Oil prices have moved steadily upward all this week as the dollar slipped and equities moved higher. Opening on Monday at $72 a barrel, it closed on Wednesday at $75.18, the highest close since October 18th 2008.
The weekly stocks report is delayed until Thursday this week, but analysts are expecting crude to increase as refinery maintenance shutdowns are running above normal due to low demand. Colder than usual temperatures in the US are expected to start pulling down distillate stocks which are at their highest level since January 1983.
Goldman Sachs is expecting oil prices to hit $85 a barrel before the end of the year.
OPEC issued a new forecast saying that the demand for oil would increase by 700,000 b/d next year to an average of 84.9 million b/d based mainly on increased demand from China. OPEC expects economic recovery in the OECD nations will be “slow and weak” next year.
Cambridge Energy Research released a report saying that demand for oil in the developed countries reached an all-time peak in 2005. The demand for oil from China and other developing nations is expected to increase however.
Baghdad says that numerous foreign oil companies are resubmitting bids to help develop Iraqi oil fields. The first auction earlier this year was largely a failure when Baghdad insisted that foreign oil companies would only receive $2 a barrel for any new oil produced.
The Saudis continue to work hard on convincing others that oil exporting nations should be compensated for any drop in sales brought on by treaties to restrict emissions.
Beijing released figures showing that the decline in China’s imports and exports slowed sharply in September. Exports last month were only 15.2 percent lower than last year as compared to 23.4 percent lower in September (August?). Many analysts are expecting that China’s 3rd quarter GDP which will be announced next week will be over 9 percent. Beijing also reported that electricity consumption in September was 16 percent higher than in 2008.
As China’s economy had started contracting rapidly in September 2008, year over year comparisons may be suggesting a larger rebound than is actually taking place. Earlier this week China’s cabinet released detailed plans to curb large over-capacities that have developed in many industrial sectors.
While China’s stimulus efforts over the last year may have increased economic activity, it is not yet clear whether this increase will carry over into the coming year.