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The Commodities Report

Gold reaches 1165$/oz level

Tue, Nov 24 2009, 10:42 GMT
by KBC Market Research Desk

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Headlines

• Crude oil slightly gains due to tension between Iran and Western nations 

• Gold reaches 1165$/oz level 

• Possible Latin America supply disruptions send base metals higher again

  
  

Brent and Distillates

Oil prices rose slightly as lower price and heightened tension between Iran and Western nations raised speculation over a potential supply risk, encouraging investors to push prices higher.
Today, oil eased to hover around 77$/b, weighed down by a firmer greenback, but trade thinned ahead of the Thanksgiving holiday and weekly U.S. data that could show rising crude stocks.

Preliminary data showed oil consumption in China, excluding inventory moves, growing about 10% y/y, however, oil demand in the U.S. and Europe remains lacklustre.

Saudi Arabia's new method of pricing oil bound for the United States reflects the world's growing reliance on sour crude, which is harder to refine. The sour grades of crude may eventually displace sweet crude to become a benchmark.

The Norwegian Oil Industry Association, the OLF, said Friday that parts of the oil services industry were "in crisis" due to a collapse in orders attributable partly to the sector being starved of new exploration areas. Norway's oil industry has been pressurizing the government to open up the Lofoten region, located in waters above the Arctic circle. Lofoten is thought to contain 2 bln.b of oil equivalent.

U.S. refiners are expected to keep output at historic lows through the beginning of 2010 as they wait for the economy to recover enough to revive demand for gasoline and other fuels. Refiners are keeping runs below 80 % of capacity by extending the scope and length of planned seasonal maintenance. They are even shutting down plants in hopes of whittling down brimming diesel and gasoline stocks to keep profit margins in the black.

China's gasoline exports held strong in October, adding pressure to the Asia market where sellers were struggling with high stockpiles against slower demand, especially in Indonesia, Asia' top importer. Official customs data showed China's motor gas exports rose 62% from a year earlier to 345 kt last month.

World biodiesel annual capacity will grow to 39.8 mln.t in 2010, a 9% growth from 2009, even as many plants around the world are running at extremely low rates linked partly to the global economic downturn. Increases are most notable in Asia and South America.

Vietnam's crude oil output will fall by 1 million tonnes next year to around 15 million tonnes due to declining production at its ageing oilfields, Petrovietnam's top official said. However, production will improve in 2011 and the following years as a handful of new oilfields are put into commercial production.

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Published on  Tue, Nov 24 2009, 10:58 GMT

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