Headlines
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Crude stays below 70 $/b level
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Lower crude and greenback push gold higher
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Base metals mixed after previous losses
Brent and Distillates
Crude eased on Wednesday after the U.S. Department of Energy reported that crude oil inventories fell last week by 400 kb compared with projections that they would be down by 600 kb. Petrol stocks were down 3 mln.b, far more than expected 900 kb draw while distillate stocks rose 1.2 mln.b, double the forecast of a 600 kb build-up.
Supply from 11 OPEC members rose to 26.20 mln.b/d from 26.12 mln.b/d in July, a Reuters survey showed. None of the countries complied with its implied target that was 24.84 mln.b/d for the whole group.
Russia produced 9.97 mln.b/d crude in August, up 0.6% from 9.91 mln.b/d in July and 1.5 % higher than the 9.82 mln.b/d produced in August 2008. The main increase came from Rosneft that launched Vankor oilfield in the Arctic. New field with 220 kb/d in 2009 and 510 kb/d proposed for 2014 should become a major supplier to China. It is assumed that OPEC is frustrated that Russia has taken advantage of OPEC's cuts over the last year. Natural gas production also recovered from its lows on improved demand.
Iraq's oil exports in August reached 2.009 mln.b/d, a shade lower than the 2.037 mln.b/d in July, the head of the State Oil Marketing Organisation said on Wednesday.
OPEC ministers will meet on 9 September in Vienna to review the market outlook and target levels. Several OPEC delegates are on the record saying it is unlikely the producer group will lower output targets with crude oil prices trading around 70 $/b. Both Iran and Algeria, however, have said a production cut may be needed if prices turn lower. The producer group has also said they are concerned about the high level of crude and refined products inventories. OECD oil stocks stand at 61.7 days forward cover as of end‐June.
PetroChina has agreed to pay 1.9 bln C$ for a majority stake in two oil sands projects in northern Alberta in the latest of several Chinese investments to help develop the world’s second-biggest oil reserves. Production at full capacity is projected to reach 300- 500 kb/d at a total capital cost of 15- 20bln C$. The first phase of the project is due to come on stream in 2014 with a daily output of 35 kb/d at a cost of about 1.1bln. C$. The two projects should be viable at an oil price of 50-60 $/b. Lower oil prices over the past year has caused the postponement of many oil sands projects. The Canadian Association of Petroleum Producers has lowered its 2020 production projections from 3.8mln.b/d two years ago to a maximum of 2.9mln.b/d.
A big new oil find by BP may spur excitement about the Gulf of Mexico's deepwater potential, but technical challenges mean that it could be years before any oil is brought to the surface. BP described its Tiber discovery as "giant," which according to the U.S. EIA is a find of 500 mln.b or more.
