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Friday(August,15 2014)

OIL MARKET NEWS (WEEK 33): WEEK ENDED AUGUST 15, 2014

             MAJOR HIGHLIGHTS

1. Brent crude oil trades in a range of $100-$104 per barrel.
2. The average GHS/US Dollar exchange rate stabilises for the second consecutive week.
3. Libyan lawmakers agree to elect next president by popular vote.
4. Ghana’s current stock of diesel and petrol improves compared to last week.
5. U.S. crude oil production in July highest in 27 years.

Brent crude oil trades in a range of $100-$104 per barrel

Average Dated Brent price for the week (published by Platts) decreased by $1.66 to $101.67 per barrel from the previous week's average of $103.33 a barrel, indicating 1.61% decline.

Brent crude oil fell, weighed down as disappointing economic data from the European Union fuelled concern about demand, and also ample OPEC production indicating a well-supplied oil market. Growth in Germany and France grounded to a halt in the second quarter.

That disappointing data came just days after news that implied oil demand in China, the world's second-largest oil consumer, fell 6 percent in July from June.

OPEC said its members increased output in July despite violence in Iraq and Libya while trimming its 2014 demand growth forecast. Also weighing on Brent crude oil was U.S. intervention in Iraq that eased concerns over the risk of disruption to supply from OPEC's second-largest producer. U.S. air strikes on the Sunni insurgency calmed market worries over the risk to oil production, helping pull prices lower again.

"Despite armed conflict in Libya, Iraq and Ukraine, the oil market today looks better supplied than expected, with an oil glut even reported in the Atlantic basin," the International Energy Agency (IEA) said in its monthly report. "U.S. and EU sanctions on the Russian oil sector are not providing oil markets with much support either.

The consensus in the industry seems to be that neither set of sanctions will have any tangible near-term impact on supplies. Even for the medium term, their impact appears questionable," the IEA added.

Free on board (FOB) average prices of Petrol remained unchanged at $950.15/MT from the previous week's average of $950.15; Diesel went down by $5.05 to $869.90/MT from the previous week’s average of $874.95, indicating 0.58% decline and LPG went down by $9.10 to $745.90/MT from the previous week’s average of $755.00, indicating 1.21% decline, during the period under review.

The average GHS/US Dollar exchange rate stabilises for the second consecutive week.

The stability of the Ghana Cedi against the USD, lessen the impact of the international prices of petroleum products on the petroleum price build-up. The GHS/US Dollar exchange rate for the period 11th August 2014 to 15th August 2014 was 3.0350 compared to 3.0350 during the previous 2 consecutive weeks.

This resulted in the USD and GHS equivalent FOB prices of Petrol, Diesel and LPG been the same. FOB prices of Petrol remained unchanged, Diesel and LPG decreased by 0.58%, 1.21% respectively over the previous week’s prices.

GEOPOLITICS

Libyan lawmakers agree to elect next president by popular vote

Libya's new parliament agreed that the next president would be elected by a popular vote as lawmakers sought to overcome a confrontation between two armed factions.

Western partners hope the new parliament will open space for negotiations between rival militias and their political backers and return Libya to stability after a month of clashes that turned Tripoli and Benghazi into battlefields.

The House of Representatives voted overwhelmingly for the new president to be directly elected by the Libyan people as it seeks to put the country back on track towards democracy, three years after Muammar Gaddafi's fall in an uprising.

INVENTORIES

Ghana’s current stock of diesel and petrol improves compared to last week

Ghana’s current stock of Diesel and Petrol improves to 1.1 and 2.8 weeks respectively. Diesel’s current stock of 1.1 compares to last week’s stock of 0.4 weeks, while Petrol’s current stock of 2.8 weeks compares to last week’s stock of 2.3 weeks.

These improvements were mainly as a result of BDCs been able to establish LCs with their commercial banks. According to the import schedule, Diesel of about 96.2 million litres was expected for delivery, while Petrol of about 59.1 million litres was expected for delivery to add to existing stockpiles.

LPG of about 9 million kilogrammes was also expected for delivery by close of the week (August 16, 2014). The CDU and RFCC remain shut down for planned mini maintenance and lack of feed.

The statistical arm of the U.S. Department of Energy, the Energy Information Administration (EIA), reported in its Weekly Petroleum Status Report for August 1, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.4 million barrels to 367.0 million barrels while gasoline stockpiles decreased by 1.2 million barrels to 215.3 million barrels.

Inventories of distillate fuel, a category including heating oil and diesel, decreased by 2.4 million barrels to 125.1 million barrels over the same period. Total commercial petroleum inventories increased by 1.5 million barrels last week.

DEMAND and SUPPLY

U.S. crude oil production in July highest in 27 years

U.S. crude oil production averaged an estimated 8.5 million barrels per day in July, the highest level since April 1987, the Energy Information Administration said. In its monthly short term energy outlook, the EIA also raised its crude production forecasts for this year to 8.5 million bpd from its previous estimate of 8.42 million bpd and for next year's output to 9.3 million bpd from 9.27 million bpd previously.

The EIA in its Weekly Petroleum Status report for August 1, 2014 reported that, U.S. crude oil imports averaged over 7.8 million barrels per day last week, up by 283,000 barrels per day from the previous week.

Over the last four weeks, crude oil imports averaged over 7.6 million barrels per day, 4.6% below the same four-week period last year.

Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 470,000 barrels per day. Distillate fuel imports averaged 151,000 barrels per day last week.

REFERENCES

• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Friday(August,08 2014)

OIL MARKET NEWS (WEEK 32): WEEK ENDED AUGUST 8, 2014

Major Highlights

  1. Brent crude oil trades in a range of $102-$104 per barrel.
  2. The average GHS/US Dollar exchange rate stabilizes over last week’s rate.
  3. Fighting in Libya spreads from Tripoli to Zawiya town, around 20 km from Zawiya port.
  4. Ghana’s current stock of diesel to last 0.4 weeks; petrol to last 2.3 weeks.
  5. U.S June petroleum imports drop to 3-1/2 year low.
  6. OPEC revises 2014 global oil demand growth forecast to 1.1 million, down 30,000bpd.
Brent Crude Oil in a range of $102-$104 barrel.

Average Dated Brent price for the week (published by Platts) decreased by $1.94 to $103.33 per barrel from the previous week's average of $105.27 a barrel, indicating 1.94% decline.

Brent crude oil fell as ample supply in global markets was compounded by worries over the impact of trade sanctions on global economic growth. "This continued escalation between the EU, U.S. and Russia over sanctions will be a negative for global economic growth," said Olivier Jakob, oil analyst at Petromatrix consultancy in Switzerland.

However, Brent crude oil rose after the United States approved air strikes against Islamist militants in Iraq, raising concerns over the security of oil supplies from OPEC's second largest producer. "The market will look very close at what happens next, and whether oil supplies from southern Iraq could be under threat," Tetsu Emori, a commodity fund manager at Astmax Co Ltd in Tokyo.

Free on board (FOB) prices of Petrol decreased by $31.95 to $950.15/MT from the previous week's average of $982.10, indicating 3.25% decline; Diesel went down by $11.95 to $874.95/MT from the previous week’s average of $886.90, indicating 1.35% decline and LPG went down by $35.00 to $755.00/MT from the previous week’s average of $790.00, indicating 4.43% decline, during the period under review.

Ghana Cedi/US Dollar exchange rate stabelizes over last week's rate 

The stability of the Ghana Cedi against the USD, lessen the impact of the international prices of petroleum products in the petroleum price build-up.

The GHS/US Dollar exchange rate for the period 4th August 2014 to 8th August 2014 was 3.0350 compared to 3.0350 during the previous period. This resulted in the USD and GHS equivalent FOB prices of Petrol, Diesel and LPG been the same.

FOB prices of Petrol, Diesel and LPG decreased by 3.25%, 1.35% and 4.43% respectively over the previous week’s prices.

GEOPOLITICS

Fighting in Libya spreads from Tripoli to Zawiya town, around 20 km from Zawiya Port.

Clashes in Libya spread from Tripoli to the western town of Zawiya near Tunisia's border, where a large oil port is located, killing four people, local town council officials said.

The fighting in Zawiya is part of a broader struggle between two loose confederations of former rebels and their political allies whose rivalries have exploded into street battles that have killed more than 200 people in the past three weeks.

