Oil Falls to a 5-Week Low
Oil dropped to a 5-week low, just above $68 a barrel on Thur, due to signs that high energy costs were firing inflation and slowing demand in the U.S, reports Reuters. Commodities, stock and bond markets fell on Wednesday after the United States reported a steep rise in consumer prices in April, driven by a big jump in fuel costs. U.S oil prices have fallen $4 since Friday, although some investors say the decline is just a pause for breath in a rally that has lifted the cost of oil from $20 per barrel since the start of 2002.
US Coal Imports Hit 8.13 Mt in the 1q06
The latest statistics from the US Ministry of Commerce show that US coal imports in the 1q06 reached 8.13 Mt, up 1.23 Mt from the same quarter last year. Most of the increase consisted of a large rise in shipments from Colombia, which climbed from 4.97 Mt in the 1q05 to 5.85 Mt in the 1q06. March coal imports into the US were the highest monthly total ever.
US Gasoline Stocks Rise
US gasoline stocks rose 1.3m bbl to 206.4m bbl last week, the latest data from the US Department of Energy showed. Domestic gasoline production climbed 259k b/d to 9.18m b/d - despite a fall in refinery utilization from 90.2% to 89.8% - as refiners maximized their output of gasoline over distillates. Gasoline imports were down 199k b/d at
1.45k b/d but this was from a very high base the previous week and they still remain close to historical highs. Crude stocks fell 100k bbl last week to 347m bbl, as crude runs increased 21k b/d, while crude imports were up 376k b/d at 10.38m b/d - their highest level in 5 months.
OPEC Cuts World Oil Demand Forecast
OPEC cut its world oil demand growth forecast for 06 from 1.43m b/d to 1.38m b/d saying high prices are contributing to a slowdown in
incremental demand in developed countries, reports Platts. The group now sees oil demand averaging 84.6m b/d in 06. OPEC also cut its
forecast for non-OPEC oil output in its monthly oil report, expecting it to grow 1.34m b/d in 06 to around 51.48m b/d, compared with a
previous projection of 51.54m b/d. It has also raised the "call" on its own crude from 28.5m b/d to 28.62m b/d for 06.
CVRD and ThyssenKrupp Agree 19% Price Increase
CVRD and ThyssenKrupp have agreed a 19% increase for iron ore fine contract prices for the 2006 fiscal year, Reuters reports. This exceeds many analysts expectations of 10-15%. The agreed rise reflects the strength of demand and presumably the steelmakers increased ability to pay following this years steep rise in the price of steel. In the past, other steelmakers have followed initial price settlements, but Chinas current market position may mean it will still hold out for a lower price rise.
Meanwhile, it has emerged that China produced a monthly record 33.71 Mt of crude steel in April, according to Macquarie Bank. This compares with 32.9 Mt produced in March. The annualised total is 410.1 Mt.
European and US Refinery Throughput Rises In Apr
US refinery runs increased 332k b/d month-on-month in Apr to just under 14.9m b/d, accounting for 85.7% of capacity, according to figures from Energy Intelligence. Throughputs at EU refineries also rose during Apr, up 402k b/d from Mar to 12.2m b/d, giving a 91% utilisation rate. Due to scheduled maintenance in Japan, refinery runs there dropped 400k b/d in Apr to just over 4m b/d, taking utilisation down from 92.4% in Mar to 84%.
India's Product Exports Rise As Refiners Expand
India's rising product exports will continue to climb higher over the next few months as the country expands refining capacity, reports Petroleum Argus. Although Indian oil demand is growing, it is being outpaced by output from a growing refining industry that is already running at over 100% of nameplate capacity. Refiners are choosing to export the surplus rather than cut throughputs. Product exports rose by over 30% in the first 2 months of the year compared with a year earlier, while gasoil exports were up by 40% year-on-year to over 230k b/d in the same period. Exports will increase further when state-owned IOC doubles capacity at its Panipat refinery to 240k b/d and Essar Oil starts up 156k b/d at its Vadinar plant by the end of June.
Retail Sales in China Up 14%
According to Bloomberg, Chinas domestic demand for retail goods continued to climb in April. Sales were up 13.6% on the same month in 2005, the highest level since March 05. Another indicator of Chinas rapid growth in domestic demand is the rising number of domestic car sales, up 57% year-on-year in April, the Chinese news agency Xinhua reports.
