Headlines
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Gold remains in a narrow range
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Higher Chinese demand and lower LME stocks send copper up
Brent and Distillates
On Monday morning crude fell more than 2$/b but recovered strongly later. OPEC's decision to enforce better compliance with previous curbs rather than make new production cuts and Opec secretary-general A. el-Badri warning that the cartel could take “drastic action” at its next meeting in May 28 if prices stayed low were enough to offset eroding global demand.
OPEC decided on Sunday against more supply cuts, signalling that it would delay its goal of boosting oil prices to 75 $/b for some time. The decision marks a significant shift in the policy of the cartel, which supplies about 40 % of the world’s oil and had given the impression that it wanted to push up prices as quickly as possible. However, it now seems that OPEC fears that more radical action to achieve the target could harm the fragile world economy. The result also shows that some cartel members would struggle politically and financially if they were to cut production significantly further than they have already. On the contrary the cartel urged its members to comply fully with the 4.2mln.b/d cuts pledged since September. Compliance stands at 79 %, leaving about 800 kb to be removed. OPEC has agreed to meet again in May 28.
OPEC's Angolan president said on Sunday the group's existing supply curbs had brought some stability to the market, although prices remained too low to encourage investment in new supplies.
According to IEA Saudi Arabia has delivered almost half the group’s collective 3.3mln.b/d production cuts since September and this past month may have produced below its nominal target. By contrast, Iran, Venezuela and Angola have collectively reduced output by only around 600 kb/d, or half the decided 1.17mln.b/d. Combined.
North Asia's crude imports fell last quarter from year-ago levels for the first time in nearly two years, as the global economic crisis hit demand, but China's increased purchases lifted Saudi exports to a record. North Asia imported a total 10.731 mln.b/d of crude between October and December last year, down 1% versus the same quarter a year ago and from thirdquarter 2008, as OPEC cuts first agreed in September, have barely been felt.
Iraq's economy will face even worse hardship next year if oil prices do not recover, Iraq's OPEC governor said on Monday. Iraq needs oil money to rebuild after years of sanctions and war. The 100$ price slump last summer has already forced Baghdad to curb government spending by a fifth for 2009, and more belt-tightening may be needed.
Kuwait's government will cancel a 15 mld.$ oil refinery project, which met opposition in parliament.