Foreign governments have mostly closed their embassies and evacuated staff after three weeks of clashes turned Libya's two main cities - Tripoli and Benghazi - into warzones in the worst fighting since the NATO-backed war against Muammar Gaddafi.

Zawiya port is connected to El Sharara in the southern desert and its pipelines started operating a few months ago after months of blockades by armed protesters. "

The clashes are around 20 kilometers from the port. The port is operating normally, and at least one tanker leaves everyday exporting oil," Youssef Hamza, managing director of Zawiya port told Reuters.

He added that "All fuel depots for domestic consumption and for exports are full, and all tankers load once they arrive."

INVENTORIES

Ghana’s current stock of Diesel to last 0.4 weeks while  Petrol to last 2.3 weeks.

Current stock of Diesel and Petrol declines to about 0.4 and 2.3 weeks respectively. Diesel’s current stock of 0.4 compares to last week’s stock of 1.3 weeks, while Petrol’s current stock of 2.3 weeks compares to last week’s stock of 2.5 weeks.

These reduction in stock levels is as a result of financial hold on imports of these products. Diesel and Petrol stocks of about 45 million litres and 23.2 million litres respectively are under financial hold.

According to the import schedule, Diesel of about 72.5 million litres was expected for delivery, while Petrol of about 56.3 million litres was expected for delivery to add to existing stockpiles.

LPG of about 7 million kilogrammes was also expected for delivery by close of the week (August 09, 2014).

The CDU and RFCC remain shut down for planned mini maintenance and lack of feed.

U.S June Petroleum Imports drop to 3-1/2 year low.

The statistical arm of the U.S. Department of Energy, the Energy Information Administration (EIA), reported in its Weekly Petroleum Status Report for August 1, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.8 million barrels to 365.6 million barrels while gasoline stockpiles decreased by 4.4 million barrels to 216.5 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, decreased by 1.8 million barrels to 127.5 million barrels over the same period.

Total commercial petroleum inventories decreased by 8.4 million barrels last week.

DEMAND AND SUPPLY

OPEC revises 2014 global oil demand growth forecast to 1.1 million, down 30,000bpd.

The U.S. trade deficit narrowed more than expected in June as petroleum imports dropped to a 3-1/2 year low, suggesting that trade was less of a drag on second-quarter economic growth than initially thought.

In June, imports fell 1.2 percent, the largest drop in a year, to $237.4 billion. That came as petroleum imports declined to $27.4 billion, the lowest level since November 2010, from $28.3 billion in May.

A domestic energy boom has seen the country reduce its dependence of foreign oil, helping to ease pressure on the current account deficit.

The petroleum deficit fell to its lowest level since May 2009. There was a jump in crude oil exports. Rising exports bode well for economic growth prospects for the rest of the year.

Exports to Canada hit an all-time high in June. Exports to China rose 1.4 percent, while imports from that country increased 3.7 percent.

Elsewhere, OPEC trimmed its 2014 global oil demand growth forecast for a second consecutive month and said the group managed to increase output in July despite violence in Iraq and Libya, pointing to more comfortable global supplies.

In a monthly report, the Organization of the Petroleum Exporting Countries trimmed its projection for growth in global oil demand this year to 1.10 million barrels per day (bpd), down 30,000 bpd.

This is the second consecutive time it has cut the forecast. OPEC also trimmed forecast global demand for its crude oil in 2014 to 29.61 million bpd, down 70,000 bpd from the previous estimate, citing the lower demand forecast and a higher expectation of non-OPEC supply.

The report also showed OPEC's crude output in July rose. According to secondary sources cited by the report, output increased by 170,000 bpd to 29.91 million bpd, led by higher supply in Libya and Saudi Arabia.

REFERENCES
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk 

Tuesday(August,05 2014)

SAFETY TIPS FOR MOTORISTS AT A FILLING STATION

Dear Motorists anytime you are at any filling station to buy fuel, you should concentrate and observe these tit bits BEFORE AND AFTER YOU ARE SERVED to ensure your safety and value for money.

1.Pull up at the pump Island before your fuel tank is opened.

2.Switch off your engine.

3.Closely observe both the quantity and price indicators of the pump; ensure that it reads ZERO, before you are served.

4.Avoid mobile phone conversations and please be attentive for the moment and be involved in the process.

5.Do not smoke in the forecourt of the filling station.

6.Do not buy fuel dispensed from a pump with a Ghana Standard Authority’s `RED STICKER`.

7.Ensure that the Ghana Standards Authority’s ‘GREEN STICKER’ is displayed on the serving dispensing pump.

8.Open your tank and request the attendant to serve you. Make your request in litres or the cedi equivalent (not in gallons).

9.Ensure that the quantity / volume of product on the display is in litres.

10.Observe the amount indicated on the pump display is what you are paying for.

11.If you suspect any foul play, report to the manager or supervisor of the station. If you are not satisfied, contact the NPA on Vodafone toll free number 080012300 or on NPA’s main lines 0302-766195/6.

Tuesday(August,05 2014)

WHAT TO DO IF YOU SMELL GAS

  • Open doors and windows to get rid of the gas.

  • Extinguish all sources of naked flame (coal pots, cigarettes, etc)

  • Check and see if the gas has been left on.

  • If not, there is probably a gas leakage, so turn off the regulator and call technicians to service your stove.

  • If it is safe to do so, try to locate the source of the leak by applying a solution of soapy water to the base of your cylinder valve or along the flexible hose. If bubbles appear and become bigger or increase in number then you have a leak. Knowing where the leak is helps prevent accidents.

  • Do not turn electrical switches on or off.

  • Don’t use matches or naked flames, do not smoke.

  • Don’t use naked flames to check for leakage.


IN CASE OF FIRE

  • Remember, fire needs three ingredients:

  • LPG

  • Oxygen (Air)

  • Heat to ignite


If you have to deal with a fire remember these point:

  • React quickly – a small fire is easier to deal with than a larger one.

  • Alert every one of the fire and evacuate the building.

  • Never try to deal with the fire if it is unsafe to do so.

  • Think of a fire triangle and try to remove one of the ingredient of the fire.

  • Always approach fire from upwind and only if it is safe to do so.

  • If there is fire in the kitchen or near the cylinder, put off the regulator and try to remove the cylinder away from the fire, if it is safe to do so.

  • Attempt to put off fire with fire extinguisher (dry powder fire extinguishers are the most effective for use of LPG fire).

  • Do not use water to put off fire where LPG is present.

  • Call the fire service.

Friday(August,01 2014)

OIL MARKET NEWS (WEEK 31): WEEK ENDED AUGUST 1, 2014

  Major Highlights
 Brent crude oil trades in a range of $103-$106 per barrel.
 The average GHS/US Dollar exchange rate enjoys relative stability over the previous week’s rate.
 The EU and U.S announce further sanctions against Russia.
 Ghana’s current stock of petrol and diesel sees improvement as a result of establishment of Letters of Credit to BDCs.
 Ghana’s consumption of petroleum products fall in June 2014 (Y-on-Y and M-o-M).

Average Dated Brent price for the week (published by Platts) decreased by $0.83 to $105.27 per barrel from the previous week's average of $106.10 a barrel, indicating 0.78% loss. Brent crude oil slipped as ample supply in the Atlantic basin offset geopolitical tensions in the Middle East, Africa and Europe. Michael Wittner, an oil analyst at French bank Societe Generale, said oversupply in the West African crude market was "a bearish sign". "The likelihood of a supply disruption remains extremely low as the ability of other regions to respond, particularly the US energy sector, remains high," analysts at Goldman Sachs led by Jeffrey Currie said in a note to clients. Also weighing on Brent crude oil was weak demand in Europe and Asia. However, Brent crude oil prices rose, reversing losses in the week, as fighting in Ukraine and deteriorating relations between Russia and the United States ignited new fears of supply disruptions in the market. "The escalation of hostilities is stoking supply fears, as the energy card is waiting to be played by Russia and the West as a way to inflict economic harm on each other," said John Kilduff, a partner at Again Capital LLC in New York
Free on board (FOB) prices of Petrol decreased by $11.85 to $982.10/MT from the previous week's average of $994.55, indicating 1.25% loss; Diesel went up by $3.15 to $886.90/MT from the previous week’s average of $883.75, indicating 0.36% gain while LPG went down by $17.80 to $790.00/MT from the previous week’s average of $807.80, indicating 2.20% loss, during the period under review. The relative stability of the Ghana Cedi against the USD, which depreciated insignificantly by 0.01%, increased marginally the contribution of the international prices of crude oil and petroleum products in the petroleum price build-up. The GHS/US Dollar exchange rate for the period 28th July 2014 to 1st August 2014 was 3.0350 (depreciated by 0.01%) compared to 3.0347 during the previous period. The GHS equivalent FOB prices of Petrol and LPG decreased by 1.24% and 2.19% respectively, while Diesel increased by 0.37% over the previous week’s prices.

