomberg.com/news/2011-11-10/poland-shale-tests-show-europeunlikely-to-match-u-s-boom-bernstein-says.html UT study: No direct fracking-water contamination link Preliminary results of a University of Texas study on hydraulic fracturing indicate the process itself does not appear to contaminate contaminating drinking water, but that fracturing sites may have a higher incidence of surface problems that can occur with any type of drilling. Prior reports, investigations and data gathered throughout the country on claims that the process often called fracking contaminated ground water so far dont make the direct link, said Chip Groat, a UT geologist who is leading the study. http://fuelfix.com/blog/2011/11/09/ut-study-no-direct-frackingwatercontamination-link/ EC committed to providing clarity on supply and trade transparency rules, says DG Energy policy expert Conscious of the energy industry's urgent need for further clarification of new rules, European Commission (EC) officials are preparing two new sets of regulations on data transparency for Europe's energy markets, according to Andrs Hujber, a policy officer with the EC's Directorate-General for Energy. http://www.risk.net/energy-risk/news/2124058/ec-committed-providing-claritysupply-trade-transparency-rules-dg-energy-policy-expert

Green/ Alternative Energy News

Gas drilling could take air out of offshore wind I understand the power of Lake Erie wind as soon were out past the breakwaters of Cleveland Harbor. The tugboat Im riding in is 74 feet long, but the waves make it bob like a rubber toy in a preschoolers bath tub. Before long, Im sweating and looking for a place to heave. Right next to me, Bill Mason seems to be enjoying the ride. In fact, he wants to show me a spot where the wind is stronger. Where were headed is to an anemometer, Mason says, mispronouncing the instruments name. Its been measuring the wind speeds since, I think, 2007. So I know we have good wind. http://www.wbez.org/story/gas-drilling-could-take-air-out-offshore-wind-93875#

Solar Glut Worsens as Supply Cuts Prices 93% The cost of solar cells and microchips has nowhere to go but down because of a supply glut for the commodity theyre made from, a brittle charcoal-colored semiconductor baked in ovens at 600 degrees centigrade. Polysilicon has plunged 93 percent to $33 a kilogram from $475 three years ago as the top five producers more than doubled output, data compiled by Bloomberg shows. The industry next year will produce 28 percent more of the raw material than will be consumed, up from 20 percent this year, said Robert Schramm- Fuchs and Shai Hill, analysts at Macquarie Group Ltd. http://www.bloomberg.com/news/2011-11-10/solar-glut-to-worsen-after-pricesplunge-93-on-rising-supply-commodities.html

U.S. Wind Market May Fall Off a Cliff in 2013, Vestas CEO Says U.S. wind turbine sales may dry up in 2013 unless lawmakers extend tax credits supporting the market beyond the end of next year, said Vestas Wind Systems A/S Chief Executive Officer Ditlev Engel. The so-called production tax credit, or PTC, provides an incentive of 2.2 cents a kilowatt-hour for electricity from wind applied to operators tax bills. In the past, the termination of such policies has shown markets can disappear, Engel said yesterday by phone interview. http://www.bloomberg.com/news/2011-11-09/u-s-wind-market-may-fall-off-a-cliffin-2013-vestas-ceo-says.html

Crude Oil News

OPEC Daily Basket Price 11/9/2011- $113.13 (11/8/2011- $113.79)

Crude Rises Near Three-Month High on Europe Sentiment, U.S. Inventories Oil rose in New York on speculation Europes economy may weather the regions debt crisis, as equity markets trimmed opening losses and the euro recovered against the dollar. Futures advanced as much as 1.7 percent, reversing an earlier decline of 0.6 percent. Crude fell yesterday, halting a five-day rally, amid concern that the debt crisis had spread to Italy and would stifle growth in the countries that use the euro. The International Energy Agency reduced forecasts for global oil demand in 2012 for a third month on weaker prospects for developed nations. Its quite bullish at the moment in the oil market, said Gerrit Zambo, a trader at

Bayerische Landesbank in Munich. But the bullish sentiment can easily turn again if we see markets crashing further due to the Italian situation. http://www.bloomberg.com/news/2011-11-10/crude-oil-rebounds-as-equities-parelosses-euro-recovers-against-dollar.html

