At midday Singapore time in electronic trading on the New York Mercantile Exchange, benchmark oil dropped down 44 cents to $94.34 a barrel for June delivery. It is the lowest declination noted down since December. On 14 May 2012, the contract came down $1.35 to settle at $94.78 in New York.

Brent crude fell down 45 cents at $110.55 per barrel in London scheduled for July delivery.

Because of decelerating economic activity in the world, especially the U.S. and China, the two biggest consumers of oil, crude was down 11 percent from $106 tag in May.

Many investors are afraid that Greece’s inability to form a government subsequent to the recent elections, can aggravate the country’s debt crisis and deep recession as well as weaken the confidence throughout Europe.

In a report, energy trader and consultant Ritterbusch and Associates said: “Greece’s struggle to form a new government has moved to centre stage,” as well as further pointed out: “The possibility of a significant economic slowdown in European economic activity is prompting contagion fears.”

Most of the oil investors are taking their cues from global stock markets, which have sunk so far in the month of May. On Monday, the Dow Jones industrial average fell 1 percent although many Asian stock markets were down Tuesday.

In other energy trading, heating oil dropped 1.2 cents to $2.92 per gallon and gasoline futures fell 0.7 cents to $2.95 per gallon. Natural gas declined 1.6 cents at $2.49 per 1,000 cubic feet.

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The survey done this year shows that the state had about 6.61 million gallons of gasoline per year until recent times whereas the count has come down to about 4.46 million gallons of gasoline this year.

Prices on gasoline in California continuously declined during last few weeks. But now that some refineries in the state are closed down, oil production has decreased resulting in rising oil prices.

The Energy Department survey revealed that the average price of a gallon has increased by 2.7 cents to reach $4.213 in California. Despite the fact, nationwide prices on oil have fallen by 4 cents reaching to $3.790.

The reason why U.S. average for a gallon of regular continued to fall was the boom in oil supplies from North Dakota that triggered the decline of U.S. oil prices.

Nigeria, Africa’s largest oil producer plans to increase crude oil production to 4 million barrels per day by 2020 said Petroleum Minister Diezani Alison-Madueke. In addition, the East African country also plans to boost liquified gas production by an additional 20 million metric tons a year from the present 26 million tons said the Petroleum Minister at a speech delivered at Howard University in Washington, Levi Ajuonuma. She was there to receive an award for professional excellence from the Faculty of Architecture, Engineering and Computer Science of the university.

At present, Nigeria is able to deliver oil at an average of 2.1 million barrels a day of oil per month. Its current crude reserves are estimated at 37 billion barrels and gas reserves at 187 trillion cubic feet.

“With expansion of capacity by almost one million barrels per day over the next years, Nigeria can significantly contribute to global supply additions and diversification, thereby alleviating and challenging supply concentration.” said Mrs Diezani Alison-Maduekei in her speech.

Militant group attacks between 2006 and 2009 had cut the oil output of Nigeria by nearly 28 percent. However, the situation improved after fighters seeking greater percentage of oil revenue laid down their arms after accepting an official amnesty. On the other hand Nigeria’s Movement for the Emancipation of the Niger Delta refused to backtrack saying the government has not met the group demands for local control of the Delta’s oil. They have threatened attacks on pipelines and energy facilities.

At midday Singapore time in electronic trading on the New York Mercantile Exchange, Benchmark oil to be delivered in June descend 13$ to $102.98. The contract fell 77 cents at $ 103.11 in New York on 23rd April, 2012. However, the prices of oil to be delivered in London climbed up 15cents at $ 118.87 per barrel.

The fiscal austerity measured designed to reduce European depth levels increased inventors’ concerns that such measures will instigate recession, as well in 2012. After a survey on 23rd April 2012, it depicts unpredictable dropped down of the eurozone’s manufacturing and services sectors in April 2012.

The chief economist at a Standard Chartered, Gerald Lyons said: “Developments in the euro area continue to drive sentiment.” and also pointed out: “The biggest threat facing the world economy is a collapse of one or more euro area economies.”

Crude prices have traded between $100 and $110 in 2012 because of the U.S. economy, which is found to be at more than expected pace letting other crude demand to fall down.

Some analysts are optimistic about the demand for crude in the U.S. and China, the world’s largest oil consumers, to jump back at normal condition. However, economic sanctions by Western powers against Iran will incise crude output from OPEC member as well tighten the global supplies.

Carl Larry at Oil Outlooks and Opinions said: “We are looking at the bottom in U.S. gasoline demand, the bottom of the Chinese slowdown and we are just starting to feel the pinch on Iranian sanctions.” He also remarked: “Outside of another economic meltdown, there’s not much that we can see that is going to bring this oil price back down.”