Geopolitics

The European Union and the United States announced further sanctions against Russia, targeting its energy, banking and defence sectors in the strongest international action yet over Moscow's support for rebels in eastern Ukraine. The measures mark the start of a new phase in the biggest confrontation between Moscow and the West since the Cold War, which worsened dramatically after the downing of Malaysian flight MH17 over rebel-held territory on July 17 by what Western countries say was a Russian-supplied missile.

Inventories

Of the total stocks of Diesel and Petrol reported in the table, about 11.4 million litres and 36.7 million litres respectively are under financial hold. This brings operational stocks of Diesel and Petrol to last 1.3 weeks and 2.5 weeks respectively. This current stock of Diesel sees an improvement over last week’s stock to last of 0.2 week while Petrol’s current stock declines compared to last week’s stock to last of 2.9 weeks. According to the import schedule, Diesel of about 48.5 million litres was expected for delivery, while Petrol of 10.7 million litres was expected for delivery to add to existing stockpiles. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (August 02, 2014). The CDU has been shut down since March 16, 2014 due to lack of crude oil while the RFCC shut down on May 19, 2014 for planned mini maintenance.
The statistical arm of the U.S. Department of Energy, the Energy Information Administration (EIA), reported in its Weekly Petroleum Status Report for July 25, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.7 million barrels to 367.4 million barrels while gasoline stockpiles increased by 0.4 million barrels to 220.9 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, increased by 0.8 million barrels to 129.3 million barrels over the same period. Total commercial petroleum inventories decreased by 0.5 million barrels last week.

Demand and Supply

From Table 1, it can be observed that Ghana’s consumption of all petroleum products fell in June-14 from June-13 (year-on-year). MGO Foreign recorded the highest drop of 98%, followed by Kerosene (80%), Petrol (19%), ATK (13%) etc. The drop in MGO Foreign is partly due to the separation of Gasoil Rig from MGO Foreign in 2014.
Table 2 depicts Ghana’s consumption of petroleum products on a month-on-month basis. Consumption of all the petroleum products except ATK recorded drops in June-14 from May-14. The highest drop by half (50%) was recorded for MGO Foreign. Petrol and Diesel experienced drops of nearly a quarter (22.8% and 23%) each for the same period. This could mainly be attributed to BDCs inability to raise LCs from commercial banks to fund imports of these products. However, ATK recorded about a quarter (24%) rise in consumption in June-14 from May-14. This was mainly as a result of some BDCs failing to deliver their scheduled stocks and also coupled with Tema Oil Refinery’s inability to produce in the month of May-14. The situation was, however, returned to normalcy with the issuance of emergency cargoes to avert further deterioration of the situation.

References
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk

Tuesday(July,29 2014)

OIL MARKET NEWS (WEEK 30): WEEK ENDED JULY 25, 2014

  Major Highlights
 Brent crude oil trades in a range of $105-$107 per barrel.
 The average GHS/US Dollar exchange rate enjoys relative stability over the previous week’s rate.
 Fighting intensifies in eastern city of Donetsk between Ukrainian army and pro-Russian rebels.
 Ghana’s stock of petrol and diesel to last 3.2 and 0.8 weeks respectively.
                                                        U.S. crude stocks fell more than expected last week.

Average Dated Brent price for the week (published by Platts) increased by $1.00 to $106.10 per barrel from the previous week's average of $105.10 a barrel, indicating 0.95% rise. Brent crude oil edged up, supported by escalating geopolitical tensions over Ukraine, fighting in Gaza and expectations of large draws in US oil stockpiles. ‘’The escalating tensions in Ukraine is causing European foreign ministers to consider further sanctions on Russia. ‘The talks about potential new sanctions against Russia can add risk premium to the oil price,’’ said Olivier Jakob, an analyst at Petromatrix in Zug, Switzerland. There is some push for the EU to move into the type of sanctions that the United States is imposing on companies that do not have a direct link with the events in Ukraine, said Jakob. Violence raged as Israel pounded the Gaza Strip, pushing the Palestinian death toll to more than 500, while Israel's losses mounted to 13. "The crises in Ukraine and the Gaza Strip, coupled with the risk of tougher economic sanctions against Russia, caused oil prices to climb," Commerzbank analyst Carsten Fritsch said.

Free on board (FOB) prices of Petrol decreased by $11.85 to $994.55/MT from the previous week's average of $1,006.40, indicating 1.18% loss; Diesel went up by $5.65 to $883.75/MT from the previous week’s average of $878.10, indicating 0.64% gain while LPG went down by $3.70 to $807.80/MT from the previous week’s average of $811.50, indicating 0.46% loss, during the period under review. The relative stability of the Ghana Cedi against the USD, which depreciated insignificantly by 0.08%, increased marginally the contribution of the international prices of crude oil and petroleum products in the petroleum price build-up. The GHS/US Dollar exchange rate for the period 21st July 2014 to 25th July 2014 was 3.0347 (depreciated by 0.08%) compared to 3.0323 during the previous period. The GHS equivalent FOB prices of Petrol and LPG decreased by 1.10% and 0.38% respectively, while Diesel increased by 0.72% over the previous week’s rates.

Geopolitics

Ukrainian army tanks were reported to have launched an assault to break pro-Russian rebels’ hold on the eastern city of Donetsk in the first major outbreak of hostilities in the area since Malaysia Airlines flight MH17 was shot down last week. A separatist leader said Ukrainian government forces were trying to break into Donetsk and fighting was under way near the railway station.

Inventories

Of the total stocks of Diesel and Petrol reported in the table, about 24.5 million litres and 11.0 million litres respectively are under financial hold. This brings operational stocks of Diesel and Petrol to last 0.2 weeks and 2.9 weeks respectively. According to the import schedule, Diesel of about 56.2 million litres was expected for delivery, while Petrol of 13.4 million litres was expected for delivery to add to existing stockpiles. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (July 26, 2014).

The CDU is still down since March 16, 2014 due to lack of crude oil while the RFCC shut down on May 19, 2014 for planned mini maintenance.

The statistical arm of the U.S. Department of Energy, the Energy Information Administration (EIA), reported in its Weekly Petroleum Status Report for July 18, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.0 million barrels to 371.0 million barrels while gasoline stockpiles increased by 3.4 million barrels to 220.5 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, increased by 1.6 million barrels to 128.5 million barrels over the same period. Total commercial petroleum inventories increased by 5.2 million barrels last week.

Demand and Supply

According to the EIA, U.S. crude oil imports averaged over 7.4 million barrels per day last week, down by 20,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.3 million barrels per day, 4.2% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 625,000 barrels per day. Distillate fuel imports averaged 91,000 barrels per day last week.
Total products supplied over the last four-week period averaged over 19.3 million barrels per day, down by 2.0% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.0 million barrels per day, down by 1.0% from the same period last year. Distillate fuel product supplied averaged over 3.8 million barrels per day over last four weeks, down by 6.2% from the same period last year.

References
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Tuesday(June,17 2014)

OIL MARKET NEWS (WEEK 24): WEEK ENDED JUNE 13, 2014

  Major Highlights
Brent crude oil trades in a range of $109-$113 per barrel.
The average GHS/US Dollar exchange rate weakened by 1.77% over the previous week’s rate.
Insurgents seize two more Iraqi towns, Obama threatens air strikes.
Ghana’s current stock of petrol to last 1.4 weeks, diesel 2.8, LPG 0.7 and ATK 2.0 weeks.
China consumed roughly 9.41 million barrels of oil per day (bpd) in May 2014.

