Headlines
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Crude oil lower ahead of FOMC and OPEC meeting
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Gold gains even if dollar strengthens
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Base metals retreat amid concerns that China might tighten monetary policy
Brent and Distillates
Crude oil prices fell on Monday ahead of today’s FOMC and tomorrow’s OPEC meeting.
The International Energy Agency revised up its global demand forecasts for both 2009 and 2010 by 70kb/d. The IEA now expects global oil demand to reach 86.6mln.b/d this year, an increase of 1.8 % or 1.6mln.b/d versus 2009. Global demand in 2009 was revised up to 85.0 mln.b/d, a fall of 1.4%, or 1.2mln.b/d, compared with the previous year. The IEA said Asia alone would provide more than half of global oil demand growth this year with China accounting for almost two-thirds of that region’s rise.
Chinese implied oil demand has sustained growth at above 1mln.b/d since October 2009, with the pace of increase climbing to 1.4mln.b/d over the first two months of 2010.
OPEC meets for the first time in three months in Vienna tomorrow, when it will discuss individual member quotas and total output in light of an oil price wavering back near the 80$/b.
OPEC is unlikely to make any formal decision on the issue. Satisfied with current oil prices, the cartel is widely expected to keep its formal production target unchanged at the meeting, as it did throughout 2009. Without Iraq, OPEC states have increased output by roughly 600 kb/d since early autumn while crude prices have gained around 11$/b to the upper end of what many OPEC ministers say is their preferred 70- 80$ price range.
Members such as Nigeria, Angola and Venezuela have indicated in the past weeks that they want higher targets within the group's quota system in order to accommodate new drilling projects that represent significant potential cash flow. Angola alone is expected to add around 100kb/d in production capacity this year.
The rebuilding of Iraq's oil sector is a factor that will appear very soon. With the world's third-biggest proven oil reserves, the gradual resurrection of Iraq's oil industry will inevitably raise competitive threats with producers, such as Iran and Saudi Arabia, from 2011 onward as Iraq's production capacity increases. However, it isn't a factor at the moment.
Sinopec Corp has started building a large oil stockpiling facility in southern Guangdong province, a company newspaper reported . The commercial oil storage facility, consisting of 15 oil tanks with capacity of 125, km3 each, is expected to be operational by the second half of 2011.
Russia's crude oil export duty is set to be fixed at 36.80$/b from April 1, i.e. 6% more than March's level of 34.73$/b to reflect a recent increase in the Urals price, according to finance ministry data released Monday. Nevertheless, the export duty for East Siberian crude oil is likely to remain at zero for April, a government source said, although the government may take a final decision on changing the rate in the middle of this week.
Libya warns that European countries locked in a diplomatic row with Libya should remember that their energy firms have interests in the North African country, Libya's top energy official said in an interview.
Venezuela will export crude oil to Belarus 80 kb/d starting in May, Venezuelan President Hugo Chavez said on Monday.
