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The Commodities Report

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Gold remains in focus of investors

Tue, Oct 13 2009, 10:21 GMT
by KBC Market Research Desk

KBC Bank

Headlines 

• Weaker greenback and positive demand forecast send crude higher 

• Gold remains in focus of investors 

• Re-opening market in China increases base metals price

Brent and Distillates

On Monday crude rose on growing optimism about the pace of global economic recovery and a positive demand forecast from IEA.

OPEC crude production rose to 28.93 mln.b/d in September, up 120 kb/d from 28.81 mln.b/d in August, the IEA said. Most of the increase in production corresponds to higher volumes from Angola and Nigeria, which outweighed smaller falls in supply from some other countries, including Iran and Saudi Arabia.
Excluding Iraq production from the 11 OPEC members bound by quotas rose to 26.42 mln.b/d in September from 26.25 mln.b/d in August, leaving them 1.575 mln.b/d above their collective target level of 24.845 mln.b/d.
As a result, compliance with the group's fell to an estimated 62% in September, down from 66% in August. Production by countries outside OPEC is estimated to have risen by 200 kb/d in September to 50.6 mln.b/d, leaving total world oil supply at 84.9 mln.b/d, up 300 kb/d on the month.

Using price and production projections from its October Short-Term Energy Outlook the EIA says OPEC's 12 members could earn a combined 558 bln.$ of net oil export revenues this year. For 2010, the EIA expects OPEC could earn a total 686 bln.$. The agency estimates OPEC's 2008 net export revenues at 971 bln.$, below the 1010 bln.$ OPEC itself said it earned last year.
Last week, the EIA expected the price of WTI to average 72.42$/b in 2010, unchanged from the previous forecast. For 2009, however, the agency has lowered its price projection to 59.90$/b from 60.12$/b.

Venezuelan oil exports in September fell by 230 kb/d after rising in August. Also total crude and refined product shipments fell to 2.328 mln.b/d in September.

Americans' newfound frugality means that demand for U.S. diesel fuel will continue to languish through this year's holiday season as shipments of goods remain weak. As a result, refineries, already running well below capacity, may be forced to slow operations even more to cut down on inventories of diesel and jet fuel, which have brimmed to 26-year highs.

Iraq's oil ministry signed a deal with Britain's BP and China's CNPC to develop its super-giant Rumaila oilfield, a milestone in Iraq's efforts to renew its struggling oil sector. On the contrary Iraq's Oil Ministry is considering revised offers from Exxon Mobil and Lukoil for West Qurna, one of several oilfields for which Iraq failed to secure a developer in a June auction. The auction was the centrepiece of Iraq's efforts to revive its lucrative but crumbling oil sector.

Current oil prices at the levels of between 60 and 80$/b are "convenient" for both exporters and importers, Kuwait's oil minister told the state news agency.

Total expects to increase its oil output in Angola by at least a third over the next two years as a new offshore oilfield comes on stream, and the French oil major predicts further big rises in output.

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Published on  Tue, Oct 13 2009, 11:24 GMT