Average Dated Brent price for the week (published by Platts) increased by $1.98 to $110.82 per barrel from the previous week's average of $108.84 a barrel, indicating 1.82% gain. Brent crude oil rose as violence in Iraq prompted worries about supply outlook. "Iraq has become a key supplier as it has managed to ramp up output quite rapidly and it has helped offset losses from other producers," said a source at an Asian refinery. "So if there is any disruption from Iraq, everybody is worried that the impact on the market will be serious." Also supporting Brent crude oil were strong Chinese trade data and U.S jobs figures pointed to healthy economic growth and higher oil demand from the world’s top two consumers. "We have been getting a series of overall positive economic numbers from China and the United States that is helping support oil prices as the overall demand outlook looks good." said Ken Hasegawa, a Tokyo-based commodity sales manager at Newedge Japan. He added that "Oil is now in a new price territory and is likely to climb more as investors rework their positions, supported by the uncertainty and technicals." Free on board (FOB) prices of petrol increased by $18.5 to $1023.10/MT from the previous week's average of $1004.60, indicating 1.84% gain; diesel went up by $14.50 to $898.70/MT from the previous week’s average of $883.90, indicating 1.67% gain and LPG went up significantly by $36.30 to $776.40/MT from $740.10, indicating 4.90% gain, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 9 June 2014 to 13 June 2014 was 2.9852 (depreciated by 1.77%) compared to 2.9333 during the previous period. The weakened Ghana cedi against the U.S dollar increased the contribution of the international prices of crude oil and petroleum products in the price build-up, resulting in higher ex-pump prices. The GHS equivalent FOB price of petrol, diesel and LPG increased by 3.64%, 3.47% and 6.76% respectively during the period under review.

Geopolitics

Islamist rebel fighters captured two more Iraqi towns overnight in a relentless sweep south towards the capital Baghdad in a campaign to recreate a mediaeval caliphate carved out of fragmenting Iraq and Syria. U.S. President Barack Obama threatened military strikes against the radical Islamic State of Iraq and the Levant, highlighting the gravity of ISIL's threat to redraw borders in an oil-rich region with the risk of any new entity turning into a launch-pad for attacks on Western interests. In the spreading chaos, Iraqi Kurdish forces seized control of Kirkuk - an oil hub just outside their autonomous enclave that they have long seen as their traditional capital - as Iraqi government troops abandoned posts in panic over ISIL's advance. "I don't rule out anything because we do have a stake in making sure that these jihadists are not getting a permanent foothold in either Iraq or Syria," Obama said at the White House, when asked whether he was contemplating air strikes. "In our consultations with the Iraqis, there will be some short-term immediate things that need to be done militarily," he said. A U.S. defence official said the United States had been flying surveillance drones over Iraq to help it fight ISIL.

Inventories
                                                                                                                                                                                                                                      According to the import schedule, diesel of over 43 million litres was expected for delivery, while petrol of about 66 million litres was expected for delivery to add to existing stockpiles. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (June 14, 2014).
The CDU is still down since March 16, 2014 due to lack of crude oil while the RFCC shut down on May 19, 2014 for planned mini maintenance.
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for June 6, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.6 million barrels to 387.0 million barrels while gasoline stockpiles increased by 1.7 million barrels to 215.8 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, increased by 0.9 million barrels to 119.0 million barrels over the same period. Total commercial petroleum inventories increased by 6.2 million barrels last week.


Demand and Supply

China's implied oil demand fell 3.1 percent in May from the previous month to its lowest since August 2013 as refineries scaled back production for maintenance and continued to export surplus fuel to trim inventories as the nation's economy slowed. China consumed roughly 9.41 million barrels per day (bpd) of oil last month, according to Reuters calculations based on preliminary government data, the lowest level in nine months and down from 9.71 million bpd in April. May consumption was also down 0.7 percent from 9.48 million bpd a year earlier, the calculations showed.
According to the U.S. Department of Energy, U.S. crude oil imports averaged over 7.1 million barrels per day last week, up by 23,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.1 million barrels per day, 8.1% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 560,000 barrels per day. Distillate fuel imports averaged 106,000 barrels per day last week. Total products supplied over the last four-week period averaged 18.8 million barrels per day, up by 1.6% from the same period last year. Distillate fuel supply averaged 4.0 million barrels per day over the last four weeks, up by 1.1% from the same period last year.


References
 www.bloomberg.com
 www.reuters.com
 www.bbc.co.uk
Tuesday(June,10 2014)

OIL MARKET NEWS (WEEK 23): WEEK ENDED JUNE 6, 2014

  Major Highlights
•    Brent crude oil trades in a range of $108-$109 per barrel.
•    The average GHS/US Dollar exchange rate weakened by 1.42% over the previous week’s rate.
•    Protests at oil facilities and fighting causes Libya to lose $30 billion in oil revenue.
•    Ghana’s current stock of petrol to last 3.4 weeks, diesel 3.3, LPG 1.1 and ATK 0.03 weeks.
•    Ghana’s consumption of petroleum products experience mixed movements.

Average Dated Brent price for the week (published by Platts) decreased by $0.85 to $108.84 per barrel from the previous week's average of $109.69 a barrel, indicating 0.77% loss. Brent crude slipped on ample supply in the United States and as tensions over Ukraine cooled. Ukraine's President-elect and western leaders are working on a peace plan to end violence in the east of the country which caused oil prices to rise in May. "The situation in Ukraine seems to be getting better, so prices are unlikely to spike up," said Ken Hasegawa, a Tokyo-based commodity sales manager at Newedge Japan. “Avenues of communication are open and the talks this week meant the market is not as concerned as it was when Crimea crisis erupted,” Christopher Bellew, broker at Jefferies Bache, said. A strong dollar and recent data showing rising OPEC oil production also weighed on prices. A stronger dollar tends to put pressure on commodities including oil, which are priced in the U.S. currency as it makes them more expensive for non-U.S. importers. Brent gained in the course of the week on renewed optimism over steady demand growth in the world's top oil consumer the United States following healthy economic data, with supply disruption concerns providing additional support. Orders for long-lasting U.S. manufactured goods unexpectedly rose and consumer confidence perked up, underpinning risk assets and bolstering U.S. equity markets to another record close. "There are quite a few bullish factors in the oil market that are supportive, we have good economic indicators and uncertainty over Libya and Ukraine," said Tetsu Emori, a commodity fund manager at Astmax Investment. Free on board (FOB) prices of petrol decreased by $10.65 to $1004.60/MT from the previous week's average of $1015.25, indicating 0.77% loss; diesel went down by $18.23 to $883.90/MT from the previous week’s average of $902.13, indicating 2.02% drop while LPG went up by $2.10 to $740.10/MT from $738.00, indicating 0.28% gain, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 2 June 2014 to 6 June 2014 was 2.9333 (depreciated by 1.42%) compared to 2.8922 during the previous period. The weakened Ghana cedi against the U.S dollar increased the contribution of the international prices of crude and petroleum products in the price build-up, resulting in higher ex-pump prices. The GHS equivalent FOB price of petrol and LPG increased by 0.36% and 1.71% respectively, while diesel fell by 0.63% during the period under review.

Geopolitics

Gunmen in Libya shot dead a Swiss national working for the International Committee of the Red Cross (ICRC), fired a grenade at the prime minister's office and tried to kill a renegade general in a series of attacks. Anarchy is spreading in the North African oil-producing country where turmoil and political infighting have reigned since the 2011 uprising that ousted Muammar Gaddafi. Libya has lost $30 billion due to 10 months of protests at oilfields and export terminals but has sufficient foreign currency reserves to keep the country running, a central bank official said. A wave of protests at oil facilities has reduced the North African country's oil output to less than 200,000 barrels a day down from 1.4 million bpd in July before the strikes started. "The damages the state has now suffered after more than 10 months, Libya has lost not less than $30 billion," Musbah Alkari, director of the central bank's reserves department, told Reuters.

Inventories
                                                                                                                                                                                                                                      According to the import schedule, diesel of over 39 million litres was expected for delivery, while petrol of about 45 million litres was expected for delivery to add to existing stockpiles. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (June 7, 2014).
The CDU is still down since March 16, 2014 due to lack of crude oil while the RFCC shut down on May 19, 2014 for planned mini maintenance.
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for May 30, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.4 million barrels to 389.6 million barrels while gasoline stockpiles increased by 0.2 million barrels to 214.1 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, increased by 2.0 million barrels to 118.1 million barrels over the same period. Total commercial petroleum inventories increased by 8.8 million barrels last week.

