Commodities | May 15 2006
By Greg Peel
The International Energy Agency released its monthly oil report on Friday which suggested that mild northern hemisphere weather in the first quarter as well as sustained high prices have led to a reduction in oil demand. It has revised down its global oil demand growth estimates for 2006 from 1.47 mb/d to 1.25 mb/d.
This did not have any particular impact on the oil price, as a loss of production at a major Texas refinery and more Nigerian tensions contrived to keep the market at current levels.
The supply side also looked a bit healthier, nevertheless, rising in April by 485 kb/d to 85.1 mb/d. Increases were recorded from OPEC, Former Soviet Union, Africa and North America, although North Sea outages provided some offset. However, Barclay’s Capital is not confident in the IEA’s non-OPEC figures, believing them to be overstated.
Continuing the rosier picture, Chinese oil imports fell in April for the first time this year – by 1.8% year-on-year. But Barclays points out that this cannot be considered bearish for the oil price as in April 2005 imports grew by a staggering 23%. That this level of imports has been all but sustained is an indication of continuing growth, says Barclays, not of a turning point.
Can we see any relief is petrol prices from these numbers? Not really. The IEA reports strong gasoline prices in April lifted refining margins to their highest level since Katrina. This is due to heavy Atlantic basin maintenance and offline US Gulf capacity.