The Commodities Report
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Brent eases below 50$ level
Thu, Nov 20 2008, 11:08 GMT
by KBC Market Research Desk
Headlines
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Gold loses its inflation hedge role
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Recession fears weight on base metal prices again
Brent and Distillates
Crude oil prices went down on Wednesday as market participants reacted to several important reports about US oil inventory data, housing and inflation for an indication of forward oil demand.
The latest US inventories data showed a larger-thanexpected 1.6 mln.bbl rise in crude stocks last week, above the consensus forecast for a build of 800 kbbl. Gasoline inventories rose by 500,000 barrels, just above the consensus forecast for an increase of 400kbbl. Only distillate stocks (including heating oil) fell 1.5mln.bbl against the consensus forecast for an increase of 600 kbbl.
According to Centre for Global Energy Studies oil prices will continue to slide until OPEC makes real cuts in crude output or high-cost non-OPEC production is shut in. The London-based CGES, founded by former Saudi oil minister Ahmed Zaki Yamani, said its demand forecasts were more pessimistic than those of the IEA.. CGES also believes global oil demand will actually fall in both 2008 and 2009, with oil demand growth in Asia, Latin America and the Middle East no longer able to offset the continuing decline in OECD countries..
The CGES reference scenario sees OPEC further cutting output in the fourth quarter 2008 and, as a result, the price of Brent crude averaging 57$/b over the quarter. In the first quarter of next year OPEC may cut more firmly by more than 1 mln.b/d. However, reduced global demand for oil means the price continues to fall in spite of this, averaging 39$/b for the quarter.
Oil prices could fall to as low as 40$/b next year as more efficient refining capacity comes online and production costs for some regions fall, Deutsche Bank said in a Wednesday research note.
Lukoil deputy CEO Leonid Fedun said yesterday he hopes OPEC will decide to cut crude output at its emergency meeting in Cairo on November 29, reiterating his call for Russian authorities to join any such move. Fedun believes a "significant" output cut by OPEC may push crude prices back up to around 80$/b. Lukoil also called for Russia to join OPEC, while the country's authorities have spoken about coordination of actions with the cartel in order to prevent sharp fluctuations in price.
Chevron declared a force majeure in Nigeria on Tuesday after a main supply pipeline to its Escravos export terminal was sabotaged last week, forcing it to shut in around 90 kb/d.
China will help Costa Rica more than double the capacity of its state-run oil refinery under an agreement signed during Chinese President Hu Jintao's visit this week. The agreement between Costa Rica's oil refinery, Recope, and the state-run Chinese National Petroleum Corp will increase the plant's capacity to 60 kb/d from 25 kb/d.
Published on Thu, Nov 20 2008, 11:15 GMT
Archive
- Base metals correct previous gains
Published On Fri, Jul 3 2009, 08:29 GMT - Higher U.S. gasoline inventories push crude below 70 $/b level
Published On Thu, Jul 2 2009, 10:23 GMT - Stronger dollar eases gold
Published On Wed, Jul 1 2009, 08:47 GMT - Gold corrects yesterday's loss
Published On Tue, Jun 30 2009, 10:17 GMT - Crude returns to 70 $/b level
Published On Mon, Jun 29 2009, 08:32 GMT
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