Weekly average Brent crude oil price falls on oversupply and weak economic data
The weekly average GHS/USD exchange rate appreciates for the second consecutive week
Expectations of Saudi oil shake-up stir uncertainty
Ghana’s current stock of diesel decreases; petrol increases compared with the previous week
Diesel and Petrol imports of about 54 and 25 million Lts respectively expected by 19th September 2015
U.S crude oil imports down by 396,000 barrels per day from the previous week
Average Dated Brent price for the week (published by Platts) decreased by $1.21 to $47.66 per barrel from the previous week's average of $48.87 a barrel, indicating 2.49% decrease.
Brent crude oil price fell after Goldman Sachs cut its crude forecasts, citing global over-supply and concerns over the health of the Chinese economy, and after Saudi Arabia dismissed the idea of an oil producer summit. China's main indexes closed down on Monday as investors sold shares in the aftermath of a four-day market holiday, during which further restrictions on futures trading were announced.
Also weighing on prices was Japan’s revised gross domestic product (GDP) data showing its economy shrank at an annualised 1.2 percent in April-June, despite ongoing government and central bank measures to support growth.
On the supply side, Saudi Arabia is set to maintain output at around 10.2 million to 10.3 million barrels per day, near this summer's record high, in the fourth quarter as rising refinery demand offsets lower local use for power, according to industry sources. "The focus is shifting back to the still-high oversupply," Commerzbank senior oil analyst Carsten Fritsch said.
In the short term, supply will swell further from the North Sea, where crude output tracked by Reuters will rise to its highest in just over two years in October, according to loading schedules, adding to ample Atlantic Basin supplies.
Free on board (FOB) prices of petrol decreased by $14.21 to $533.85/MT from the previous week's average of $548.06, indicating 2.59% decrease; diesel decreased by $11.88 to $458.25/MT from the previous week’s average of $470.13, indicating 2.53% decrease; while LPG increased by $31.50 to $344.00/MT from the previous week’s average of $312.50, indicating 10.08% increase, during the period under review.
The average GHS/US Dollar exchange rate appreciated significantly, compared to the previous week. The appreciation of the Ghana Cedi against the USD is expected to decrease the impact of exchange rate in the determination of prices of petroleum products resulting in reduced ex-pump prices, all other things been equal.
The GHS/US Dollar exchange rate for the period 7th - 11th September 2015 was 3.7204 compared to 3.7733 for the previous week (1.40% appreciation).
A shake-up of Saudi Arabia's oil leadership by King Salman has introduced a new element of unpredictability to its energy policymaking at a moment when Riyadh is grappling with slumping crude prices and its war in neighbouring Yemen.
State oil giant Aramco has been without a permanent chief executive since April, when Khalid al-Falih was made health minister, and the old Supreme Petroleum Council, where energy policy was historically made, was abolished in January.
While the world's top crude exporter has always prized stability and consistency in crafting oil policy, the changes, alongside a shift in market strategy that contributed to the world price slump, have left analysts and traders guessing as to King Salman's long-term vision.
Ghana’s current stock of Diesel and Petrol to last 3.5 and 2.8 weeks respectively (as at 14th September, 2015). Diesel’s current stock of 3.5 weeks-to-last, decreased when compared to last week’s stock-to-last of 3.9 weeks, while petrol’s current stock of 2.8 weeks-to-last, increased when compared to last week’s stock-to-last of 2.7 weeks.
According to the import schedule, diesel of about 54 million litres is expected for delivery, while petrol of about 25 million litres is expected for delivery to add to existing stockpiles for the market.
LPG of about 5.0 million kilogrammes is also expected for delivery by close of the week (19th September, 2015). The CDU and RFCC units are both shutdown due to lack of crude and total utility failure respectively.
The statistical arm of the U.S. Department of Energy, the Energy Information Administration (EIA), in its Weekly Petroleum Status Report for week ended 4th September, 2015 reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.6 million barrels to 458.0 million barrels.
Total motor gasoline inventories increased by 0.4 million barrels to 219.3 million barrels. Inventories of distillate fuel, a category including heating oil and diesel, increased by 1.0 million barrels to 234.1 million barrels over the same period.
Propane/propylene inventories rose 0.2 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 3.2 million barrels last week.
Demand and Supply
The EIA in its Weekly Petroleum Status report for week ended 4th September, 2015 reported that, U.S. crude oil imports averaged about 7.5 million barrels per day last week, down by 396,000 barrels per day from the previous week.
Over the last four weeks, crude oil imports averaged over 7.6 million barrels per day, 0.5% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 589,000 barrels per day. Distillate fuel imports averaged 130,000 barrels per day last week.
The US EIA reduced its demand forecast for oil and refined products for the first time this year on the back of slowdown in China and its implications for the rest of Asia. The agency still expects consumption to increase by 1.3mbd from this year to next, rising to 94.93mb/d, however this is down from the 95.08mb/d they had forecast last month.
Russia, the world's top oil producer, may increase its oil output by 1 percent this year, Energy Minister Alexander Novak was quoted as saying by Russian news agencies on Wednesday.
"This year, we expect output in line with last year, maybe (even) with a moderate growth of around 1 percent," Novak was quoted as saying by Interfax news agency.
Russia has been pumping near post-Soviet highs of around 10.7 million barrels per day of oil over the last couple of months despite low oil prices, as weak rouble is offsetting losses.
Barclays Oil Update