IEA Cuts Global Oil Demand Growth Forecast For 2006
The IEA has cut its estimate for world oil demand growth this year to 1.25m b/d, down from a previous projection of 1.47m b/d due to mild first quarter weather and sustained high oil prices. Global demand is now expected to average 84.83m b/d in 2006. Global supply in Apr increased 485k b/d to 85.1m b/d with OPEC crude production rising to 30.04m b/d up from 29.87m b/d in March due to higher output from Iraq and Nigeria. Non-OPEC production is forecast to rise to 50.1m b/d in 2006, up 1.18m b/d from '05.
Chinas Crude Imports Fall In April
Chinas crude imports in April were at 2.9m b/d, according to preliminary data. Although 2% lower month-on-month and year-on year, the level is close to historical highs. Chinese crude imports for the first four months of 2006 have averaged 3m b/d. Product imports rose by 2% month-on-month taking levels 20% higher year-on-year. Product imports for the first four months of 2006 have averaged 682k b/d.
Valero and Conoco Cut Rates Due To Refinery Repairs
Valero Energy Corp. has taken its coking unit offline at its 245k b/d Texas City refinery for needed repairs, reports San Antonio Business Journal. The 50k b/d unit will take 7 days to repair, in which time distillate production will be reduced by 40k b/d and gasoline by 15k b/d. ConocoPhillips Corp. has also cut rates at its 263k b/d Bayway refinery in New Jersey due to problems with some units, reports Reuters.
Eurozone Economic Growth Accelerates
Economic growth in the 12-nation eurozone picked up in the 1q06, according to EU statistics body Eurostat, rising by 0.6% over the 4q05 and by 2% over the 1q05. Earlier this week, the European Commission raised growth forecasts for the eurozone to 2.1% this year from 1.9% in 2005, driven by investment, a pick up in consumer demand in Germany and an improving global business environment. The commission also said the economy of the EU would expand by 2.3% this year from 1.6% in 2005.
Rail Lines Blocked by Soyabean Protests
Soyabean farmers in Brazil are into the third week of a protest aimed at boosting government aid. As a result, soyabean buyers are having to draw on stocks at the ports of Santos and Paranagua, Dow Jones reports. Furthermore, a market report from the Chicago Board of Trade adds that two train lines across the country's soyabean-growing belt were successfully blockaded.
US Gasoline Imports Hit Record High
US gasoline imports reached their highest level on record having risen 630k b/d to over 1.6m b/d last week helping stocks to grow over 2.3m bbl to 205.1m bbl, even so, stocks still remained 4% lower year-on-year, the latest data from the US Department of Energy shows. Gasoline demand increased by 247k b/d to 9.35m b/d. Crude imports also rose by 196k b/d to 10m b/d taking inventory levels 272k bbl higher to 347m bbl, the highest since the week ending 29 May 1998. Distillate imports inched 32k b/d higher to 325k b/d, 42% higher year-on-year, helping stocks to rise by 170k bbl to 114.7m bbl despite demand rising 28k b/d to 4.2m b/d. Refinery runs improved at 90.2%.
Chinas Economic Growth Forecast Upgraded
The World Bank has upgraded its 2006 economic growth forecast for China to 9.5%, as it said more measures were needed to cool the economy, reports the BBC. The forecast was upgraded following faster than expected growth in 1q06 of 10.2%, after total growth of 9.9% for all of '05. GDP growth is expected to slow to 9.8% in 2q06.
Chinese Steel Price Highest Since September
The price of Chinese wire rod steel has risen to US$390/tonne, the highest since September 2005. The latest price is up 7% on the level of three months ago. This has positive implications for the freight market, as a rebound in steel demand in China should lead to further increases in the seaborne iron ore trade. Wire rod is used extensively in construction.
OPEC Output Climbs Above 30m b/d In April
Total OPEC crude production in April went back above 30m b/d for the first time since Nov, up 250k b/d from Mar to 30.01m b/d, due to higher volumes from Iraq and Nigeria, reports Platts. OPEC-10 boosted their average output by 60k b/d, from 27.94m b/d in Mar to 28m b/d-their official ceiling level-in Apr. Iraq provided the biggest increase, up 0.19m b/d to 2.01m b/d, due to an increase in exports from the south which had previously been constrained by a combination of weather problems, power outages and sabotage. Nigeria also saw a rise despite the loss of 500k b/d due to ethnic tension. Output was up 50k b/d month-on-month at 2.2m b/d due to new production from ExxonMobil's offshore Erha field.
