Oil prices fell by more than $5 a barrel in the first week of November, as Beijing finally took a step to calm China's runaway economic growth, traders took profits ahead of the US presidential election and US crude stocks registered two consecutive strong builds. However, fresh supply fears arose in Iraq and Nigeria. Spot Brent was trading at $45.27 a barrel on 3 November, compared with $50.64 a barrel a week earlier.
On 1 November, the People's Bank of China (central bank), raised interest rates by 0.25 per cent - the first rate rise in nine years - as fears of unmanageable inflation persuaded the bank to attempt to rein in soaring rates of growth. Oil prices immediately fell on the expectation of a concomitant easing of voracious energy demand. US stock data was quietly released amid the excitement surrounding the US presidential result on 3 November, and showed a build of 2.2 per cent in crude stocks to 289.7 million barrels in the week to 29 October. But a bullish note was added by a further draw in distillate stocks, of 0.8 per cent to 115.7 million barrels. 'The US heating oil market has become the point of greatest friction among the profusion of constraints, shortages and choke points that now characterise the global oil market,' says Paul Horsnell, analyst at Barclays Capital. On the supply side, Iraq's northern oil system was yet again the victim of sabotage, with four attacks in the space of 24 hours on 1-2 November, including one on the main Kirkuk-Ceyhan export pipeline. Nigeria is once again creating unease in the market. Trade unions are calling for an indefinite strike from 16 November to protest at rises in the price of fuel due to cuts in government subsidies. The Royal Dutch/Shell Group, Nigeria's biggest foreign producer, is seeking a court injunction which would prevent its local workers from striking.