Headlines
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Higher U.S. petrol inventories send WTI down
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Worries that China could increase bullion reserves support gold
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Fed comments behind base metals gains
Brent and Distillates
Yesterday Brent added and WTI eased after U.S. inventories showed contradictory results. Crude stockpiles dropped by 3.8 mln.b in the week up to June 19 exceeding market forecasts of a 1 mln.b drop. However, at the beginning of summer holiday season petrol inventories increased by 3.9 mln.b as refinery utilisation climbed, and distillates stocks hitting 2.1 mln.b.
U.S. oil demand should rebound when the economy recovers, but crude oil imports may not resume growth as rapidly as they did when past recessions ended, government forecasters said on Wednesday. New domestic petroleum supplies may minimize the need for more imports when the United States comes out of its economic downturn, the Energy Information Administration said.
The recent sharp rebound in oil prices appears to have been driven by speculative bets and is unlikely to be maintained without a recovery in real demand, the chief IMF economist said on Wednesday.
On Tuesday the EU energy commissioner Andris Piebalgs said that a 70$/b price was unlikely to throttle any nascent economic recovery. It is a rare acceptance of higher oil prices by a politician representing consumer nations that he considers such a price as “the most fair price”. On the contrary OPEC, which has criticised low prices for stymieing investment, said during a joint summit between the EU and OPEC, that saw signs of increased demand and that a price of 80 $/b would not jeopardise any recovery.
Recession will cut investments in the energy supply sector in 2009 from 2008 by more than the 100 bln.$ , i.e. 21% quoted in the IEA report released in May.
Iran plans to develop 20 onshore and offshore oil and gas fields as part of its next five-year development plan, some of which will be offered to foreign oil companies, a senior Iranian official said. He added that Russia had good potential for activities in Iran's oil and gas sector and there is much interest in Iran to have joint activities with Gazprom and Tatneft, specially in technology and enhanced oil production.
Last month the main militant group in the Niger Delta declared "all out war" but it is very hard to quantify how much production is both capable and how much is currently shut-in as a result of militant activity. The Nigerian Department of Petroleum recently said Nigeria was losing over 1 mln.b/d of its 3.2 million b/d of production due to the ongoing crisis in the region.
Japan's crude oil imports fell 18.8 % in May from a year earlier, the biggest percentage decline in five years, government data showed yesterday, reflecting weakening demand amid a recession. Japan's customs- cleared crude oil imports fell to 3.mln.b/d last month, marking the seventh straight month of decline, the Ministry of Finance said.
Russia's Gazprom and Nigeria's state-run oil company NNPC on Wednesday agreed to invest at least 2.5 bln.$ in a new joint venture to explore and develop Africa's biggest oil and gas sector.
The new company Nigaz, a 50/50 joint venture between the two energy companies, aims to build refineries, pipelines and gas power stations throughout Nigeria.
