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The Commodities Report

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Gold corrects yesterday's loss

Tue, Jun 30 2009, 10:17 GMT
by KBC Market Research Desk

KBC Bank

Headlines

• Crude returns to 70$/b level ignoring lower IEA forecast 

• Gold corrects yesterday’s loss 

• Surge in crude prices supports copper

  
  

Brent and Distillates

On Monday oil climbed above 70$/b as tensions in energy-rich Nigeria increased worries and markets shrugged off lower IEA forecast.

The IEA made a large cut to its medium-term forecast for total world oil demand, suggesting the impact of recession and energy-efficiency efforts may help check future increases in the price of crude oil. The IEA expects global oil demand by 2013 to grow by 0.6% in 2008-14 Its forecast for a 540 kb/d increase marks a significant revision from the 1 mln b/d prediction made in 2008.
Nevertheless, the IEA is still very concerned an too rapid oil price rise could derail any economic recovery and consumer countries should seize the moment to improve energy efficiency, the agency's executive director said on Monday.

U.S. oil demand in April was 216 kb/d more than previously estimated, but was still down 1.297 mln.b/d from a year earlier, the Energy Information Administration said on Monday.

Nigeria is struggling to fulfil its OPEC output quota and has shut down two refineries as militans step up attacks on oil installations in the southern Niger Delta. Nigeria has an implied OPEC quota of 1.67 mln.b/d that came into effect on January 1 but weeks of violence in the restive region has cut output to 1.6 mln. b/d.

Russia clearly sees itself as an observer and not a member of OPEC, President Dmitry Medvedev told the oil producer group's current president on Friday. OPEC has repeatedly invited Russia to participate at its meetings in the hope that it would join or work with the group.

Oil traders are relying on an unwitting ally, OPEC, to help them quietly exit what experts say is one of their most lucrative gambits ever -- storing vast oil supplies at sea to sell later for profit. Trading firms like Koch and Vitol have sold millions of barrels from supertankers into the United States over the past month to cash in after crude prices doubled since winter, tanker brokers told Reuters.

The Indian government may unveil a roadmap in its July 6 budget to deregulate fuel pricing and give leeway to state-run oil refiners to fix petrol and diesel prices within a band. Refiners will probably be allowed to raise retail auto fuel prices by up to 15-20%..

For the first time since the U.S. invasion global oil firms will have a run at Iraq's vast oil resources when Baghdad auctions off contracts in its biggest fields this month. The June 29-30 tender for service contracts in six already producing oilfields and two undeveloped gas fields is fraught with risk following a revolt in the state-run oil industry, and amid violence and political uncertainty.

Sinopec's 7.2 bln.$ bid for oil explorer Addax Petroleum is a sign that China's energy giants find it easier to secure reserves in parts of the world where there are fewer hang-ups about Beijing owning local natural resources. Africa and the Middle East, where Swiss-based Addax has its main assets, are more politically disposed to China than are developed nations such as U.S., where local politicians blocked CNOOC's $18.5 bln.$ bid for oil company Unocal in 2005. 

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Published on  Tue, Jun 30 2009, 10:35 GMT