Headlines

  • Crude oil returns below 70 $/b

  • Gold back on the verge of 1000 $/oz level

  • Higher London stockpiles and lower Chinese demand ease base metals


Brent and Distillates

Commodities


Commodities

At the last week’s end oil prices fell below 72$/b in thin trading, pressured by easing Asian stocks and comments by Chinese refiner Sinopec that diesel demand in China had not completely recovered. The downward pressure continued on Monday sending crude below 70$/b level.

OPEC noted in its latest monthly oil market report that while its production cuts had helped to reduce crude inventories, refined products now represented "more than 60% of the total overhang in stocks compared with only 20% in January.

An anticipated bounce in fuel demand next year will not be enough to prevent European refiners from cutting runs or even closing because of fierce competition in traditional export markets. Even if demand is set to pick up for most fuel next year as economies return to growth, refiners will no longer be able to count on a gasoline exports to U.S., which has traditionally provided a lucrative revenue stream, refiners and analysts said.

While a further increase in oil prices is not a foregone conclusion, several leading investment banks and industry analysts have predicted that prices will move higher, perhaps sharply. Goldman Sachs recently predicted the current slack in the oil market could be re-absorbed by the end of 2010, as supply lags the recovery in demand owing to an investment hiatus, recreating the conditions that led to a sharp price increase in 2008.

The recession has resulted in a big fall in global greenhouse gas emissions, an IEA study has found. Carbon dioxide emissions from burning fossil fuels had seen a significant decline in 2009, more than in any year in the last four decades, largely because of falling industrial output.

The prospect of new oil finds in West Africa will lure big investors to the region but firms can expect regulatory obstacles in countries still recovering from years of war and instability. A consortium led by Anadarko Petroleum Corp this week announced a find, called Venus, off the coast of Sierra Leone near the Liberian border that could mean a multibillion-barrel oil deposit.

Vietnam's first refinery, the 140,000-b/d Dung Quat plant, will reopen on Sept. 30, the refinery said in a report. The plant, which was shut down for technical repairs on Aug. 18, will resume operations at about 65% of its designed capacity, or about 90 kb/d.

China's gasoline exports jumped to their highest since early 2007 and diesel sales remained unexpectedly strong last month adding to concerns that domestic demand in the world's No. 2 consumer is failing to keep up with record refinery production. China exported 518,551 t of petrol last month, official customs data showed, up 248 % from August last year, when refiners were importing gasoline to meet heightened demand during the summer Olympics.

In a speech on Monday, Andrew Sentance, a member of the Bank of England’s monetary policy committee, said the energy market was “one of the prime candidates” for the next big global shock and warned of “substantial upside risks” to oil prices as demand recovered across the global economy.