According to energy trading, heating oil fell down 0.4 cents at $3.14 per gallon and gasoline futures dropped down 0.4 cents at $3.14 per gallon. Natural gas shored up 1.2 cents at $2.02 per 1,000 cubic feet.

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For the first time, researchers at the Penn State University and Rice University have discovered a way to grow a nanosponge from a carbon nanotube that could absorb 100 times its weight in oil.

Carbon nanotubes are tiny tubes with diameters ranging from 1-50 nanometers – approximately the width of a hair. The research team’s goal was to produce a 3D network of these nanotubes that would make up a macroscale fabric. These spongy blocks could then be thick enough to clean up oil spills and perform other tasks. However, the team quickly realized that adding a small amount of boron puts kinks and elbows into the nanotubes to form covalent bonds, which give the sponges its robust qualities.

Such, boron infused spongy carbon-nanotube blocks are superhydrophobic, i.e. they hate water but they are also oleophilic, which means they love and can absorb oil. In fact, they absorb 123 times their weight in oil. The sponge can be burnt to remove the oil and repeatedly used again to absorb more oil. Even after 11,000 testings in the lab, the sponge remained elastic enough for re-use. Furthermore, the sponge blocks are made of 99% air which can be used to conduct electricity plus they work well with magnets, essential to drain out the oil for further use.

However, to clean-up oil spills on a massive scale, larger sheets need to be produced or find a way to weld smaller sheets together. These nanotube sponges also have use in other applications such as scaffolds for bone-tissue regeneration and in automobile and plane industries.

The international team involved in this research, includes Mauricio Terrones, a professor of physics and of materials science and engineering at Penn State; Pulickel Ajayan, the Benjamin M. and Mary Greenwood Anderson, Professor in Engineering at Rice University; and other scientists from the United States, Spain, Belgium and Japan.

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Oil prices in Asia have climbed higher due to the disruption in the Middle East and the latest surveys of US jobs data.

West Texas Intermediate crude, New York’s main contract is scheduled for delivery in May was up by 24 cents at  $US102.70 per barrel. Similarly Brent North Sea crude for May was up by nine cents to $US122.76 in morning trade.

The worries about the geopolitical tensions and fear of disruption to supplies in the Middle East. This is in spite of the underlying factors that caused prices to go down in the past few days.

Iran, a major crude producer stated that nuclear talks with the world powers would take place on Saturday in Istanbul in regards to the controversial Tehran nuclear programme.

The last talks with the P5+1 powers – Britain, China, France, Germany, Russia and the United States were held in January 2011 with no effect.

Western countries along with US, fear that Iran is developing a nuclear weapon. However, Iran denies the charge and claims it is for peaceful purposes only.

Iran has threatened to close the ‘Strait of Hormuz’, a major route for oil supply, if further sanctions are imposed on it by the Western countries.

In the meantime, Kuwait is already imagining possible scenarios if the Strait of Hormuz is closed. Kuwait draws out around 3.0 million barrels per day and a large portion of it is exported as crude and refined products through the Strait of Hormuz.

In order to match earlier week’s downtrend, the prices on oil fell down on 2nd of April 2012. This downtrend was experienced after traders got the latest batch of data on the Chinese economy.

Because of ongoing changes, New York’s main contract dropped to 58 cents to $102.44 a barrel influencing West Texas Intermediate crude oil for delivery in May 2012. According to the midday report of London trade, Brent North Sea crude fell 95 cents to $124.34 a barrel. On last month, China manufacturing activity reached the highest level compared to March 2011. This has upturned a nightmare for a sharp slowdown in the world’s largest energy user.

The China Federation of logistics and Purchasing said: the official purchasing managers index (PMI) mounted to 53.1 from 51 in February 2012 served by an increase in new orders.

The figure marks the fourth straight rise because the reading above 50 suggests expansion, though a reading below 50 indicates contraction. A separate survey by HSBC is less appealing as it highlights a less optimistic picture compared to the official figure. HSBC’s PMI dropped to 48.3 in March 2012 from 49.6 in February 2012, depicting the sign of contraction in the fifth month manufacturing activity.

David Morrison, an analyst at trading firm GFT said: “Investors delved deeper into the official Chinese Manufacturing PMI, and decided that the bullish headline figure masked more troubling issues.” He added “This number has repeatedly contradicted data from HSBC which has now pointed to four consecutive months of contraction. Overall, there are increased concerns over the slowing pace of Chinese growth which could lead to reduced demand for oil.”