Demand and Supply

Ghana’s consumption of petroleum products experienced mixed movements, with Kerosene, MGO Foreign and ATK experiencing significant drops in volumes, while petrol gained from April 2013 to April 2014. Kerosene saw the highest drop of 82%. This could be attributed to the removal of subsidies and the introduction of the Petroleum Product Marking Scheme which has significantly reduced adulteration in the industry. In terms of month-on-month consumption, diesel, petrol and MGO Foreign increased while LPG, Kerosene and ATK dropped, as illustrated in the table below.  

 References
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Wednesday(June,04 2014)

OIL MARKET NEWS (WEEK 22): WEEK ENDED MAY 30, 2014

Major Highlights
  •  Brent crude oil trades in a range of $109-$110 per barrel.
  •  The average GHS/US Dollar exchange rate weakened by 0.26% compared to the previous week.
  •  Ukraine elects new president.
  • Ghana’s current stock of petrol and diesel to last 4.1 weeks each; LPG 1.1 weeks.
  •  U.S. total commercial petroleum inventories increased by 3.2 million barrels last week.
Average Dated Brent price for the week (published by Platts) decreased by $1.17 to $109.69 from the previous week's average of $110.86 a barrel, indicating 1.05% loss. Brent crude oil slipped, weighed down, as expectation of a build in U.S. crude inventory pushed traders to take profits ahead of a government inventory report, and also by easing geopolitical tensions in Ukraine, after a successful presidential election. "This is profit-taking ahead of the EIA and API reports," said Bill Baruch, senior market strategist at iitrader.com in Chicago. "With regards to Ukraine, there is a positive aspect in that there is some light at the end of the tunnel." A stronger US Dollar also weighed on Brent. Losses were, however, capped by deterioration in violence in Ukraine and Libya. Free on board (FOB) prices of petrol increased by $4.05 to $1015.25 from the previous week's average of $1010.95 per metric tonne (MT), indicating 0.43% gain, LPG went up by $5.80 to $738.00 from $732.20 per MT, indicating 0.79% gain, while diesel went down by $9.37 to $902.13 from the previous week’s average of $911.50 indicating 1.03% drop, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 26 May 2014 to 30 May 2014 was 2.8922 (depreciated by 0.26%) compared to 2.8848 during the previous period. The weakened Ghana cedi against the U.S dollar increased the contribution of the international prices of crude and petroleum products in the price build-up, resulting in higher ex-pump prices. The GHS equivalent FOB price of petrol and LPG increased by 0.69% and 1.05% respectively, while diesel fell by 0.77% during the period under review.

Geopolitics

Ukraine’s election of a new President, deemed a success by the European Union, is likely to ease pressure for far-reaching sanctions against Russia as Europe worries about how punitive steps might hurt its own economy. The election had been billed as a crucial test of whether Europe needed to step up pressure on Russian President Vladimir Putin. But deep trade ties with Russia and widespread dependence on its energy reserves mute any EU enthusiasm to tighten sanctions. European Commission President Jose Manuel Barroso and Herman Van Rompuy, head of the body representing the EU's 28 governments, said in a statement "we welcome statements by the Russian Federation indicating that it will respect the will of the Ukrainian people and engage in a dialogue with the new Ukrainian president."

Inventories

According to the import schedule, diesel of over 50 million litres was expected for delivery, while petrol of about 55 million litres was expected for delivery to add to existing stockpiles for the market by close of the week (May 31, 2014).
The CDU is still down since March 16, 2014 due to lack of crude oil while the RFFC commenced production on May 18, 2014 at rate of 1800MTPSD (76%).
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for May 23, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.7 million barrels to 393.0 million barrels while gasoline stockpiles decreased by 1.8 million barrels to 213.9 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, decreased by 0.2 million barrels to 116.1 million barrels over the same period. Total commercial petroleum inventories increased by 3.2 million barrels last week.

Demand and Supply

According to the U.S. Department of Energy, U.S. crude oil imports averaged about 7.8 million barrels per day last week, up by over 1.3 million barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.1 million barrels per day, 9.3% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 725,000 barrels per day. Distillate fuel imports averaged 148,000 barrels per day last week.

Total products supplied over the last four-week period averaged 19.1 million barrels per day, up by 2.2% from the same period last year. Over the last four weeks, motor gasoline supply averaged over 9.1 million barrels per day, up by 5.4% from the same period last year. Distillate fuel supply averaged about 4.1 million barrels per day over the last four weeks, up by 8.6% from the same period last year. Jet fuel product supply was down 1.6% compared to the same four-week period last year.

References
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Tuesday(June,03 2014)

INSTILLING SANITY IN THE PETROLEUM DOWNSTREAM SECTOR

In order to ensure sanity in the petroleum downstream sector, the National Petroleum Authority (NPA) has introduced a new scheme to halt the adulteration of petroleum products and ensure that subsidized petroleum products reach the target group. This will also recoup revenue for government which would have been lost through diversion of subsidized petroleum products.

The new measure, known as the Petroleum Product Marking Scheme (PPMS), involves the introduction of a bio-chemical liquid (fuel marker) into the petroleum products at the loading depots prior to delivery of the products to the retail outlets. The marker creates a “finger print” and provides a secure, tamper-proof method of authentication.

Low levels of the marker are usually applied to the petroleum product and the concentration of the marker can only be detected by patent-protected portable field devices. These patent devices are used by field monitoring officers to detect violations.

The implementation of the PPMS is as a result of NPA’s objective of ensuring that the industry continues to be efficient and profitable whilst consumers are satisfied.

ADULTERATION
Adulteration of petroleum products is a practice confronting many countries in the world. In recent past in Ghana, adulteration of diesel with kerosene has been the main reason why much of subsidized kerosene intended for the rural population does not get to the intended targets. Adulteration is not limited to diesel and kerosene alone.

Gasoline adulteration with premix fuel is also practiced as a result of the significant price differentials between these products due to government subsidies on the “social” products. Product adulteration is also a contributory factor to reports of malfunctioning of vehicle engines and harmful emissions to the detriment of the environment and public health.

Some countries confronted with this challenge have attempted to address this challenge by the use of colour dyes.

In Ghana, we responded by changing the colour of premix from red to blue. Prior to this, the similarity of the colour between premix and petrol made adulteration undetected by visual observation. The change in colour from red to blue differentiated premix from petrol to discourage adulteration and diversion to premix.

However, coloration of the petroleum products has a lot of limitations since the dye can be easily removed by both physical and chemical processes such as acid washing, clay filtration, UV filtration, among others.

Presently, the petroleum regulatory authorities of most countries such as Brazil, South African, Uganda, Tanzania, among others have adopted a modern and robust technology known as Fuel Marking to combat adulteration of petroleum products as well as recover fiscal tax revenue from the sale of petroleum products.

In Brazil, for instance, fuel marking began 10 years ago. The technology has been used successfully by the National Agency for Petroleum, Natural Gas and Biofuels (ANP) to reduce the incidence of gasoline adulteration with organic solvents from 12.5% to 2%. In South Africa, apart from the reduction of incidences of adulteration of diesel with kerosene, fuel marking technology has been significantly used to recover fiscal tax revenue from the sale of diesel by the Oil Marketing Companies.

The South African Revenue Service (SARS) currently collects about 300 million Rand annually (US$4.4m) in tax revenue from the sale of diesel. The high tax revenue from diesel is attributed to the benefit of fuel marking in South Africa.

Pursuant to the success stories of these countries, a Technical Committee was formed by the NPA to undertake study tours to these countries.

Based on the recommendations of the team and in line with its mandate per the NPA Act 691, the NPA took the decision in 2011 to mark petroleum products in the country with the following objectives.
  •   To enable the NPA, as the regulatory body, monitor the quality of fuel
  • To help combat adulteration of petroleum products as well as recover fiscal tax revenue from the sale of petroleum products.
  • To prevent the smuggling of petroleum products into and out of Ghana

The NPA proposed a Legislative Instrument (LI) which was laid before the Parliament of Ghana on 26th July 2012 and  subsequently passed into Law, LI2187 (Petroleum Product Marking regulations) on 13th of September,2012. This means that where applicable, punitive sanctions such as fines, imprisonment or both would apply to defaulting Petroleum Service Providers.

The implementation of the fuel marking process commenced in February 2013 at Cirrus Depot in Tema and was replicated at all operational depots in the country by the end of March 2013. Also, the Authority has acquired the necessary equipment and has set up field monitoring teams which monitor the product quality at all petroleum product retail outlets and other bulk consumption points in the country.

