NEWS & EVENTS: Breaking News
30.06.2009 08:20
June 30. In global petroleum market headlines, oil prices surged nearly 4% to above USD 71 a barrel Monday, stoked by news of fresh rebel attacks on oil installations in Nigeria and gains in equity markets. Nigeria's main militant group said its fighters had attacked an oil facility belonging to Royal Dutch Shell in the Niger Delta on Monday, days after President Umaru Yar'Adua proposed an amnesty. Benchmark crude for August delivery gained USD 2.11 at USD 71.27 a barrel on the New York Mercantile Exchange. In London, Brent prices soared USD 1.92 to USD 70.84 a barrel on the ICE Futures exchange. Further support came as US stocks opened higher on signs of life in the global economy, which kept investors optimistic over the prospect of a recovery. The US Energy Information Administration revised up April oil demand by 1.18% from its early estimate of 18.255 mn bpd, suggesting a potential turnaround in the US economy. The EIA revision came after a bullish International Energy Agency mid-term oil demand forecast Monday, which said that there was a chance of an extended contraction and that the threat of a supply crunch had only receded, not gone away. Based on a higher economic growth scenario, the IEA predicted Monday product demand would grow by 0.6%, or 540,000 bpd on average, between 2008 and 2014, taking demand from 85.8 mn bpd to 89 mn bpd. Number 2 oil consumer China unexpectedly increased gasoline and diesel prices Monday by nearly 9% and 10%, respectively. Crude was bolstered by militant activity in Nigeria as fighters forced production outages in the West African country. The Movement for the Emancipation of the Niger Delta (MEND) said its fighters struck the Shell Forcados platform in the Delta state in the early morning. Shell reported having shut in some oil production at its western operations in the Delta while it investigated reports of attacks. As we can see, the Nigerian situation is the main factor driving the market right now and the attacks seem to be removing some oil production capacity from the market. Friday, four militant Nigerian factions said they would accept in principle an amnesty offer from President Umaru Yar'Adua, raising hopes Africa's top oil producer would halt a battle with rebels. Pipeline bombings, attacks on oil and gas installations and kidnapping of industry workers over the past three years have prevented Nigeria from pumping much above two-thirds of its installed oil output capacity of 3 mn bpd. Qatar's oil minister Abdullah al Attiyah said Monday that he does not see any need for OPEC to increase output when it meets in September. OPEC has already targeted cutting 4.2 mn barrels from September levels to help support prices. Algerian Energy and Mines Minister Chakib Khelil said Monday that an increase in OPEC oil production was hard to envisage, despite rising crude prices. We think OPEC could help tighten the oil market significantly later this year if it continues to implement production cuts. Iran's oil minister said Monday that it was producing in line with its OPEC output target. The market awaits US oil inventory data to be released tomorrow by the Energy Information Administration. We expect a 1-mn-bbl drawdown in crude stocks, a 1.5-mn-bbl build in distillate stocks and a 500,000-bbl build in gasoline stocks. We view yesterday’s rally as a speculative end-of-quarter upsurge, with traders trying to push prices higher and then selling before closing their books. For this reason, we expect to see heavy selling today, on the last day of the month, while inventory numbers tomorrow will not likely help to reverse what we believe could be an upcoming bearish trend.
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