Special Report on Crude Oil Friday, February 21, 2014

Transcription

1 Special Report on Crude Oil Friday, February 21, 2014 U.S. oil futures cruised to another 2014 high in February, as a tightening picture for products refined from crude and improved domestic pipeline infrastructure buoyed the market. weeks. Wednesday's settlements. A frigid winter has driven strong demand for heating-related fuels such as natural gas and heating oil, and prices have surged as inventories have fallen. In government data released last week, inventories of distillates, which include heating oil, were 10% below year-ago levels and 22% below average for this time of year. Though weather isn't normally a strong driver of crude prices, the tight supply picture has traders betting that crude will be in high demand for more refined products--particularly as new extended weather forecasts predict another severe cold spell for much of the U.S. in the next week to two Another major factor boosting the crude market has been the opening of the southern portion of the Keystone XL pipeline system, which has expanded the ability for crude to reach refiners on the Gulf Coast, where it can be processed into products and exported. As more products refined from domestic crude reach the global market, traders believe the value of the U.S. benchmark will rise to be closer to that of its global Brent counterpart. The distance between those two contracts has been nearly cut in half since the start of the year, standing at $7.16 as of On MCX Crude Oil March expiry contract trading near 5 month high as market open near Rs 6151 per barrel after registering low of Rs per barrel. Market registered high near Rs per barrel. It was trading up by almost 4% from January month closing prices. On Nymex, Market registered high of $ per barrel, trading near 101.7, almost up by 5.7% from previous month closing prices. Page 1 of 7

2 Crude Oil Inventory: Last Month on 5 FEB weekly Crude oil Inventory was at its lowest. There is an inverse co-relation of Price and Inventory as inventory goes Down, prices Increased and vice Versa. USDINR Vs Crude Oil Correlation Following chart depicts the correlation between INR and Crude oil, white line shows crude oil price movement and green line indicates INR movement. Thorough this chart we can clearly see that there is a positive correlation between INR and Crude oil Prices. Prices move in the same direction at the same time. Price of crude oil is shown at right side and left side prices are the rupee rate. Page 2 of 7

3 Seasonality chart- Following map shows seasonality in gold prices, blue line indicating 2010 price movement and green line for 2011, red line for 2012, orange indicating 2013 and yellow indicating average of World Energy Consumption The International Energy Outlook 2013 (IEO2013) projects that world energy consumption will grow by 56 percent between 2010 and Total world energy use rises from 524 quadrillion British thermal units (Btu) in 2010 to 630 quadrillion Btu in 2020 and to 820 quadrillion Btu in Much of the growth in energy consumption occurs in countries outside the Organization for Economic Cooperation and Development (OECD), known as non- OECD, where demand is driven by strong, long-term economic growth. Energy use in non-oecd countries increases by 90 percent; in OECD countries, the increase is 17 percent Page 3 of 7

4 Top ten oil importers in China is the world's second-largest consumer of oil and projected to move from second-largest net importer of oil to the largest in According to the Oil & Gas Journal, as of January 2014, China holds 24.4 billion barrels of proven oil reserves, up over 0.7 billion barrels from the 2013 level and the highest in the Asia-Pacific region. China's total oil and liquids production, the fourth largest in the world, has risen by about 54% over the past two decades and serves only its domestic market Crude Oil Highlight Lift the Crude-Oil Export Ban, U.S. Chamber Says-The president of the U.S. Chamber of Commerce, Tom Donohue, called for the federal government to lift the 40-year old ban against exports of American crude oil China Crude Imports Rise to Record High as New Refineries --China which consumes more oil than any country except the U.S., boosted net crude imports to a record high last month as two new refineries prepared to begin operations. Overseas crude purchases exceeded exports by million metric tons in December, Crude oil gains on weak U.S. unemployment report--oil prices rose after a poor U.S. December jobs report fanned expectations for the Federal Reserve to taper its monthly bond-buying program on a very gradual basis, which would elevate crude and other commodities by weakening the greenback Libya s First Oil Expansion in 10 Months Aiding Refiners-- The first expansion in Libyan oil production in 10 months is poised to lower regional crude costs, boosting margins for European refiners that have been closing at the fastest rate in decades. The holder of Africa s largest crude reserves tripled supply to about 650,000 barrels a day in the three weeks to Jan. 13, The production rate, 42 percent of the average for the past decade Page 4 of 7

