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| September 15, 2003 | Monday | Rajab 17, 1424 |
World commodity report
Oil
In the first week of September, oil prices slumped by as much as 9 per cent as concerns about the low level of gasoline inventories diminished after the end of the US summer season. By late September 5, the price of benchmark Brent North Sea crude oil for October delivery stood at $27.23 a barrel in London from $29.55 a week earlier.
The US crude oil stocks rose by a bigger-than expected 1.8 million barrels to 280.4 million barrels in the week to August 29, the US Department of Energy said. Gasoline inventories showed a surprise increase of 700,000 barrels to 191.9 million in the week, while distillate fuel stocks rose by 2.9 million. “It was very bearish overall,” said the US-based analyst of brokers Refco.
By September 9, crude oil prices recovered part of earlier week’s US gasoline inspired $2 a barrel fall on further concern about supply issues in Nigeria and Iraq.
A Nigerian union said that the Royal Dutch/Shell, which accounts for almost half of Nigeria’s 2 million barrels a day in oil production, had shunned talks to try and end a strike. The Pengassan union has threatened to withdraw from Shell facilities. The action comes on top of sporadic ethnic fighting in the oil producing region of Nigeria, which has also caused concern about future oil supplies.
Iraq’s ability to return to anywhere near the 2.7 million barrels a day it was producing before the war suffered another setback when the US army engineers said the Iraq-Turkey Kirkuk oil pipeline, damaged by sabotage some weeks ago, would stay closed for another five weeks as repairs were completed.
Members of Opec will have to spend nearly $100 billion by 2010 and $209 billion by 2020 in order to sustain their existing production capacities, as well as cater for the projected rise in demand.
Secretary General of Opec said the advances in petroleum technology continue to make oil and gas cleaner fuels, and this is accompanied by improved infrastructure and transport particularly for gas. “The successful development of carbon dioxide sequestration technology will ensure that the use of fossil fuels is entirely compatible with sustainable growth and that they will continue to serve the needs of mankind for decades to come. Opec can, therefore, make a major contribution to an evolving energy system, which is closely tied to the demands of sustainable development.”
Russian pipeline oil exports climbed to a new all-time high in August while oil output by the world’s second largest oil exporter hit a new post-Soviet peak, the Russian Energy Ministry data showed. August oil exports through the state pipeline monopoly Transneft rose by 100,000 barrels per day from the previous month to 3.58 million barrels per day, while output rose to 8.6 million barrels per day compared with 8.5 million barrels per day in July.
Industry sources said the boost was mainly due to bigger shipments through the country’s main Black Sea ports, which enjoyed favourable weather in August.
Gold prices have held steady for the past seven months, with a weakening of the dollar the main supportive factor. On the London Bullion Market, the price of an ounce of gold stood at $375.8 on September 5, against $375.6 the previous week.
Political uncertainty in the Middle East is one factor, as it attracts investors interested in gold as safe haven investment.
There has been a slight pickup in the euro, providing support. The dollar extended its losses against the euro late in the week in response to the disappointing US employment figures.
Gold was also supported by expectations that an agreement between the world’s major central banks to limit gold sales would be extended at an International Monetary Fund meeting in Dubai on September 23, analyst said.
Gold prices closed at their highest in London for almost seven years on September 9. The metal was helped by a weaker US dollar and political concerns in the Middle East. The rise in gold helped push other precious metals higher. Platinum revisited its 23-year high of $714 a troy ounce, a point it last reached a week ago.
Spot gold closed in London at $381.05 a troy ounce, its highest close since mid-November 1996. The London fix was set at $382.25.
In early New York trading gold was at $382.20/382.95, just off its intra-day peak of $383.20. This is the highest point at which bullion has traded since reaching a 61/2-year high of $388.50 in early February in the run-up to the war in Iraq. Investors have been attracted to gold lately. Speculators hold record long positions, indicating that prices are expected to rise, in futures traded on Comex, part of the New York Mercantile Exchange, according to the Commodity Futures Trading Commission.
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