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OIL: EVENTS ROUND THE WORLD

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OIL: EVENTS ROUND THE WORLD

Oct 24 2014, 10.45am GMT

Stock.com

Brent down towards $86, Saudi supplies down, PetroChina buys from Columbia.

U.S Brent

Brent slipped following reports of a doctor in New York testing positive for Ebola, news that may affect the travel industry, prompting investors to steer away from risky U.S. stock futures; Asian shares also dropped. Brent was down 61 cents at $86.22 a barrel by 0233 GMT. U.S. crude for December delivery fell 70 cents to $81.39 a barrel, after closing $1.57 higher, its largest daily gain since 16 September.

U.S Sanctions

Representative from US administration, U.S. Treasury Undersecretary David Cohen, spoke at the Carnegie Endowment for International Peace regarding threats of sanctions to anyone seen buying black-market oil from the IS terrorist organisation. He cited smugglers transporting to Turkey and the Kurdish region of Iraq. IS was estimated to produce $2 million worth of crude oil a day, however allied air strikes in September have reputed to bring this amount down to 20,000 barrels a day, as reported by International Energy Agency.

U.S Futures

Cushing, Oklahoma is the delivery point for US crude where inventories rose by nearly 1 million barrels last week and are expected to rise further with the completion of 2 new pipelines to the Cushing oil hub. The result was a fall in the premium for benchmark cash WTI crude to its lowest level in six months. The premium for rolling long positions into December, recorded today, traded at 55 cents over December NYMEX futures, but slipped later to between 25 cents to 30 cents. Oversupply and lower prices are expected.

U.S Bank tests

The FED will apply stress tests to 31 U.S banks, due to start in January 2015, to ascertain if they can take the pressure of adverse economic conditions such as lower oil prices, lower employment or corporate loan increases.

Saudi Arabia

Saudi pumped less oil to the market in September than August, even after output rise. Supplies dropped 328,000 barrels per day (bpd) to 9.36 million bpd. Output however rose from 9.7 million bpd, up from 9.6 million bpd in August. This is positive news for the oil industry as the market looks for relief from falling prices.

OPEC meeting

OPEC’s twelve members are due to meet on 27 November next month to review target output figures. Targets currently stand at 9.7 million bpd, up from 9.6 million bpd in August. With prices at extreme lows, and actually breaking the $80 support level last week, still only a minority of OPEC members have called for a limit on output and supplies.

China

The desire for good value has taken China’s petrol giant, PetroChina Co., to Columbia to buy crude. As the world’s second largest oil user, China finds itself in a good position to benefit from low prices and eager suppliers. China’s total crude imports rose 7.8 percent in September from last year’s figures, recording 27.6 million tons, or 6.74 million barrels a day. Columbian crude into China doubled from last year to 7.8 million metric tons from January to September, whilst supplies from Saudi Arabia, dropped about 11 percent to 36.6 million tons.

The US Energy Information Administration recorded the following data on Columbian output. 

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