News archive February 2010

China's burgeoning trade relationship with Africa is reflected in the country's latest crude import data, which show an increase in crude imports from Angola (795 kbpd) and Sudan (272 kbpd) of 53.5% and 130.5% respectively, Energy Intel reports. Angola is now China's largest source of crude, displacing Saudi Arabia from whom imports arrived at a rate of 688 kbpd, down 7.2% year on year. China imported 4.04 Mbpd of crude oil in January, a 33% increase year on year, as the effect of guaranteed refining margins and capacity expansion continues to be felt. However, last month's figures represent a decline from December's record imports of 5.03 Mbpd.

According to the American Iron and Steel Institute (AISI), US steel imports in January rose for the third consecutive month to 1.5 Mt, up by 16% from the previous month. This marks the highest level since January 2009, but still represents a 31% year-on-year fall.

January saw Indian refineries process an average of 3.31 mbpd of crude
oil, a 3.8% increase from the year before, Reuters reports. Reliance’s
Jamnagar plant processed 724.5 kbpd, up 55.1 kbpd y-o-y, whilst
Essar’s Vadinar refinery saw runs increase by 13.3 kbpd from last year
to an average of 283.9 kbpd. The country’s January crude imports
averaged 2.92 Mbpd, a 17.8% increase from the same period in 2009.

The world export price for HRB (hot-rolled band) steel has risen for the fourth straight month, up by $22/t from end-Jan to the current level of $596/t, according to the latest SteelBenchmarker issued by World Steel Dynamics. The US HRB price has risen by $24/t month-on-month to $670/t, the highest level since November 2008. Meanwhile, the HRB price in the EU has risen by $8/t from early February to $600/t. However, this remains $5/t lower than in late January. China’s HRB price has risen by $5/t from a month earlier to $473/t.

Today's summary of weekly petroleum data from the US Department of Energy reveals that crude inputs increased by 335 kbpd last week. Consequently, refineries were operating at 81.2% of total capacity, up from 79.8% the week before. However, with crude imports rising by 536 kbpd, inventories were up 3 Mbbl to 337.5 Mbbl by the end of the week. Gasoline stocks fell by 900 kbbl to a total of 231.2 Mbbl, whilst imports rose by 137 kbpd to an average of 846 kbpd. Distillate inventories totalled 152.7 Mbbl, a 600 kbbl decline from the week before, with imports arriving at an average of 444 kbpd, a 53 kbpd increase.

A number of oil majors have expressed concerns that Nigeria's proposed Petroleum Industry Bill (PIB) could threaten future investment in the country's oil industry, in particular the development of deep water fields, Reuters reports. The bill, which is currently making its way through the National Assembly, would allow the government to renegotiate existing contracts, reassert control over unexplored areas and increase the costs of oil companies. As part of the reform, the Nigerian National Petroleum Corp. (NNPC) would also be split up into smaller profit-driven units. A number of oil majors argue that the bill in its current form would make it difficult to develop new reserves, especially offshore. This is the sector seen by many as critical to the country's future production growth, not least because of the ongoing attacks on infrastructure in the Niger Delta.

Maintenance work at some of Russia's major refineries could see the country's March crude runs fall by 120 kbpd (about 2-2.5% of total capacity) month on month, Argus reports. Last week saw Lukoil shut down a primary ditillation unit at its 195 kbpd Volgograd plant that could lead to an input decline of 36.7 kbpd in March, and 47.35 kbpd in April. Maintenance here will be followed by work at the Novokuibyshev, Orsk and Yaroslavl refineries that will result in significant reductions in crude runs over the next two months.

Exports of CPC Blend from Novorossiysk are forecast to fall to 669 kb/d in March, the lowest level since May 2009, reports Argus. Volumes hit a record 796 kb/d in January, 4.6% higher y-o-y, having risen from 758 kb/d in December. The lower volumes are most likely due to maintenance on the pipeline or the Tengiz field.

