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The Commodities Report

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Favourable U.S. statistics push base metals up

Thu, Nov 26 2009, 11:54 GMT
by KBC Market Research Desk

KBC Bank

Headlines

• Crude oil price recovers as dollar falls

• Gold at fresh high

• Favourable U.S. statistics push base metals up

Brent and Distillates

Last week U.S. crude stocks rose by 1mln.b, slightly below the consensus forecast for an increase of 1.2mln.b as imports recovered following disruptions caused by tropical storm Ida. Also petrol stocks rose 1mln.b compared with the consensus forecast for an increase of 300 kb. However, demand remains sluggish, just below the 9mln.b/d level averaging 8.99mln.b/d over the past four weeks, up 0.5 % over the same period last year. On the contrary distillate stocks fell 500 kb, above the consensus forecast for a drop of 100 kb. More than one-fifth of U.S. refining capacity has been lying idle due to poor demand but activity recovered slightly with refinery utilisation up 0.9% to 80.3 %.

More plant closures could be on the way for the U.S. oil refining industry, which has already idled some plants this year, as profits are squeezed by weak fuel demand and high supplies. It is expected that the U.S. refining industry will only return to decent levels of profitability after the permanent removal of at least 5% of its capacity, i.e. around 900 kb/d.

The volume of Japan's customs-cleared crude oil imports fell 18.4% in October, marking the 12th straight month of annual declines, the Ministry of Finance said. Japan, the world's third-biggest oil consumer, imported 3.29 mln.b/d of crude oil last month, the lowest for the month since 1989, the preliminary data showed.
Japan's weekly commercial crude stocks rose 4.6% last week after approaching multi-decade lows earlier this month, with the build coming despite a rise in crude runs, suggesting an uptick in imports to refineries. Crude stocks grew to 91.6 mln.b in the week to Nov. 21, after falling the previous week.

Norwegian major Statoil wants to explore off the coast of Greenland, believing that the region offers high potential for discovery, one of its executives told Norwegian business daily Dagens Naeringsliv. Nevertheless, Statoil drilled a dry exploration well off Greenland in 2000 which according to other estimates, cost around 62.7 mln.$.

Germany's biodiesel industry produces at about 20% of capacity because of taxes on the fuel that have cut petrol station sales and imports of cheap Argentine for blending, an industry leader said. Germany's 4.8 mln.t annual capacity biodiesel industry was expected to produce about 1 mln.t this year, said Peter Schrum, president of biofuels industry association BBK.

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Published on  Thu, Nov 26 2009, 12:18 GMT