Headlines
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Crude at year’s high
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Gold hovers near to record level
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Weak greenback and higher Chinese demand support base metals price
Brent and Distillates
On Wednesday crude oil prices rebounded from previous day’s weakness and hit a fresh 2009 high as commodity markets rallied after dollar sank through a key resistance 1.500 against the euro and U.S. inventories disappointed.
U.S. inventories released yesterday showed an increase of 1.3 mln.b in crude stocks last week, below the consensus forecast for a 1.8 mln.b rise. Petrol stocks fell 2.3 mln.b last week, above the consensus forecast for a 1 mln.b decrease. Also distillate stocks (including heating oil) fell 800 kb, however less than the consensus forecast for a drop of 1.3 mln.b. Almost one-fifth of refining capacity (18.9%) remains idle because of poor profit margins and disappointing demand from consumers.
OPEC countries have reactivated some planned oil projects which had been put on ice earlier this year as a result of low oil prices, the group's secretary-general Abdalla el-Badri said. From the 35 delayed projects, seven of them will be reactivated," Badri said on the annual Oil & Money conference in London.
Vietnam will increase by half the amount of fuel that distributors are required to hold in stock to the equivalent of 30 days worth of demand, the government said, aiming to ensure supply security as it opens the retail market. The new minimum stock requirement will take effect from Dec. 15 and remain in effect until 2025, it said in a circular on the oil product trading business signed by Prime Minister Nguyen Tan Dung. The current requirement is a minimum of 20 days.
The dramatic slide in Mexico's oil production has come to an end and it can maintain output at 2.5 mln.b/d for the coming years, Energy Minister Georgina Kessel said. Mexican crude output has plunged by nearly a quarter since peaking in 2004, straining public finances and leading bond rating agencies to warn the country's debt could be downgraded.
Stockpiles of the heating fuel in Japan decreased for the first time in six weeks, easing 3.2 % to 20.31 mln.b in the week to Oct. 17 from the week before, the Petroleum Association of Japan said on Wednesday.
Oil prices will probably stay strong over the coming months, driven by expectations of growing demand and a relatively high level of OPEC output discipline, BP's chief economist said on Tuesday.
According to China Petroleum and Chemical Industry a few key problems must be addressed if China is to revitalize its petrochemical industry. First, the industry lacks product integration, with an oversupply of low-end products and a shortage of high-end products that needs to be imported at high cost. Further on, a lack of resources is impeding the growth of pharmaceuticals, while environmental concerns cause hardship for many industries. Last but not least too many small-scale producers are scattered too widely across the country, while a lack of technological innovation leads to a surplus of low-skilled enterprises.
Steep production declines at Venezuela's older oil fields combined with obstacles to new heavy crude development could keep the country's oil production flat for years to come. Such stagnant production rates threaten to hinder economic growth in the country, where President Hugo Chavez's leftist government depends heavily on oil export revenues to fund the social programs that buoy its popularity.
