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The Commodities Report

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Weak U.S. data sends crude down

Tue, Nov 4 2008, 10:35 GMT
by KBC Market Research Desk

KBC Bank

Headlines

• Stronger dollar weights on gold again

• Base metals slightly higher but outlook remains weak

Brent and Distillates

On Monday crude oil slumped on data showing weak manufacturing activity in the U.S. BP Chief Executive T. Hayward estimates that U.S. demand for oil has dropped some 2 mln.b/d on the year over the last four weeks. Sliding global automobile sales also weighed on demand for oil.

Russia slashed its export duty for crude oil to 287.30$/t, i.e. 39.35 $/b, from November 1, the government's press office announced over the weekend. The cut is the second in a few months as the Russian government tries to support oil producers in the light of huge falls in the price of crude. Export duty for light oil products has been set at 205.90$/t, while the tax for heavy oil products is 110.90$/t.

Both U.S. presidential candidates propose that millions of jobs should be created, as energy projects transform the economy, increase national security and cut greenhouse gas emissions. Obama has proposed spending 150 bln.$ over 10 years to spur the private sector to bring cleaner energy to market, including alternative fuels for transportation, renewable energy for power generation and carbon-capture technology for coal plants. McCain has said he would spend 2 bln.$ a year to advance clean-coal technologies and would set U.S. on track to build a fresh fleet of nuclear power plants by 2030.

Shell does not rule out further investment decision delays in the future after last week postponing a decision on a possible expansion of a major oil sands project in Canada, the company's exploration chief M. Brinded said on Monday. Citing concern over rising costs, Shell last Thursday said it was postponing a decision on expanding further its Athabasca Oil Sands project, currently in the middle of a first phase expansion that should boost production capacity to 255 kb/d by 2010. However, Brinded declined to say at what oil price level Shell might have to reconsider future projects.

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Published on  Tue, Nov 4 2008, 10:54 GMT