US crude stocks grew 3.1m bbl last week to 334.5m bbl, 4.6% lower on the year, as imports rose 206 kb/d to 8.5 mb/d, according to the latest data from the US Department of Energy. Gasoline inventories were up 1.7m bbl at 232.1m bbl, the highest level since March 2008, despite imports declining 459 kb/d to 709 kb/d as demand fell 245 kb/d to 8.5 mb/d. Distillate stocks were down 2.9 mbbl at 153.3m bbl as imports fell 239 kb/d to 391 kb/d and demand increased 91 kb/d to 3.8 mb/d. Refinery utilisation was up 0.7% at 79.8%.

Global oil demand fell 980 kb/d month-on-month in January but grew 1.34 mb/d on the year to 85.88 mb/d, as sharp gains in non-OECD countries more than offset lower OECD consumption, reports Energy Intel. China saw y-o-y growth of 1.19 mb/d due to surging economic growth, while OECD demand fell 853 kb/d on the year. Global supply was up over 2 mb/d on the year at 86.63 mb/d, up just 80 kb/d on the month.

The four South Korean refiners are set to process 2.26 mbpd of crude in February, about a 15 kbpd decrease from January's volumes, reports Dow Jones. Strong mogas and naphtha cracks are leading refiners to focus on these products, as gasoil cracks remain below the levels required by many refiners. The country's exports of mogas are scheduled to leave on 10.5-11.5 MRs this month, compared to 9-10 in January, plus 2.5 MRs in the spot market. This month's gasoil exports are set to depart on 26-27 MRs, one less than in January.

Coal imports into China in January stood above 16 Mt for the third time, down by 0.31 Mt from the previous peak of 16.38 Mt set in December, posting a fourfold increase year-on-year due to strong domestic demand, according to preliminary data from China Customs.

The latest summary of weekly petroleum data from the US Department of reveals that last week mogas stocks increased by 2.3 mbbl to 230.4 mbbl, as imports increased by 242 kbpd to an average of 1.17 mbpd and refinery inputs rose by 129 kbpd to average 13.59 mbpd. Refinery utilisation increased by 1.4% to 79.1% of total operable capacity. By the end of the week, distillate stocks stood at 156.2, a decrease of 300 kbpd from the week before. Distillate imports arrived at a rate of 630 kbpd, up 192 kbpd from a week earlier. Crude imports were down very slightly at 8.34 mbpd, with inventories finishing the week at 331.4 mbbl, 2.4 mbbl higher than the week before.

According to the latest SteelBenchmarker issued by World Steel Dynamics, the world export price for hot rolled band has risen by $13/t from end-Jan to $587/t, the highest level since November 2008. The US HRB price has risen to a 15-month high of $656/t. In contrast, the HRB price in the EU has fallen by $13/t to $592/t. The Chinese HRB price dropped by $2/t to the current level of $466/t.

In its latest Oil Market Report, the International Energy Agency (IEA) has revised upwards its global oil demand forecast for 2010 by 170 kbpd to 86.5 mbpd. The forecast for non-OPEC production in 2010 is revised up 120 kbpd to 51.6 mbpd, with the call on OPEC crude predicted at 29.4 mbpd, an upward revision of 300 kbpd. The agency's refinery crude throughputs for 1q10 remain unchanged at 72.6 mbpd.

Preliminary customs data from China indicate that iron ore imports totalled 46.62 Mt in January. Despite being the lowest monthly total since October (and down on the December import total of 62.2 Mt), this marks a gain of 43% on the same month last year.

China's crude imports averaged 4.05 mbpd in January, a 1.02 mbpd (33%) increase on volumes imported during the same month last year. The latest data does, however, represent a fall from last month's record imports of 5.03 mbpd. Having exported an average of 639 kbpd compared with imports of 601 kbpd, China remains a net exporter of petroleum products, having become so in December for the first time since 1993.

