Prices hold above $80 a barrel as global demand rise continues
Oil prices remained largely stable and remain squeezed in a narrow band above $80 a barrel during the week ending 25 November as the markets adapted to robust demand.
The US’ benchmark West Texas Intermediate (WTI) contract traded at $83.71 a barrel on 25 November, up $1.29 a barrel from seven days earlier when it was valued at around $82.42 a barrel.
Europe followed a similar pattern, with the December Brent contract traded at $85.74 a barrel, up $1.45 a barrel on the previous week.
The 12-crude basket of exports from the member states of the international oil cartel, Opec also remained stable, averaging $81.16 a barrel on 24 November. This is up $0.07 a barrel from $81.09 a barrel on 18 November.
Positive global oil demand continues, including stronger than expected demand from China. Diesel demand has led the global boom according to analysts at Barclays Capital, which estimates global demand to have risen by 2.41 million barrels a day in 2010 marking the second strongest year for demand in the past 30 years. Excess inventories have fallen this year and spare capacity could end the year at only 5 per cent.
“Given these developments, we expect a more volatile and backwardated market to emerge rapidly”, says the report.
However, data from the US’ Energy Information Administration (EIA) shows US crude oil inventories stood at 358.6 million barrels, up 1 million barrels during the week, near record highs. In a 24 November report, the agency says inventories of crude oil were now 20.8 million barrels above their 2009 levels.
At the same time, gasoline inventories rose by 2 million barrels to 209.6 million barrels, just under 2009 levels of 210.1 million barrels.