After ending 2010 at the highest price since October 2008, crude oil prices have been under pressure in the first week of 2011.
US benchmark West Texas Intermediate (WTI) contracts fell to $90.30 a barrel at the end of 5 January, down $0.73 a barrel from 30 December 2010 when it was valued at $91.03 a barrel.
In Europe, Brent crude prices were $95.32 a barrel, up $1.25 a barrel from 30 December when it was priced at $94.07 a barrel. It fell $0.18 from the previous day’s price of $95.50 a barrel.
The 12-crude basket of exports from the member states of the oil producers group Opec averaged $89.79 a barrel for the week ending 5 January. This is down $0.53 a barrel on the previous week, which settled at $90.32 a barrel.
Average Opec prices for 2010 were $77.45 a barrel. The scene is set for further increases according to analysts at the UK’s Barclays Capital, who suggest Opec will play a key role in keeping prices under control.
“Indeed, while it is probably already too late to prevent the market from hitting $100 a barrel at points in 2011, we believe Opec is likely to have to play a far more proactive role to dampen any potential explosive upside that may arise and ensure that quarterly and annual averages do not reach $100 a barrel”, the analysts said in their 4 January report.
Estimates for China’s demand in November show a record high of 9.3 million barrels a day (b/d). Indian oil demand has also risen to almost 3 million b/d, its highest November level on record.
US oil demand in December is on track to average above 20 million b/d, the first time since February 2008. US crude oil stocks at the end of 2010 stood at 335.3 million barrels, the equivalent of 22.4 days worth of supply according to the latest figures from the US’ Energy Information Administration (EIA). This is 8 million barrels more than the same time in 2010, but 4.1 million barrels less than the previous week, the EIA said in its 5 January weekly energy report.