Headlines
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Ahead of OPEC meeting crude rises towards 68 $/b
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Gold overcomes 1000 $/oz
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Supply disruptions in China support lead price higher
Brent and Distillates
Oil prices rose towards 68$/b, as concerns about weak energy demand in the U.S were offset by a broad rise in Asian equities markets and expectation on OPEC meeting.
Tomorrow OPEC ministers meet in Vienna to discuss production quotas. However, analysts believe that may see more rhetoric on compliance but no change in output targets.
Recently Saudi Arabia has quietly increased its oil production capacity to a record 12.5mln.b/d. As the kingdom pumps 8.3 mln.b/d a third of its capacity is shut. The expansion has helped offset losses from Nigeria, Iran, Iraq and Venezuela. The kingdom holds 90 % of the world’s spare oil capacity and has the ability to bring the oil to the market either gradually, or immediately if war or politics suddenly cut off supply from another oil producer.
Venezuela said on Sunday it had agreed to export 20 kb/d of gasoline to Iran, which imports a large part of its needs.
The price ratio of U.S. crude oil to U.S. natural gas futures reached a record width this week and could stay that way in the long term as fundamentals pull the markets in different directions. Natural gas prices have been pressured to 7 year lows this week by bearish domestic fundamentals, while crude, which is more heavily impacted by international factors, has been bolstered this year by growing economic optimism.
Official opinion conflicts with analysts' views over whether production from Russia's new oil fields can replace the fall from older deposits after record August output. Analysts say the recent uptick might not be enough to offset stagnating western Siberia deposits, and it could be decades before sufficient infrastructure is in place to exploit new reserves in eastern Siberia.
Jordan has asked Iraq to supply it with a greater portion of oil allocated to the country under a recently renewed pact between the two neighbours. The country expects that oil shipments it receives now could be increased from 10 kb/d to 15 – 20 kb/d. Jordanian officials have cited transportation difficulties as the reason why shipments had not increased to 30 kb/d.
Mexican President Felipe Calderon replaced the head of state-owned oil monopoly Pemex on Monday and urged his replacement to reverse slumping production and reserves. Mexico, which depends on oil sales to finance government spending, has seen its crude output slide more than a quarter since 2004 as yields drop at the aging Cantarell field and new projects prove slow to make up the gap.
