Barclays Capital has cut its oil price forecast for the year to $60 a barrel for Brent, down from $71 (it sees West Texas Intermediate at $57 a barrel on average). The reduction is significant as the bank’s commodities research team, lead by Paul Horsnell, has been an accurate – and bullish – forecaster for the last few years.
The bank sees now global oil demand collapsing this year by 1.25m barrels a day, more than the forecast from the International Energy Agency, the Western countries’ oil watchdog, of a drop in consumption in 2009 of about 1.0m b/d.
“Perhaps reflecting the apparent IP week [the International Petroleum Week, the London industry conference] consensus that the start of sustainable price recovery may have to wait for a clearer bottoming of the economic cycle, our price deck has been altered to reflect the accumulation of the forecast revisions on the pace and scale of GDP growth recovery.”
Surprise on the Energy Information Administration’s weekly oil data, as crude oil stocks posted an unexpected drop and, particularly, the demand figures are much better than in previous weeks, with year-on-year gains for gasoline and distillates. Oil prices sharply higher both in New York and London 15 minutes after the release. ICE April Brent up $1.88 a barrel to $41.42 while Nymex March West Texas Intermediate is $2.69 higher to $37.34 a barrel. The March contract expires on Friday, the most active Nymex April WTI contract is up $1.89 to $39.31 a barrel.
Oil imports into the US were sharply down on the week, a decline of 859,000 b/d to 8,79m b/d, probably the first clear signal that Opec productions cuts are starting to bite.
Crude oil stocks down 200,000 barrels (Reuters’ consensus 0.3m barrels build)
Gasoline stocks up 1.1m barrels (Reuters’ consensus 0.5m barrels draw)
Distillate stocks off 800,000 barrels (Reuters’ consensus 1.2m barrels draw)
Total oil products demand over the past 4 weeks 19.95m barrels, down 0.1 per cent from a year ago
Gasoline demand over the past 4 weeks 8.90m barrels, up 0.8 per cent from a year ago
Distillate demand over the past 4 weeks 4.24m barrels, up 0.3 per cent from a year ago
Jim Mulva, chairman of ConocoPhillips, had a crack at other Big Oil bosses in his speech at the IP Week dinner in London on Wednesday night.
The oil majors are “a house divided”, he said, and that “puts us in danger of being marginalised.”
Big oil companies have plenty of shared interests, he said: stable regulations and tax regimes, good relations with oil and gas-rich countries, and so on. They need to fight for public acceptance and political support.
But in that battle, he suggested, they are not all on the same side. Conoco, which is the number three American oil company, has signed up to join the US Climate Action Partnership, a business group lobbying for regulation of carbon dioxide emissions, as have BP and Shell. Exxon and Chevron, the biggest and second-biggest US oil groups, have not.
Our daily round-up of important and diverting reads from around the web:
Climate change: Consensus is emerging from economists on the cost of averting climate disaster
California‘s new budget would weaken air pollution rules
Oil sands: Obama’s first meeting with Canadian PM Stephen Harper expected to feature a difficult conversation on Alberta oil sands
Water: The water-energy nexus and water ETFs
Energy news headlines from around the web:
- Rio Tinto investors eye return of Jim Leng (Times)
- Exxon to shut Singapore plants soon (Reuters)
- EU carbon rallies as German allocation fails to spur selling (Platts)
- Colombia’s Ecopetrol plans $6.2 billion for 2009 capex (Platts)
- Major oil spill from tanker heads towards British Isles (AP via Guardian)
- Shell eyes more Russian projects with Gazprom (Reuters via Forbes)
Energy news from the FT:
- BP and Verenium in biofuels joint venture
Move set to speed up availability of non-food feedstocks biofuels
- BP appoints former TNK chief to board
Dudley appointed amid long-running search for chairman
- Russia opens new front to supply energy to Asia
$22bn liquefied natural gas project launched
- Brent dips under $40 for first time this year
Commodities Report: European crude hits a low