On Wednesday crude oil prices fell after the US government reported a larger-than-expected increase in the country’s crude oil inventories last week.
The U.S. Department of Energy said that oil inventories rose 2 mln.b, i.e. above forecast of a 1.8 mln.b. build up. Gasoline stocks dropped 2.5 mln.b, more than the one-million-barrel expected decline. Gasoline demand was also up 1.7% in the four weeks ended April 2 compared with a year earlier. But inventories of the fuel are too high, and demand too weak, for the drop in gasoline stockpiles to create the impression that supplies are tightening significantly.
Global oil demand growth this year is expected to be slightly lower than previously forecast as weaker European consumption has overshadowed higher Asian, namely Chinese, demand, the U.S. Energy Information Administration said on Tuesday. In its latest forecast, the EIA said world petroleum consumption this year will rise by nearly 1.5 mln.b/d, 10,000 b/d lower than its estimate last month, from 2009's total to 85.5 mln.b/d.
Oil prices could stay within the 70-80 $/b range for 10 years, the OPEC oil cartel said last week, arguing that lower prices would deter investment in new energy supply but higher prices would hamper economic growth. Assuming the 70-80 $ range, the group appears to be trying to anchor oil market expectations around 75$, a price level which Saudi Arabia, OPEC’s de facto leader, describes as “fair”. Indeed, oil has traded roughly within the mentioned range since August and some of the world’s largest oil traders believe the range will remain in place in the near future. However, Wall Street analysts believe oil prices are heading back to 100 $/b, supported by strong consumption in China.
Major refiners in South Korea are likely to raise purchases of Russia's new ESPO Blend crude, considering lower costs and higher yield during refining processes, Korean traders said. Oil transported via the East Siberia-Pacific Ocean (ESPO) pipeline to the Far East port of Kozmino near Japanese, Korean and Chinese buyers, has been widely accepted by Asian refiners. Regional buyers had strived to secure alternatives compared with waterborne Middle East and Asia- Pacific crudes.
Heavy crude's relative value to light will remain pressured in Asia longer than in Europe and the United State because of new Russian exports to the East and a glut of heavy fuel oil there. The price spreads of light, higher quality crude versus heavy has widened over the past month across all three major regional markets.
Venezuela's state oil company PDVSA is studying all options on the future of its 50% stake in four German refineries. Industry sources told Reuters this week Russian state giant Rosneft was seeking to buy the stakes in the Ruhr Oil refinery venture with BP.
Russian companies and Venezuela will invest between 60 mln. and 80 mln.$ this year in the Junin 6 block in Venezuela's vast Orinoco heavy crude belt.
Brazil's Petrobras said on Wednesday it found light oil in a new well that confirmed its estimate of 5 to 8 bln.b in the Tupi offshore field.
