OIL PRICES: Prices steady as Opec says no change
Oil prices hovered just above $60 this week as concerns lingered over the state of health of the US and Chinese economies. Opec's decision to leave oil output unchanged did little to spur on the market. Brent oil traded at $60.37 a barrel on 21 February, compared with $61 a week earlier.
The cartel decided on 16 February that a production change was unnecessary. Opec, which pumps more than a third of the world's oil, had previously agreed to cuts totalling 1.7 million barrels a day (b/d), or six per cent of supplies, at its previous two meetings.
Opec president and UAE Energy Minister Mohammed bin Dhaen al-Hamli says: 'We are watching developments on world stock markets, to assess their possible impact on the global economy and, in particular, on energy demand.
'We remain concerned about the continuing weakness of the US dollar against other major currencies, notably the euro and the pound sterling, because this is having a significant effect on the purchasing power of oil producing, developing countries.'
Opec slightly increased its forecast for world oil demand growth in 2007, estimating this would be 1.3 million b/d, up just 0.1 million b/d from its previous estimate.
Traders continue to be concerned over the US housing market and China's move to raise interest rates to cool growth. Both countries have also been busy pondering their own future energy needs.
In the US, the Bush administration sent legislation to Congress on 20 March, which would mandate the annual use of 35,000 million gallons of alternative fuels in 2017. The idea had been originally announced at the end of January in Bush's State of the Union address.
Under the proposal, a new Alternative Fuel Standard in 2010 will replace the existing Renewable Fuel Standard, which currently mandates the use of 7,500 million gallons of ethanol and other biofuels by 2012.
The proposal has received strong criticism from the refinery industry. Bruce Smith, chief executive officer of US refiner Tesoro, warns about the risks of building a domestic renewable industry whose economic viability is dependent on tariffs and subsidies.
He suggests this would be a parallel with the US refinery industry in the 1980s, when refineries had to close once the subsidies were lifted.
Meanwhile, China's second strategic oil reserve site at Zhousan is expected to be ready for filling by the end of March, with total capacity of 1.2 million cubic metres.
China, the world's third-largest oil importing nation, imported 138.8 million tonnes of crude oil in 2006, up 16.9 per cent from 2005.
Oil prices hovered just above $60 this week as concerns lingered over the state of health of the US and Chinese economies. Opec's decision to leave oil output unchanged did little to spur on the market. Brent oil traded at $60.37 a barrel on 21 February, compared with $61 a week earlier.
The cartel decided on 16 February that a production change was unnecessary. Opec, which pumps more than a third of the world's oil, had previously agreed to cuts totalling 1.7 million barrels a day (b/d), or six per cent of supplies, at its previous two meetings. Opec president and UAE Energy Minister Mohammed bin Dhaen al-Hamli says: 'We are watching developments on world stock markets, to assess their possible impact on the global economy and, in particular, on energy demand. 'We remain concerned about the continuing weakness of the US dollar against other major currencies, notably the euro and the pound sterling, because this is having a significant effect on the purchasing power of oil producing, developing countries.' Opec slightly increased its forecast for world oil demand growth in 2007, estimating this would be 1.3 million b/d, up just 0.1 million b/d from its previous estimate. Traders continue to be concerned over the US housing market and China's move to raise interest rates to cool growth. Both countries have also been busy pondering their own future energy needs. In the US, the Bush administration sent legislation to Congress on 20 March, which would mandate the annual use of 35,000 million gallons of alternative fuels in 2017. The idea had been originally announced at the end of January in Bush's State of the Union address. Under the proposal, a new Alternative Fuel Standard in 2010 will replace the existing Renewable Fuel Standard, which currently mandates the use of 7,500 million gallons of ethanol and other biofuels by 2012. The proposal has received strong criticism from the refinery industry. Bruce Smith, chief executive officer of US refiner Tesoro, warns about the risks of building a domestic renewable industry whose economic viability is dependent on tariffs and subsidies. He suggests this would be a parallel with the US refinery industry in the 1980s, when refineries had to close once the subsidies were lifted. Meanwhile, China's second strategic oil reserve site at Zhousan is expected to be ready for filling by the end of March, with total capacity of 1.2 million cubic metres. China, the world's third-largest oil importing nation, imported 138.8 million tonnes of crude oil in 2006, up 16.9 per cent from 2005.This content is only available to full MEED package subscribers (MEED magazine and MEED.com).
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