Oil prices managed to remain just below $60 a barrel at the beginning of November, on the back of milder weather in key US consuming regions and the ongoing recovery of Mexican Gulf production. However, increased political uncertainty in the Middle East continues to support the market, while OPEC officials in late October urged greater investment, both upstream and downstream, if prices were to be lowered over the longer term. Spot Brent was trading at $59.13 on 2 November, compared with $59.77 a week earlier.
As the northern hemisphere winter looms, attention is turning to distillate stocks and the weather, which eased prices by turning warmer in late October. However, US stock data released on 2 November showed distillate stocks falling to 120.9 million barrels, near the floor of their average range for this time of year. Crude stocks rose by 0.9 per cent to 319.1 million barrels and are now up 12 per cent year on year. A particularly ferocious hurricane season has been pushing up prices for several months and, as it draws to a close, prices have correspondingly eased. In addition, crude and refining facilities are gradually coming back on line. Shut-in oil production on 2 November stood at 958,000 barrels a day, according to the US Minerals Management Service, equivalent to about 64 per cent of the total. US oil majors have been coming under fire at home for raking in profits while consumers suffer. OPEC acting secretary-general Adnan Shihab-Eldin, speaking at a conference on 30 October, also urged international oil companies to deploy their record revenues to depress prices. 'This is a chance for them to invest,' he said. 'We believe that they should definitely make an effort to invest in the downstream in trying to resolve bottlenecks.' Shihab-Eldin said the following day that he expected crude prices to fluctuate in the $45-50-a-barrel range throughout 2006. OPEC chief economist Fatih Birol in an interview with the Financial Times published on 2 November urged Middle East producers to step up investment. 'We may end up with much less oil from the Middle East than we demand if current investment in the Middle East is not stepped up substantially,' he said. Regional political events are helping support prices in the near term, as the market anxiously watches events in Iran and Syria.