Abu Dhabi to keep March contract volumes steady

Posted on January 30, 2008

Abu Dhabi to keep March contract volumes steady
Reuters Published: January 29, 2008, 23:39

Singapore: Abu Dhabi National Oil Co (Adnoc) has notified at least four Asian lifters that it will supply crude oil at full contracted volumes for March, as it did for February, lifters said yesterday.

Abu Dhabi, the main oil producer the UAE, would also supply limited extra volumes, on top of fully contracted volumes, with three refiners saying they did not request additional volumes for March.

Additional cargo

One lifter said they would receive an additional 500,000-barrel cargo of Murban crude for March, while another declined to comment on whether he had sought additional volumes.

Demand for March Abu Dhabi crude has weakened from February as refiners in North Asia have started cutting runs.

The steady March volumes come as the Organisation of Petroleum Exporting Countries (Opec) is scheduled to meet this week, with members repeatedly saying they are pumping enough oil, signalling that it would maintain output levels despite calls by the United States for more supplies to help ease high prices.

International crude prices have come down from their historic high of over $100 a barrel on worries of a US slowdown.

Spot Abu Dhabi crude fell to its deepest discounts in three months last week, with flasgship Murban crude sold at down to a discount of 25 cents a barrel to Adnoc.
But demand has not collapsed and spot cargoes for March loading have largely cleared by now, traders said, suggesting that refiners saw value in the light sour grades, though at discounts to their official selling prices (OSPs).

Japanese refiners, who are the largest buyers of Abu Dhabi crude, have cut runs for January and February from their initial plans on sluggish domestic demand and falling margins.

Japan’s top refinering company, Nippon Oil Corp, has also said that it will extend and deepen a 30,000 barrels per day (bpd) production curb this month to a 41,000-bpd cut in February.

Four out of five South Korean refiners have also decided to cut crude runs for February, pressured by poor margins and seasonally weak demand, processing at the lowest rate in four months, a Reuters poll of industry sources show-ed.

Opec likely to deny Bush plea for more supply

Posted on January 30, 2008

Opec likely to deny Bush plea for more supply
Bloomberg Published: January 29, 2008, 23:39

London: The Organisation of Petroleum Exporting Countries (Opec), the producer of more than 40 per cent of the world’s oil, may reject US president George W. Bush’s request to increase production and relieve the strain of rising energy costs.
Opec will keep its output target unchanged at 29.67 million barrels a day when it meets in Vienna on February 1, according to 29 of 32 analysts surveyed between January 24 and 28 by Bloomberg News. Ministers from Qatar, the UAE and Iraq said last week that more oil isn’t needed. Bush asked producers to pump more crude during a visit to Saudi Arabia.

Oil fell 5.3 per cent to $90.90 a barrel this month, and the 13-nation group wants to prevent a further decline, the analysts said. A slowdown in the US, the world’s biggest energy consumer, risks curbing demand for fuel as the end of winter in the Northern Hemisphere reduces consumption. “Opec would be shooting themselves in the foot if they increased supply,” Michael Davies, head of research at Sucden (UK) Ltd in London, said.

Recession fears

Goldman Sachs Group Inc. and Merrill Lynch & Co. predict deteriorating growth in the US will spread to other nations. Japan, the world’s third-largest oil consumer, has probably entered a recession already, Goldman’s chief Japan economist, Tetsufumi Yamakawa, said.

The US dollar, used by Opec to price oil sales, weakened 12 per cent against the euro during 2007, eroding Opec’s purchasing power. There’s “no need for additional barrels,” Hossein Kazempour Ardebili, the Opec governor for Iran said.
“There’s a 60 per cent chance they’ll increase production as the US is putting pressure on Saudi Arabia,” Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterriech in Vienna, said. “If Opec does increase, prices could come down into the $80s.”

“Opec is happy with the price above $80, and they clearly want to stop it going below $80,” said Johannes Benigni, managing director of PVM Oil Associates in Vienna.

Forecast: Output may be cut

Opec may cut its oil output in March if stockpiles increase and demand dwindles, the Wall Street Journal said, citing unidentified ministers and officials.
The 13-member group may have a tough time this year deciding whether to boost or decrease production, the newspaper said. A US recession could curb the growth in global demand, yet China and the Middle East are still using more oil, the Journal said.