Headlines
- Gold crosses 925$/oz level
- Gloomy U.S. retail sales weight on base metals
Brent and Distillates
On Tuesday 3-month crude oil contract price hit the 60 $/b level for the first time since November as demand for oil in China appears to be strengthening with crude imports up 13.6 % y/y in April to 3.95 mln.b, the first positive annual increase since October 2008. However, oil prices fell on Wednesday after OPEC cut its 2009 global oil demand.
Later on oil prices found partially support from U.S. inventories data, which showed an unexpected drop in crude stocks, down 4.7mln.b last week, confounding the consensus forecast for an increase of 1.4mln.b. Petrol stocks fell 4.1mln.b last week, compared with the consensus forecast for an increase of 200 kb, providing support for petrol prices
OPEC said in its Monthly Oil Market Report demand would drop by 1.57 mln.b/d in 2009 to average 84.03 mln.b/d. Its previous forecast was for demand to fall by 1.37 mln.b/d. Despite the latest revision, OPEC still expects higher global oil demand than IEA which last month forecast consumption this year at 83.4 mln.b/d. Demand is falling fast in the developed nations of OECD, but the global downturn has also curbed previously rapid demand growth in developing countries such as China and India. World oil demand contracted y/y by a record 2.4 mln.b/d in the first quarter of this year with about 95 % of the total decline attributed to the OECD, OPEC said.
OPEC complied with 77% of its pledged supply cuts in April, versus 82 % in March as the group’s production, excluding Iraq, was at 25.81 mln.b/d in April, up from 25.59 mln.b/d in March.
OPEC should strictly enforce existing oil output cuts before considering a new reduction at its next meeting on May 28 in Vienna, Algerian oil minister Chakib Khelil said late Monday. Speaking on the sidelines of a new oil field opening ceremony, Khelil said that if all OPEC members adhered to their production targets, a further 600 -700 kb/d would be removed from the market.
Norway's oil production fell to a preliminary 1.99 mln.b/d on average in April from 2.15 mln. in March, the Norwegian Petroleum Directorate said.
The latest run up in oil prices may trigger a round of hedging by big energy consumer industries, like airlines, seeking to protect themselves from a further hike in costs. Already experts say there have been signs more companies are wading into the market to take out protective positions against increased costs -- a trend that could accelerate oil's rally if it gains momentum.