Following the successful introduction of the fuel marking program at all of Ghana’s ten operational fuel depots, a nationwide sampling and testing was conducted from May to June 2013. This was to ensure that the fuel marker was at the required levels at the outlets and to establish a base line for the degree of fuel adulteration and resulting revenue losses to the Republic of Ghana.

Out of the 2700 retail outlets operating in the country, the Authority sampled 1000 stations and recorded violation of more than 32%. This violation translates into revenue loss in excess of GH₵50 million through diversions of subsidized petroleum products.

Subsequently, from September to November 2013, a total of 2,997 visits were made to petroleum product retail outlets in the country. During these visits, 6,887 petroleum product samples were taken and tested onsite.

FUEL-TAX

The percentage of outlets suspected to be engaged in one form of adulteration or the other has reduced from 32% (recorded in the May to June exercise) to about 7% at the end of November 2013 indicating the effective nature of the program.

These results suggested there is a deterrent effect resulting from the regular field monitoring and that taxable revenue will further increase significantly if sanctions are enforced.

This drop in failure rate translates to an estimated revenue recovery of about GHc17m per annum in tax revenue and a significant savings on subsidies.

The fuel-tax integrity program has been successfully implemented for the Republic of Ghana. The fuel marking levels of gasoline and diesel are at the required levels and it is possible to detect dilution in the distribution-chain.  A 78% reduction in the station failure rate has been observed since program start, providing evidence of a deterrent effect on illicit fuel trade even prior to the start of sanctions.

All testing rounds to-date have shown that there is material dilution of both gasoline and diesel. Full program execution and enforcement will benefit the people of Ghana a further estimated revenue recovery of GH₵ 33 million per annum.

As an additional benefit, in most cases, the adulterant used to dilute either gasoline or diesel will affect the quality of the end product and may result in vehicle engine failures and in harmful emissions to the detriment of the environment and public health.  

A well-executed program including enforcement can further benefit the people of Ghana by reducing pollution created by fuels adulterated by kerosene, used engine oil and other unknown contaminants.
Tuesday(May,27 2014)

OIL MARKET NEWS (WEEK 21): WEEK ENDED MAY 23, 2014

  Major Highlights
  •  Brent crude oil trades in a range of $110-$111 per barrel.
  •  The average GHS/US Dollar exchange rate weakened by 0.43% compared to the previous week.
  •  Libya proposes June election as crisis escalates.
  •  Ghana’s current stock of petrol to last 3.6 weeks; diesel to last 4.5 weeks.
  •  U.S. total commercial petroleum inventories increased by 2.1 million barrels last week.

Average Dated Brent price for the week (published by Platts) increased by $1.28 to $110.86 from the previous week's average of $109.58 a barrel, indicating 1.16% gain. Brent crude oil held steady above $110 a barrel, supported by conflicts in Libya and Ukraine as well as positive economic data in the world's top oil consumers, the United States and China. The fragile situation in Libya supported global oil prices, with new fighting breaking out in the capital Tripoli, according to witnesses. The reports by Tripoli residents of gunfire and explosions near two military camps came days after gunmen stormed parliament in the worst violence in months. The oil market was supported by signs of global economic growth, with U.S. manufacturing growth picking up to a three-month high in May, and China's factory sector turning in its best performance this year in May. China’s preliminary Purchasing Managers’ Index was 49.7 for May, up from 48.1 the previous month and the highest reading this year, according to HSBC Holdings Plc and Markit Economics. This figure signaled that the economy of the world’s second-biggest oil consumer is stabilizing. “China’s manufacturing is now only barely contracting” and today’s data is a welcome improvement, Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London, said. “We remain cautious as to whether this is enough to give a significant boost to industrial commodities like oil.”

Free on board (FOB) prices of petrol increased by $14.00 to $1010.95 from the previous week's average of $996.95 per metric tonne (MT), indicating 1.40% gain, LPG went up by $8.60 to $732.20 from $723.60 per MT, indicating 1.19% gain, while diesel went down marginally by $0.90 to $911.50 from the previous week’s average of $912.40 indicating 0.10% drop, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 19 May 2014 to 23 May 2014 was 2.8848 (depreciated by 0.43%) compared to 2.8725 during the previous period. Due to the depreciation of the Ghana cedi against the U.S dollar (which depreciated by 0.43%), the GHS equivalent FOB price of petrol, diesel and LPG increased by 1.84%, 0.33% and 1.62% respectively during the period under review.

Geopolitics
Libyan authorities proposed a June national election as the government sought to resolve a standoff over parliament involving powerful brigades of former rebel fighters. Libya's General National Congress (GNC) is at the heart of the crisis after gunmen claiming loyalty to a renegade former general attacked parliament with anti-aircraft cannons, demanding its suspension. The June 25 election proposal appears to be an attempt to ease tensions after recent attack claimed by forces loyal to former General Khalifa Haftar, and to avoid the potential response by rival Islamist militia brigades.

Inventories
According to the import schedule, diesel of over 11 million litres was expected for delivery, while petrol of about 32 million litres was expected for delivery to add to existing stockpiles for the market by close of the week (May 24, 2014).
The CDU is still down since March 16, 2014 due to lack of crude oil while the RFFC commenced production on May 18, 2014 at rate of 1800MTPSD (76%).
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for May 16, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 7.2 million barrels to 391.3 million barrels while gasoline stockpiles increased by 1.0 million barrels to 215.7 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, increased by 3.4 million barrels to 116.3 million barrels over the same period. Total commercial petroleum inventories increased by 2.1 million barrels last week.

Demand and Supply
According to the U.S. Department of Energy, U.S. crude oil imports averaged about 6.5 million barrels per day last week, down by 658,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.0 million barrels per day, 11.3% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 997,000 barrels per day. Distillate fuel imports averaged 176,000 barrels per day last week.
Total products supplied over the last four-week period averaged over 18.9 million barrels per day, up by 1.8% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 8.9 million barrels per day, up by 5.3% from the same period last year. Distillate fuel product supplied averaged about 4.1 million barrels per day over the last four weeks, up by 7.7% from the same period last year. Jet fuel product supplied is down 0.3% compared to the same four-week period last year.

References
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Tuesday(May,20 2014)

OIL MARKET NEWS (WEEK 20): WEEK ENDED MAY 16, 2014

Major Highlights
  •  Brent crude oil trades in a range of $108-$111 per barrel.
  •  The average GHS/US Dollar exchange rate weakened by 1.39% compared to the previous week.
  •  Iran and six world powers enter decisive phase of diplomacy on nuclear issues.
  •  Ghana’s current stock of petrol to last 4.7 weeks; diesel to last 3.3 weeks.
  •  U.S. crude production of 8.428 million barrels per day, the most since October 1986.
Average Dated Brent price for the week (published by Platts) increased by $1.23 to $109.58 from the previous week's average of $108.35 a barrel, indicating 1.14% gain. Brent crude oil steadied above $109, supported by renewed tensions in Ukraine, where the conflict looks increasingly out of control and heightening the risk of disruption to energy supplies. Seven soldiers were killed and seven wounded in an ambush in the biggest single loss of life by the Ukrainian army since it was sent to eastern Ukraine to smash pro-Russian separatist groups. Also supporting prices were concerns over output in Libya, where recently opened fields were closed again and clashes erupted in the east. "We have to take Libyan reports that these oilfields are back up with a grain of salt because it's still very uncertain there," said Joseph Posillico, senior vice president of energy derivatives at Jefferies Bache in New York. Free on board (FOB) prices of petrol went up by 0.58%, diesel by 1.23% while LPG went down by 1.05%, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 12 May 2014 to 16 May 2014 was 2.8725 (depreciated by 1.39%) compared to 2.8332 during the previous period. Due to the depreciation of the Ghana cedi against the U.S dollar (which depreciated by 1.39%), the GHS equivalent FOB price of petrol increased by 1.97%, diesel by 2.63% and LPG by 0.33%, during the same period under review.