The Norwegian and UK North Sea sectors saw crude production rise by 67kbpd (3.4%) to 2.023 mbpd in January, Energy Intel reports. All of the increase came from the UK systems, which saw production up by 81 kbpd, whilst Norwegian output fell by 15 kbpd. Cargoes of the crudes that underlie dated Brent are scheduled to load at an average of 1.32 mbpd this month, compared to 1.27 mbpd in January.

The FOB price of Indian iron ore of 63.5% Fe content rebounded by $2/t week-on-week to $103/t from the year-to-date low of $101/t last week, according to data from U-metal. The iron ore spot price has stood above $100/t over the past six consecutive weeks.

Dry bulk carrier newbuilding deliveries experienced an acceleration in January, hitting a new record of 6.3 Mdwt or 77 vessels. The Capesize fleet continued to expand at a faster pace than any other sector of the dry bulk fleet, with 19 new Capes delivered in January, compared with the previous high of 17 vessels in September 2009. Increases were also apparent in the Panamax sector, with 15 newbuilding deliveries compared with average monthly deliveries of 7 vessels in 2009. There were also 1.12 Mdwt (20 vessels) of new Handymax and 0.73 Mdwt (23 vessels) of new Handysize deliveries last month.

Production by the eleven members of OPEC excluding Iraq averaged 26.75
mbpd in January, 1.9 mbpd above the organisation’s own quota, Argus
reports. This represents the tenth consecutive rise in monthly
production, and sees quota compliance fall to 55%. Furthermore,
scheduled OPEC shipments are set to rise in February, resulting in the
first year on year rise since the global economic downturn commenced.
The organisation meets in Vienna on 17 March, where ministers are
expected to call for increased discipline: not least because OPEC
production (including Iraq) averaged 29.2 mbpd in January, 1.4 mbpd
more than the organisation’s anticipated daily call on crude of 27.82
mbbl.

Japan has lost its position as Asia's largest importer of crude, as average imports for 2009 fell by 12.7% year on year to 3.65 mbpd, reports Energy Intel. The fall was compounded by average imports in December of 4.06 mbpd, a 2.6% decline from November's volumes. The declines can be attributed to a fall in domestic sales of petroleum products which averaged 3.33 mbpd last year, 6.9% less than in 2008.

Last year's South Korean crude imports were down 3.3% year on year and averaged 2.29 mbpd. December's volumes fell 5.9% from November and arrived at a rate of 2.28 mbpd. Refinery utilisation fell to 80.5% last year from 82.8% in 2008.

The global oil surplus grew to close to 1.5 mbpd in January as, month on month, demand fell by 820 kbpd to average 85.61 mbpd and supply increased by 150 kbpd to 87.1 mbpd, reports Energy Intel. Compared to January 2009, when recession was hitting hardest, global demand last month was up by 1.08 mbpd. Non-OECD demand was up by 2.35 mbpd year on year and now averages 40.1 mbpd, whilst OECD demand fell 1.27 mbpd over the same period to average 45.53 mbpd. China led the way in terms of growth with apparent demand rising by 1.2 mbpd to 8.8 mbpd y-o-y.

The FOB price of Indian iron ore of 63.5% Fe content fell for the third straight weeks, down by $3/t week-on-week to $101/t at the end of last week, posting the lowest level so far in 2010, according to data from U-Metal. However, January's monthly average price to $104.2/t, remains the highest monthly average level since October 2008.

Strong demand from China and India has ensured that West African crude headed east at an average of 1.72 mbpd in January, reports Argus. Chinese imports accounted for 1.04 mbpd of shipments, whilst exports to India averaged 590 kbpd, a record high. February's loading schedules suggest that volumes will continue to flow eastwards at a rapid rate, with 1.58 mbpd of West African crude due to be exported to the Asia-Pacific region this month. Chinese demand is particularly strong at the moment as refiners build stocks ahead of the country's New Year celebrations, whilst new refining capacity in India has contributed to January and February demand for West African crude that is almost 240 kbpd higher than during the same period last year.