5 China's 2014 oil demand, imports to grow faster-cnpc-- China's implied oil demand will grow quicker this year at around 4 percent as new refineries start up, the country's top oil firm forecast, after slowing economic growth likely led to its weakest rise in five years in China, the world's second-largest oil user and a key factor in global prices, has driven oil demand growth for most of the past decade and its slowing consumption has helped rein in prices despite a plunge in exports from OPEC member Iran due to sanctions and prolonged outages in Libya Libya separatist group to pursue oil exports--the breakaway group in control of much of Libya s oil says it is discussing deals with a number of prospective customers to ship crude out of the country but has not made any final agreements and declined to disclose names of traders or companies. Traders look to end of US oil exports ban Crude oil slips rising exports from Iran, Libya --The price of oil fell as Libyan production continued to ramp up and the possibility of increased crude exports from Iran raised the prospects of excess supply on global markets Crude oil falls after weaker Chinese growth figures-- crude oil futures fell on China's fourth quarter GDP and December industrial production and retail sales data that showed a slightly weaker than expected trend. Crude Drops on Concern Slowing China Economy Will Curb Decline--West Texas Intermediate crude fell Amid speculation a slowing economy in China will reduce fuel demand in the country, the world s second-biggest oil consumer, EIA: Global oil demand to rise 1.2 million b/d in Global liquid fuels consumption is forecast to increase by 1.2 million b/d in 2014 and by another 1.4 million b/d in 2015, according to the US Energy Information Administration's Short-Term Energy Outlook (STEO), released this month. Countries outside of the Organization for Economic Cooperation and Development, led by China, account for nearly all consumption growth over the forecast period, EIA said. OECD consumption is expected to decline by 0.1 million b/d in 2014 and remain flat in EIA forecasts OPEC crude oil production to decline by 0.5 million b/d in 2014, as some OPEC producers cutting back production to accommodate non-opec supply growth. In 2015, overall OPEC production is to remain close to its 2014 level while some key member countries continue to reduce their output to accommodate assumed production recovery from Iraq and Angola. IEA Warns U.S. Oil Output Growth Could Hit a Wall--Surging U.S. oil production could hit a wall in the coming years if the country maintains its ban on crude exports. America's crude output has surged in recent years, driven by a boom in shale oil production. Last year, the country's oil production rose 15%, the fastest absolute annual growth in any country in 20 years. By next year, the IEA estimates imported oil of a similar quality to the crude produced from shale could be almost entirely backed out of U.S. coastal refineries IEA Sees Higher Oil Demand on Developed-Nation Economic Recovery--Global oil demand will increase more This year than previously forecast, the International Energy Agency. A ban on U.S. crude exports may crimp output growth, World consumption will climb by 1.3 million barrels a day, or 1.4 percent, to 92.5 million barrels a day, the IEA in its Oil Market Report. The increase of 90,000 barrels a day from last month is the first year of annual demand Page 5 of 7

6 growth in developed nations since 2010, it said. U.S. restrictions on exports may mean its surging domestic production hits a crude wall that curbs further expansion, China Seen Retaking Lead from U.S. in Oil Demand Growth by IEA--China will retake the lead over the U.S. in oil demand growth this year as its manufacturing and transportation industries expand, the International Energy Agency said. Chinese use is forecast to expand 3.6 percent, or 369,000 barrels a day, to million barrels a day this year, U.S. consumption will rise 0.4 percent, or 72,000 barrels a day, a slower pace than last year when its barrel-a-day expansion exceeded that of China. Soaring shale output in the U.S. is helping the world s largest oil consumer achieve its highest level of energy independence in two decades Crude oil prices increase after rise in demand, Chinese credit action--the price of oil rose after China's central bank injected credit into the financial system to offset concerns about slower economic growth, and experts raised their forecast for global crude demand, The Chinese central bank announced late in the day it would inject additional money into the financial system, reducing fears of a credit squeeze. That helped to offset lingering concerns after Monday's report of slowing economic growth in China WTI Crude Halts Advance on Speculation China Fuel Demand to Slow-- West Texas Intermediate halted a threeday advance near a three-week high amid speculation China s fuel demand will slow after a manufacturing index unexpectedly contracted. Libya Minister Says Crude Exports Down By 60%, MENA Report--Decrease due to shutdown of major sea ports in Libya, Crude Oil Falls After Fed Policy Statement-- oil futures fell after the Federal Reserve it would further scale back its economic stimulus program, a measure that has helped prop up crude prices. OPEC oil output rises in January--(OPEC) oil output has risen in January from December due to a partial recovery in Libyan supply and higher shipments from Iraq and Iran. Output from OPEC averaged million barrels per day (bpd), up from a revised million bpd in Decem ber, according to the survey based on shipping data and information from sources at oil companies, OPEC and consultants. The survey illustrates the potential for OPEC supply to rebound in 2014 if Libya, Iraq and Iran sustain higher output. That could put pressure on oil prices without cutbacks from other members, such as Saudi Arabia. WTI Oil Drops on Concern China Fuel Demand May Slow--West Texas Intermediate crude fell On amid speculation that China s fuel demand will shrink as economic growth slows in the world s second-biggest oil consumer. Page 6 of 7

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