Saudi Arabia To Pump More Oil If Needed
Saudi Arabia has said it expects oil prices to hold firm this decade and reiterated it was willing to pump more crude to markets if needed, reports Reuters. Oil Minister Ali al-Naimi said Saudi Arabia's surplus output capacity was 1.8m b/d and would be built up over the next 3 years and that it will be able to fulfil 50% of the expected increase in world oil demand by 2010. A trio of new oilfield projects will allow the kingdom to pump 12.5m b/d by 2009. State-run Saudi Aramco will boost refining capacity at home and abroad by 2m b/d in the next 5 years-including building 2 new export-oriented domestic refineries with international firms, reports Reuters.
April Exports from Richards Bay Lowest for 13 Months
Richards Bay coal exports totalled just 5.17 Mt in April, according to official data quoted by McCloskey. This is the lowest monthly total since March 2005 and compares with 6.40 Mt in April 2005 and 5.65 Mt in March 2006. Given the low throughput in the year to date, exporters now estimate that shipments from Richards Bay will reach a maximum of just under 68 Mt, as opposed to the target at the beginning of the year of 74 Mt.
Italy's Erg's Refinery Due To Be At 80% Capacity In 20 Days
Independent Italian refiner Erg has closed its 170k b/d Isab Nord refinery following a pipeline fire on 30 April despite being undamaged, reports Petroleum Argus. According to Platt's the refinery will operate at 80% capacity within 20 days and will be back to full operation within 30 days once Italian investigators approve the restart. Erg's 220k b/d Isab Sud refinery was scheduled to enter a 47 day turnaround at the start of May, while Agip closed 50% of its 200k b/d Sannazzaro refinery on 20 April for 45 day maintenance.
Major Iron Ore Export Rebound in Prospect
The latest trade data from Australia show that iron ore exports in the 1q06 totalled 57.3 Mt. This marks a year-on-year fall of 1.7 Mt and a sharp decline from the 4q05 of 10.2 Mt primarily due to weather-related supply chain difficulties. The combined quarter-on-quarter decline of 15 Mt implies the potential for a major rebound in shipments to the benefit of capesize demand, as logistical impediments ease and the mining companies target new export records.
FSU Seaborne Product Exports Hit Record In Apr
FSU seaborne product exports reached a record high of 11.65mt in Apr due to rising fuel oil and gasoline shipments, reports Petroleum Argus. Total fuel exports rose 17.5% on an average daily basis to 175k b/d after milder weather reduced domestic demand. Shipments through Tallin increased by more than a fifth due to growing supplies from Surgutneftegaz, while exports from Murmansk almost trebled due to a new fuel oil terminal there increasing loadings. Gasoline exports were up 78.2% on the month due to open arbitrage to the US and strong demand for gasoline also helped naphtha volumes grow by 21.3%, reports Argus.
Positive Indications for US Economy
The latest economic indicators for the US economy bode well for the immediate future. The BBC reports that the Institute of Supply Management's survey of activity in the country's services sector climbed to 63.0 in April, exceeding expectations. Furthermore, US factory orders experienced their highest gain in March for ten months.
Global Oil Demand Up In Apr
Preliminary data show global oil demand increased by 910k b/d in Apr year-on-year to 83.63m b/d, adding to the tightness that is driving oil prices higher, reports Energy Intelligence Briefing. The growth rate of 1.1% was much higher than March and Feb, at 0.1% and 0.3% respectively, despite demand levels dropping 1.4m b/d from March. Demand in industrialised OECD nations dropped 0.6%, while the industrialising non-OECD world pushed consumption up by 3.6% in Apr. Oil supply outstripped demand by 1.25m b/d in Apr as refiners return from maintenance in the Atlantic Basin and increased runs to stock up on summer products. Supply levels were 36k b/d higher than Mar, and 33k b/d up on the year, reports EIB.
Road Blockade in Brazil
Truckloads of soyabeans heading for Brazil's ports have been hit by a road blockade, according to media reports. The blockade is part of a protest by growers in the largest soyabean-producing state of Mato Grosso aimed at securing a financial package from the government to save farmers from selling below production costs. The precise impact of the blockade is not clear at the moment. Brazil's Foreign Trade Ministry reports that Brazilian soybean exports totalled 2.915 Mt in April, up roughly 250,000t on the previous month.