Petroleum Complex Outlook - An Excerpt from CRB'S Futures Market Service
Crude oil prices climbed to a 1-3/4 month high, moderately below January’s 16-1/2 month high. That 16-1/2 month high of $83.95 was a 45% retracement of the 1-1/2 yr downmove from July 2008’s record high of $147.27 a barrel to December 2008’s 5-3/4 yr low of $32.40 a barrel. Bullish factors include (1) the retreat in the dollar index to a 2-week low, (2) an increase in demand after total US fuel demand over the past four weeks rose +3% y/y to 19.3 million bpd, (3) renewed attacks by militants on oil installations in Nigeria, which threatens exports from Africa's largest crude oil producer, and (4) the prediction from China Oil, Gas & Petrochemicals that China's oil imports this year will rise 5% to 214 million tons, up from a record 203.8 million tons last year as the government's $586 billion stimulus spending spurs demand. Bearish factors include (1) the larger-than-expected build in weekly crude oil inventories to their highest level since Aug (+4.03 million bbl to 341.6 million bbl versus expectations of a +1.28 million bbl increase), (2) the larger-than-expected increase in weekly gasoline inventories (+773,000 bbl versus expectations of +300,000 bbl), and (3) the unexpected jump in the refinery capacity rate (+0.7 to 81.9% versus expectations of unchanged at 81.2%) which bodes well for further increases in gasoline and distillate stockpiles in the weeks ahead.
OPEC Summary: OPEC-12 output in Feb rose by +125,000 bpd (+0.4%) to 29.170 mln bpd from 29.045 mln bpd in Jan, remaining below the July 08 record of 32.775 mln bpd. OPEC-11 (ex-Iraq) output in Feb rose by +145,000 bpd (+0.5%) to 26.785 mln bpd.
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