Brent rises towards $113 despite euro zone woes Brent oil prices climbed toward $113 a barrel on Thursday, after sharp falls a day earlier, as a weak dollar and an unexpected drop in U.S. oil stocks outweighed concerns about the spreading euro zone crisis. Brent crude rose by 45 cents to $112.76 a barrel by 1050 GMT (5:50 a.m. ET), having fallen nearly $3 the previous day.The U.S. contract was up 87 cents at $96.61 a barrel by the same time. "There is enough demand for oil in the world from places like China and the developing world that the euro zone is not of overriding importance," said Jefferies Bache oil broker Christopher Bellew, adding that he thought the market was in a new trading range between $112-$116 a barrel. http://www.reuters.com/article/2011/11/10/us-markets-oilidUSTRE7922QH20111110 Oil prices rise on Iran nuclear work reports Crude oil and natural gas prices rose Nov. 8, up 1.3% each in the New York market, as Europes financial turmoil continued and Iran was reported working to put a nuclear payload on an intermediate-range missile capable of striking Israel. The International Atomic Energy Agency (IAEA) under the United Nations reported Nov. 7 Iran is working specifically to develop nuclear weapons. Iran of course is the second biggest oil producer among members of the Organization of Petroleum Exporting Countries, behind Saudi Arabia. Its October production was estimated at 3.6 million b/d. Any conflict in Iran could have serious supply implications for oil markets, and the anxiety this inspires has provided support to world oil prices for the past week, said Raymond James analysts. http://www.ogj.com/articles/2011/11/market-watch-oil-prices-rise-on-iran-nuclearwork-reports.html Watchdog warns on oil supply and demand The International Energy Agency has warned that the oil market supply and demand balance remains tight, supporting prices above $100 a barrel in spite of weakening economic growth in Europe and elsewhere. The western countries oil watchdog said in its monthly report, released on Thursday, that oil inventories in rich countries stood in September below the five-year average for a third consecutive month for the first time since 2004. A fundamentals underpinning for stubbornly high prices is clear, the IEA, said. Oil inventories in Europe fell in September to their lowest level in nine years and the IEA warned that preliminary data suggested a further drop in October in spite of weakening regional economic growth. http://www.ft.com/intl/cms/s/0/2610abd2-0b8a-11e1-9a6100144feabdc0.html#axzz1dEWcwc3w China and Indias oil reserve problem The war of words between Washington and Iran about Tehrans nuclear programme is boosting oil prices. The worry? That Israel launches a surprise attack and Iran retaliates shutting down the Strait of Hormuz, the gateway for Middle East oil. While some say that the market is overreacting as importing

countries would tap their strategic reserves to make up for any disruption, a close look at the problem shows that reserves in China and India remain low. Western countries have the capacity to respondBut what about China and India, two of the biggest buyers of Iranian crude? According to statistics by the US Department of Energy, China and India account for one-third of Irans exports. Neither has a robust system of strategic reserves, at least not yet. http://www.ft.com/intl/cms/s/0/48510094-0ab2-11e1-b9f6-00144feabdc0.html? ftcamp=rss#axzz1dEWcwc3w

A Praises Libya Oil Output Oil production in Libya is resuming far more quickly than initially expected and is on track to reach 700,000 barrels a day, almost half its prewar level, by the end of this year, the International Energy Agency said Thursday. The agency praised the "Herculean effort" by Libyan officials to restore shut-down oil fields, which have proven its previous forecasts to be far too cautious. As such, global oil supply and demand look to be in balance in 2012, the IEA said, although it warned that low inventories and the risk of further Middle East instability could underpin high prices. http://online.wsj.com/article/SB1000142405297020435800457702953138136672 6.html?mod=WSJ_hp_LEFTWhatsNewsCollection

IEA Sees Potential for $150 Crude Oil While new forms of North American production such as oil fracking are increasingly hyped as a substitute to Middle East crude, the International Energy Agency warned Wednesday that the West will still rely on Arab barrels to quench its thirst for oil. And if ministers in Baghdad or Riyadh decide to cut their spending on oil exploration, consumers will end up coughing up $150 for each barrel of crude after 2015. In its annual energy outlook, the agency said that, if between now and 2015, oil and gas investment in the Middle East and North Africa "runs one-third lower than the $100 billion per year required, consumers could face a near-term rise in the oil price to $150." http://online.wsj.com/article/SB1000142405297020422460457702796030316161 8.html?mod=WSJ_Commodities_LEFTTopNews

Recent Rig Counts Change from Prior Count Date of Prior Count Change Date of from Last Last Year's Year Count

Area

Last Cou Count nt

U.S. Canada

4 Nov 2026 11 4 Nov 11 476

5 -23 -12

28 Oct 11 28 Oct 11 Septembe r 2011

+343 +59 +54

5 Nov 10 5 Nov 10 September 2010

Internatio October 1162 nal 2011

http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm

Weather Tropical Storm SEAN http://www.nhc.noaa.gov/text/refresh/MIATCPAT4+shtml/091143.shtml

6 to 10 Day Outlooks Temperature

Precipitation

8 to 14 Day Outlooks Temperature

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