Geopolitics

Six world powers and Iran launched a decisive phase of diplomacy to draft a lasting accord that would curb Tehran's contested nuclear activity in exchange for a phased end to sanctions that have hobbled the Iranian economy. After three months of discussing expectations rather than negotiating possible compromises, the sides are to set about devising a package meant to end years of antagonism and curtail the risk of a wider Middle East war with global repercussions. Diplomats from both sides have said they want to resolve all sticking points about issues such as Iran's capacity to enrich uranium and the future of its nuclear facilities, as well as the timeline of sanctions relief, by a July 20 deadline.
Elsewhere, Libyan irregular forces backed by helicopters clashed with Islamist militias in Benghazi in fighting that left at least 12 people dead and posed a new test to the country's fragile government. The violence prompted Libya's prime minister to order the regular military to control any armed groups - including Haftar's forces - in the eastern city, where militants often clash with the army, and assassinations and bombings are common.

Inventories

According to the import schedule, diesel of over 22 million litres was expected for delivery, while petrol of about 32 million litres was expected for delivery to add to existing stockpiles for the market. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (May 17, 2014).
The CDU and RFFC are both shutdown due to lack of feed and planned mini maintenance respectively.
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for May 9, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.9 million barrels to 398.5 million barrels while gasoline stockpiles decreased by 0.8 million barrels to 214.7 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, decreased by 1.1 million barrels to 112.9 million barrels over the same period. Total commercial petroleum inventories increased by 3.4 million barrels last week.

Demand and Supply

The U.S. Energy Information Administration (EIA) said in its monthly Short-Term Energy Outlook that U.S. crude production climbed to a 28-year high last week as the shale boom moved the world’s biggest oil-consuming country closer to energy independence. Output rose by 78,000 barrels a day to 8.428 million, the most since October 1986. “This is an incredible phenomena that looks set to continue,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said. “There’s a long way to go before we explore and exploit all of the shale deposits out there.” The U.S. met 87 percent of its energy needs in 2013, and 90 percent in December, the most since March 1985, according to the EIA, the statistical arm of the Energy Department. Crude output will average 8.46 million barrels a day this year and 9.24 million in 2015, up from 7.45 million last year, the EIA said in its monthly Short-Term Energy Outlook. Next year’s projection would be the highest annual average since 1972.

China's implied oil demand fell 0.8 percent in April from the previous month to its lowest since September as refineries scaled back production for maintenance and continued to export surplus fuel to trim inventories as the nation's economy slowed. China consumed roughly 9.71 million barrels per day (bpd) of oil in April, according to Reuters calculations based on preliminary government data, the lowest level in seven months and down from 9.79 million bpd in March. Chinese investment, retail sales and factory output growth all disappointed in April by hitting multi-year lows, suggesting the world's second-largest economy is still losing steam despite government efforts to shore up activity. April consumption was up 1.1 percent from 9.6 million bpd a year earlier, while for the first four months of 2014, oil demand climbed just 0.4 percent from a year ago to 9.9 million bpd.

References
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Tuesday(May,13 2014)

OIL MARKET NEWS (WEEK19): WEEK ENDED MAY 9, 2014

             Major Highlights


  •  Brent crude oil average about $108 per barrel.
  •  The average GHS/US Dollar exchange rate weakened by 1.48% compared to the previous week.
  •  Libya’s new Prime Minister pledges to form a unity government.
  •  Ghana’s consumption of petroleum products (year-on-year) fell in March 2014 with the exception of ATK.

Average Dated Brent price for the week (published by Platts) decreased by $0.79 to $108.35 from the previous week's average of $109.14 a barrel, indicating 0.73% loss. Brent crude oil fell, pressured by reports that China's manufacturing sector contracted and Libya's oil output recovered. Data on China's manufacturing sector weighed on crude oil prices. A private survey showed that the Chinese manufacturing sector contracted for a fourth consecutive month in April. The HSBC/Markit purchasing managers' index for April came in at 48.1, lower than a preliminary reading of 48.3, but up slightly from an eight-month low of 48.0 in March. A reading below 50 indicates contraction, adding to worries that the Chinese economy is still losing momentum. Also weighing on prices were news of tribesmen ending a blockade of the El Sharara oilfield with engineers hoping for resumption of pumping within a week. Brent crude oil was, however, supported by positive economic data, with the U.S. trade deficit narrowing in March as exports rebounded to the second-highest level on record, indicating healthy demand for energy in the world's biggest oil consumer. Also heightened tension in Ukraine and the possibility of the country slipping into civil war also helped lift oil markets, as traders weighed the risk of supply disruptions from Russia, the world's biggest oil producer. Free on board (FOB) prices of petrol went down by 2.56%, diesel by 0.62% and LPG by 0.47%, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 5 May 2014 to 9 May 2014 was 2.8332 (depreciated by 1.48%) compared to 2.7920 during the previous period. Due to the depreciation of the Ghana cedi against the U.S dollar (which depreciated by 1.48%), the GHS equivalent FOB price of petrol decreased by 1.12%, while diesel and LPG increased by 0.85% and 1.00% respectively, during the same period under review.

Geopolitics

Libya’s new Prime Minister, Ahmed Maiteeq, said he wants to engage all political forces in forming a "crisis government" and devolve some powers to regions in the oil-producing state. Maiteeq was sworn-in after a chaotic vote in parliament that was immediately disputed by many deputies, another sign of the chaos gripping the North African country three years after the fall of Muammar Gaddafi. The new PM faces high expectations from Libyans tired of political infighting and the country's turbulent transition to democracy since the 2011 uprising. In a brief speech carried by state television, Maiteeq said he wanted to talk to all forces and groups of society to form a cabinet representing a "national accord". "I want to form a crisis government," he said. "The government will be based on four pillars - to improve state control and sovereignty, rebuild the security and military institutions, start...a national reconciliation, and find urgent solutions for transitional justice and grievances."

Inventories

According to the import schedule, diesel of over 11.0 million litres was expected for delivery, while petrol of about 55.0 million litres was expected for delivery to add to existing stockpiles for the market. LPG of about 7 million kilogrammes was also expected for delivery, while ATK of over 7 million litres was expected for delivery by close of the week (May 10, 2014).
The CDU and RFFC are both shutdown due to lack of feed and planned mini maintenance respectively.
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for May 2, 2014 that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.8 million barrels to 397.6 million barrels while gasoline stockpiles increased by 1.6 million barrels to 215.5 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, decreased by 0.4 million barrels to 114.0 million barrels over the same period. Total commercial petroleum inventories increased by 7.2 million barrels last week.

Demand and Supply

According to the U.S. Department of Energy, U.S. crude oil imports averaged 6.9 million barrels per day last week, down by 598,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.6 million barrels per day, 1.1% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 583,000 barrels per day. Distillate fuel imports averaged 123,000 barrels per day last week. Total products supplied over the last four-week period averaged 18.5 million barrels per day, down by 0.3% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 8.6 million barrels per day, up by 1.4% from the same period last year. Distillate fuel product supplied averaged about 4.1 million barrels per day over the last four weeks, up by 11.6% from the same period last year.

References
• www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Tuesday(May,06 2014)

OIL MARKET NEWS (WEEK18): WEEK ENDED MAY 2, 2014

  Major Highlights


  •  Brent crude oil trades in a range of $108-$110 per barrel.
  •  The average GHS/US Dollar exchange rate weakened by 0.33% compared to the previous week.
  •  Gunmen storm Libya’s parliament forcing lawmakers to abandon a vote on next prime minister.
  •  Ghana’s current stock of petrol to last 4.2 weeks; diesel to last 4.3 weeks.
Average Dated Brent price for the week (published by Platts) increased by $0.10 to $109.14 from the previous week's average of $109.04 a barrel, indicating 0.10% gain. Brent crude oil prices rose marginally, as traders focused on geopolitical risks from an outbreak of violence in Libya and Russia's intervention in Ukraine. Gunmen stormed Libya's parliament, wounding several people, while a suicide bomber in a car killed at least two people and wounded two others at an army camp in the eastern city of Benghazi. The developments raised questions about how soon oil flows will resume from the Zueitina port. "When you see an action like that, then you wonder if the port will in fact reopen," said James L. Williams, energy economist at WTRG Economics in London, Arkansas. "It just creates more uncertainty about it," he said. Also supporting price increases were an escalation in tension between Russia and Ukraine. Hundreds of pro-Russian separatists stormed the regional government headquarters in Ukraine's eastern city of Luhansk, gaining access by breaking windows and facing no resistance from police. “The Ukraine tension is escalating and it’s pushing Brent higher,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago said. Brent crude oil gains were however capped, weighed down by lacklustre China data, a potential rise in Libya's oil supply as a result of the lifting of a force majeure from the eastern Zueitina oil port and record-high inventories in the United States weighed on prices. Free on board (FOB) prices of petrol went down by 2.13%, diesel by 1.24% and LPG by 2.85%, during the period under review. The average GHS/US Dollar exchange rate weakened when compared to the previous period. The GHS/US Dollar exchange rate for the period 28 April 2014 to 2 May 2014 was 2.7920 (depreciated by 0.33%) compared to 2.7828 during the previous period. The depreciation of the GHS against the USD is not as steep as the previous weeks’ value, suggesting some level of stability in the local currency. The relatively stable exchange rate resulted in the GHS equivalent FOB price of petrol decrease by 1.81%, diesel by 0.92% and LPG by 2.53% during the period under review.

