Crude oil prices dip on poor US economic data

30 January 2011

Opec could raise production by 2 per cent to meet demand

Global crude oil prices have rebounded slightly in the week ending 28 January after early falls, but remain below the values seen on 20 January. Prices dropped on 25 January following disappointing economic data released in US and UK, which prompted concern over slowing energy demand.

Brent crude prices were priced at $97.60 a barrel on 27 January, dropping $0.50 from $98.10 a barrel on 20 January.

The margin between European and US benchmark West Texas Intermediate (WTI) contract prices has increased with the spread widening to more than $10 a barrel. WTI prices dropped another $4.05, settling at $86.77 a barrel.

Inventories in the world’s largest consumer continue to rise. The US’ Energy Information Administration (EIA) reports US crude oil stocks at 340.6 million barrels as of 21 January. This is up 4.8 million barrels from the week before and 13.9 million barrels higher than at the same time last year.

The 12-crude basket of exports from the member states of the oil producers group Opec are expected to average $92.53 for the week ending 28 January. This is down $0.94 a barrel on the previous week, which settled at $93.47 a barrel.

On 24 January, Saudi Arabia’s Oil Minister Ali al-Naimi said the cartel may raise crude oil production by 2 per cent to meet expected rising demand this year. While demand for Opec crude in 2010 was 29 million b/d, it is expected to rise by 400,000 b/d in 2011 to an average of 29.4 million b/d.

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