Energy commodity report
IFANDP NEWSROOM | JANUARY 2011 | SOURCE: Industrial Fuels and Power
Wednesday saw the already impressive spread between WTI and Brent crude widen further, with crude for February delivery on the NYMEX settling US¢52, or 0.6%, lower at US$90.86/bbl, while Brent rose by US¢36 to close at US$98.16/bbl.
The decline in the US is thought to be due to the restart of the Trans Alaska Pipeline, coupled with a report from the American Petroleum Institute that indicated that US crude inventories had risen by 3.5Mbbl, with gasoline and distillate stocks rising by 1.9Mbbl and 0.9Mbbl, respectively.
Further pressure came from the news that home construction in the US fell by 4.3% in December to the lowest level seen in over a year, together with the release of a report on Chinese inflation later today.
The latter prompted concerns that the central government might take further measures to reduce overheating, which in turn could reduce the pace of fuel demand.
Other recent news weighing on the market, includes a report from the IEA, which has suggested that Saudi Arabia has boosted oil production in an effort to stabilise oil prices. The kingdom’s output in December was estimated at 8.6Mbpd, up 100,000bpd on November.
If true, the news will be welcomed in several quarters. For example, the London-based Center for Global Energy Studies had said that “despite OPEC insisting otherwise, the CGES is still of the view that $90/bbl oil could prove too expensive for the global economy at this stage of the recovery, especially given the fragile nature of many governments’ balance sheets.”
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