Oil Report For 16 September 2009

WTI crude futures reduced some of the losses seen after yesterday’s bearish API crude inventories data which showed a build of 631K. Weakness in USD overnight in Asia and investor preference for commodities/equities helped put a bid in to crude, with losses narrowed following a positive European open.

In OPEC related news, Angola is expected to reach its compliance level in terms of quotas due to an expected 6% fall in oil shipments for the month of November.

In geopolitical news, Nigeria’s main rebel group MEND has decided to extend its cease fire by 30 days, however government failure to engage in meaningful talks would lead to further attacks on oil and gas installations. Also on the geopolitical front, Iran’s oil minister said the country is ready to deal with any possible sanction on its gasoline import over its disputed nuclear programme.

In corporate news, Tullow oil and Anadarko have reported a discovery of an oil field stretching 684 miles in the Venus-B1 well, off the coast of Sierra Leone and Ghana. Elsewhere, Total SA have indicated the commencement of new projects next year will add to production growth. In other news, a decrease in demand has led to Repsol YPF SA’s refinery in La Coruna to be run at 80% of capacity. It is unclear when the plant will resume operations at full capacity according to a company spokesperson.

Yesterday saw the release of the weekly API inventories figures, the data came out as follows:

US API Crude Oil Inventories (Sep 11) W/W +631K vs. Prev. -7216K
US API Gasoline Inventories (Sep 11) W/W +1347K vs. Prev. +571K
US API Distillate Inventories (Sep 11) W/W +5197K vs. Prev. +3282K

Looking ahead to today’s DOE inventories data, consensus of analysts surveyed by Bloomberg currently stands at:

DOE Crude Oil Inventories: -2500K (Range: Low -4800K, High +1000K)
DOE Gasoline Inventories: +700K (Range: Low -700K, High +2000K)
DOE Distillate Inventory: +1250K (Range: Low +500K, High +2000K)
DOE Refinery Utilisation: -0.5% (Range: Low -2.00%, High 0.00%)

The latest Weather Derivatives forecast sees temperatures for the next 6-10 days in the U.S. to be 2.9F above the average for this time of year. The National Hurricane Centre state there is a broad area of pressure 350 miles south from the south-west tip of Baja California and has a greater than 50% chance of becoming a tropical storm in the next 48 hours.

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