Friday’s Oil Report: G20 Calls For Efforts To Improve Transparency Of The Oil Market

Heading into the North American open, WTI crude futures have seen choppy price action but are trading higher following a move lower in the USD index which is down 0.25%.

In geopolitical news, Iran reported to the IAEA that it is constructing a second uranium enrichment plant, they claim at present there is not any operational enrichment material or nuclear material at the site. Iran claims the new plant will only enrich uranium to the level required for the production of electricity. President Obama is due to comment at the G20 summit later today.

A draft communiqué from the G20 meeting shows that the group of nations has called for efforts to improve the transparency of the oil market and also contains notes on an agreement to phase out fossil fuel subsidies over the ‘medium term.’

On a technical note, Goldman Sachs raised its global oil demand forecast for 2010 by 1.9% due economic expansion thus a recovery in demand and expectations that integrated European oil companies will struggle to sustain the current level of production. Goldman maintains its year end price forecast at USD 85.00 a barrel and expects the average for 2010 to be USD 90.00 with an end of year price of USD 95.00. Also of note, a survey by Bloomberg revealed that 55% of analysts surveyed expect crude oil futures to drop through October, 16% forecast that prices would rise and 29% said prices would be little changed.

In corporate news, Royal Dutch Shell is set to overtake BP in terms of output following an approximate USD 40bln investment from Qatar to Brazil, company estimates show that Shell is to boost oil and gas out put by one-third which will add 1mln barrels a day to capacity by the end of 2012. In other news, Oil Search which partners Exxon Mobil in a liquefied natural gas project in Papua New Guinea stated that committed spending on the venture has reached USD 1bln and a final investment decision is expected by the end of the year.

In other news, in an attempt to reverse dwindling North Sea oil and gas output, Norway has begun exploration in remote regions such as its Arctic volcanic island of Jan Mayen. BP estimates the Arctic Sea may hold 25-50% of the world’s undiscovered hydrocarbons. In separate news, China has started building the second phase of its emergency oil reserves with the construction of the Dushanzi project in the Xinjiang province.

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