WTI, Brent climb after IEA report
The agency says that world oil demand growth will increase to 2.5% in 2008 to 88.2 million barrels per day (bpd). The IEA's 2008 estimate represents an increase of 2.2 million barrels a day, from 2007's revised level of 86 million barrels a day.
Non-OPEC supply is expected to reach 51 million bpd in 2008, while OPEC capacity is expected to rise by 1 million bpd in 2008 to 35.4 million bpd. OPEC controls approximately 43% of global oil production.
"The obvious consequence is an increased need for OPEC crude," said Barclays Capital in a research note.
The news saw ICE August Brent later trade up at $77.30/bbl. Nymex West Texas Intermediate for August delivery gained $1.43 to close at $73.93 a barrel on the New York Mercantile Exchange, having climbed as high as $74 during the trading session, its highest level since Sept. 5, 2006. The contract hit an all time high of $78.40/bbl in July 2006.
“With these indicators it appears that the ball is firmly in OPEC's court for an output change decision. With each additional day that OPEC crude is withheld, fundamental tightness should continue to translate itself to support for prices,” noted Edward Morse, chief energy economist at Lehman Brothers, in a report published today.
More on Oil & refined products
A Hormuz tipping point may be days away
Agent-based model suggests delays and shortages likely to accelerate after four weeks
Energy Risk reaction: Impact of Middle East conflict on hedging and longer term risk
Energy Risk talks to Riccardo Rossi at Centrica Energy and Rob McLeod at Hartree Partners about the impact of the Iran crisis so far on firms exposed to energy
Iran strikes a stress test for CCP margin models
CME’s Span2 and Ice’s IRM2 are performing as advertised. The next few days could test their mettle
Energy Risk reaction: Venezuela and oil sanctions
Energy Risk talks to Rob McLeod at Hartree Partners about the energy risk implications of the US’s control of Venezuelan oil
Energy Risk Europe Leaders’ Network: geopolitical risk
Energy Risk’s European Leaders’ Network had its first meeting in November to discuss the risks posed to energy firms by recent geopolitical developments
US shutdown leaves commodity traders without key data
Commodity traders are ‘flying blind’ without Commitment of Traders reports
Energy Risk at 30: Learning from the past
Energy Risk looks back at the seminal events and developments that have shaped today’s energy markets
Why Iran tensions failed to rattle markets
Despite initial fears, traders say risks were signposted and investors had deleveraged after April