Because of issues between the West and major crude producer, especially Iran, many investors are vexed over possible supply distractions as the Islamic republic is hit by stringent sanctions.

There are two misunderstandings over Iran’s nuclear programme where Tehran said that it is for civilian purpose, but the U.S. believes that Iran and its allies are creating nuclear weapon.

Iran has threatened to shut down the strategic Strait of Hormuz if it is approached by further sanctions from the West.

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Higher oil prices are starting to pinch the pockets of EU consumers and could drive the region back into recession, said chief economist of the IEA, Fatih Birol.

Surging oil prices will have a direct impact on the European Union’s spending on energy imports, which would soar up to an approximate of $502 billion in 2012, compared to $472 billion in 2011. Furthermore, an additional $100 billion would be spent on natural gas imports whose prices are indexed to those of oil.

While high energy costs could eat away at Europe’s income, the region is not well equipped to handle the situation considering its other weaknesses that are currently festering the economy.

The IEA is concerned about the consequences of high oil prices on major energy-consuming, rich countries as prices edge towards $120 a barrel.

European citizens typically allot 6% to 7% of their income for cooking, heating and transport. This may go up to 11% if prices on oil remain at $120/bbl. Consumers are spending less on entertainment and food as they end up paying more for energy bills.

Europe is still recovering from the 2008 recession and continues dealing with its debt problems. The current situation could push it back into recession, said Birol.

Prices on road fuels have reached an all time high in many European countries with major economies like Europe, US, China and Japan forecasting $1.5 trillion on oil imports this year.

The current explosive oil prices has also given rise to the speculation that countries could release their emergency stocks of oil in an effort to reduce prices.

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After a successive 10-month increase in oil prices denoting a new data in the U.S. economy, it dropped down below $108 a barrel in Asia.

The prices on benchmark oil for April delivery fell down 57 cents to $107.52 barrel at the middle of the day Singapore time in electronic trading on the New York Mercantile Exchange. On 18th March 2012, the contract increased $1.03 to settle at $108.09 in New York.

Dropping down 56 cents to $125.15 a barrel for May delivery in London, the prices on Brent crude showed drastic alteration.

Investors’ confidence increased because of alteration in pricing of crude oil, which jumped from $96 in February and $75 in October depicting a boost in the U.S. economy. Looking back to the stock market, the investors detected that the Standard & Poor’s 500 rose 0.4 percent on Monday. This increase had been noted down to the highest after a long time since 20th of May, 2008. However, Asian stocks couldn’t do much better on Tuesday.

The latest clues for oil market are calculated by data on the U.S. housing and jobless claims. According to a private survey of the U.S. home building industry, home sales will increase in upcoming months.

Energy trader and consultant Ritterbusch as well as other associates said: “The market is anticipating additional favourable U.S. economic news” and further added: “until concerns ease regarding Iranian risk, the market appears capable of maintaining price gains, especially if equities remain strong.”

Heating oil fell down 1.4 cents to $3.26 per gallon and gasoline futures jumped 1 cent to $3.35 per gallon in other energy trading. Natural gas dropped down 0.4 cent to $2.35 per 1,000 cubic feet.

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According to the Vienna-based cartel, weekly average prices on oil of the Organisation of Petroleum Exporting Countries (OPEC) climbed up to $122.87 per barrel. From the last weekly report, the price rise has been recorded the highest since July 2008.

After rise of five consecutive weeks, the prices on oil have ascended by 12 dollars (or 10 percent) per barrel.

Following are major factors related to an increase in oil price:

Iran, OPEC’s second largest exporter of crude oil, is the controller of the Strait of Hormuz, which is the world’s most important sea transport line of crude oil. The geographical crisis is a big dent on increasing oil prices. This is associated with the Iranian nuclear issue. The presence of other foremost crude oil exporting countries in the Gulf region is another hurdle in raising oil price. Some analysts think argumentation on the Iranian nuclear issue may lead to a local military conflict. This can result in shut down of transportation links.

Because of speculation in the crude oil market, Greece is trying to avoid default through debt restructuring. Uplifting value of euro as a result of falling dollar along with resolving Greece’s debt crisis have prompted investment in crude oil future, which is a key factor for ascending oil price.

Oil prices climbed because of positive economic figures from the United States. The official statistics depicted that around 227,000 new jobs were created in the United States in February. This has crossed earlier speculations.

Economic situation is a strong factor for increasing prices on oil. Because of lifting investor sentiment, the Standard & Poor’s 500 index increased by 0.3 percent to 1, 370 points. Hence, this has resulted in climbing oil prices.

Rising oil prices have a long-term effect. This can also release more oil into the market to maximise profits.

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