Geopolitics

Gunmen stormed Libya's parliament and opened fire, forcing lawmakers to abandon a vote on the next prime minister, witnesses said. Parliament spokesman Omar Hmeidan said several people were wounded in the shooting incident, who were linked to one of the defeated candidates for prime minister. Lawmakers fled from the building, witnesses said. The incident ended quickly but the vote was postponed until next week. Hmeidan said deputies had started the final vote on a replacement for Premier Abdullah al-Thinni, who resigned two weeks ago saying that gunmen had attacked his family. Elsewhere, the stand-off between Russia and Western powers over Ukraine also showed no sign of abating, adding to concerns that the conflict will ultimately lead to the disruption of some oil supply due to tighter sanctions.

Inventories

According to the import schedule, diesel of over 59.0 million litres was expected for delivery, while petrol of about 55.0 million litres was expected for delivery to add to existing stockpiles for the market. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (May 3, 2014).
The CDU and RFFC are both shutdown due to lack of feed and planned mini maintenance respectively.
The U.S. Department of Energy reported in its Weekly Petroleum Status Report for April 25, 2014 that U.S. crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.7 million barrels to 399.4 million barrels while gasoline stockpiles increased by 1.6 million barrels to 213.9 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, increased by 1.9 million barrels to 114.4 million barrels over the same period. Total commercial petroleum inventories increased by 7.9 million barrels last week.

Demand and Supply

Iran's oil exports fell in April for a second month, according to sources who track tanker movements, moving closer to levels allowed by November's interim deal on curbing Tehran's nuclear programme. Iran's crude exports have averaged 1.1 million barrels per day (bpd) in April, down from almost 1.3 million bpd in March. That would bring exports back down to the average 2013 level of Iranian imports.

According to the U.S. Department of Energy, U.S. crude oil imports averaged 7.5 million barrels per day last week, down by 313,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.7 million barrels per day, 0.1% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 651,000 barrels per day. Distillate fuel imports averaged 173,000 barrels per day last week.
Total products supplied over the last four-week period averaged 18.4 million barrels per day, up by 0.6% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 8.7 million barrels per day, up by 2.1% from the same period last year. Distillate fuel product supplied averaged 4.0 million barrels per day over the last four weeks, up by 7.5% from the same period last year.

References
www.bloomberg.com
• www.reuters.com
• www.bbc.co.uk
Tuesday(April,08 2014)

OIL MARKET NEWS (WEEK11): WEEK ENDED MARCH 14, 2014

  Major Highlights
  • Brent trades in a range of $107-$109 per barrel.
  • Cedi depreciates by 0.76% resulting in higher GHS equivalent FOB prices of petrol,gasoil and LPG.
  • Libya’s former PM voted out; forces set up to liberate ports and end blockage.
  • IEA and EIA revises global oil demand; Iraq’s production the most since 1979.
Average Dated Brent price for the week (published by Platts) decreased by $1.23 to $108.03 from the previous week's average of $109.26 a barrel, indicating a 1.13% drop. Brent crude recorded marginal losses and gains during the week ended March 14, 2014. Brent crude price fell as improvement in weather conditions in North America and data from China showed growth in investment, retail sales and factory output all fell in the first two months of the year to multi-year lows in the world's second largest consumer of oil, amplifying worries about a slowdown. The released weak data showed the No. 2 oil consumer's exports in February fell 18.1 percent from a year earlier. "The weak economic numbers and exports out of China in the last week are driving prices lower," said Oliver Sloup, director of managed futures with iitrader.com in Chicago. Brent, however, drew support from worsening crisis in Libya and Ukraine, which raised fears of supply disruption; but China’s weak data kept the lids on gains. "The market is driven by geopolitical factors rather than fundamentals, and it is therefore difficult to point to a clearer direction for prices," said Tetsu Emori, a commodity fund manager at Astmax Investment. Brent crude oil price decreased by 1.13%, while free on board (FOB) prices of petrol fell by 1.52%, gasoil by 1.96% and LPG by 1.20% during the period under review. However, due to the depreciation of the Ghana cedi against the U.S dollar (which depreciated by 0.76%), the GHS equivalent of crude oil decreased by 0.37%, petrol by 0.76%, gasoil by 1.21% and LPG by 0.45%.

Geopolitics
Libya's parliament voted Former Libyan Prime Minister (PM) Ali Zeidan out for failing to stop rebels independently exporting oil in a challenge to Libya's fragile unity. Nuri Ali Abu Sahmain, head of parliament, ordered formation of a force made up of regular soldiers and allied militias to take back the ports, which previously handled a total of more than 700,000 barrels of oil per day. With tension between the two sides escalating, government forces seized a tanker that had loaded crude worth $30 million at the rebel-held Es Sider port. "With control of the central government and Libya's oil at stake, all of these groups, rivalries, and alliances of convenience are coming to the fore," said Geoff Porter, North Africa specialist at West Point's Combating Terrorism Center. He again said, "One of the reasons that Libya has reached this impasse is that dialogue had failed, not least because there was no one in Libya that could speak authoritatively and had the capacity to translate words into action."

Inventories
According to the import schedule, petrol of about 55.0 million litres was expected for delivery, while diesel of about 72.2 million litres was expected for delivery to add to existing stockpiles for the market. LPG of about 7 million kilogrammes was also expected for delivery by close of the week (March 15, 2014).
The CDU and RFCC units at TOR both remain shut down.
The U.S. Energy Information Administration (EIA) reported that U.S. crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.2 million barrels to 370.0 million barrels while gasoline stockpiles decreased by 5.2 million barrels to 226.61 million barrels in the week ended March 7, 2014. Inventories of distillate fuel, a category including heating oil and diesel, also decreased by 1.4 million barrels to 113.9 million barrels over the same period. Total commercial petroleum inventories decreased by 1.6 million barrels last week.

The U.S. Energy Information Administration (EIA) reported that U.S. crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.2 million barrels to 370.0 million barrels while gasoline stockpiles decreased by 5.2 million barrels to 226.61 million barrels in the week ended March 7, 2014. Inventories of distillate fuel, a category including heating oil and diesel, also decreased by 1.4 million barrels to 113.9 million barrels over the same period. Total commercial petroleum inventories decreased by 1.6 million barrels last week.

Demand and Supply
According to the International Energy Agency (IEA), oil demand will be higher in 2014 than previously estimated as global economic growth recovers. Pressure on supplies will ease in coming months as seasonal consumption dips. World consumption will increase by 1.4 million barrels a day, or 1.5 percent, this year to a record 92.7 million a day, or about 95,000 a day more than forecast last month, according to the IEA, a Paris-based adviser to oil-consuming nations. While freezing U.S. weather has eroded oil inventories to their lowest level in more than a decade, fading demand for winter fuels coupled with a 35-year peak in supplies from Iraq will help replenish stockpiles, the agency said. “Growth momentum is expected to benefit from a more robust global economic backdrop,” the IEA said in its monthly market report. Meanwhile, the U.S. Energy Information Administration (EIA) cut its forecast for 2014 world oil demand growth by 40,000 bpd in its monthly Short Term Energy Outlook. It predicted a 1.22 million barrel year-on-year increase.

OPEC’s members boosted output by 500,000 barrels a day to 30.49 million in February as a surge
in Iraq’s exports pushed the organization’s production above its 30-million barrel ceiling for the first time in five months, according to the IEA. Iraq’s production climbed by 530,000 barrels a day to 3.62 million a day, the most since 1979, while that of Saudi Arabia, the group’s biggest member, rose 90,000 to 9.85 million.

References
  • www.bloomberg.com
  • www.reuters.com
  • www.bbc.co.uk
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