Kuwait export crude falls to $103.4 in July
Kuwait, August 26, 2014
The price of Kuwait Export Crude (KEC) fell about $5, from $108.2 per barrel (bbl) at the start of July to $103.4 per bbl at the end of the month, said a report.
The National Bank of Kuwait report noted that the oil prices retreated in July from the nine-month highs reached in June.
The international benchmark crude, Brent, declined $6.9 per bbl from $110 per bbl to $103.2 per bbl, while West Texas Intermediate (WTI) dropped by $6.6 per bbl from $104.5 per bbl to below $98 per bbl—its lowest level in six months.
Underpinning these downward movements was an easing of geopolitical anxieties over Iraq and Libya especially, said the report.
In Iraq, despite the territorial gains made by Islamic State of Iraq and the Levant (ISIS) in the north and northwest of the country, the insurgent advance southwards was eventually held in check by Kurdish Peshmerga forces around Kirkuk and by the Iraqi military based in the vicinity of Baghdad.
The bulk of Iraq’s key oil infrastructure, production and export channels is situated in the south, away from conflict areas.
Meanwhile, in Libya, news that exports were finally resuming in spite of the heavy fighting that was taking place between militias and government units in Tripoli and Benghazi provided some measure of relief for the oil markets.
In the US, the fall in WTI is also reflective of a buildup of crude oil stocks at Cushing, Oklahoma, the main storage hub and pricing point for WTI. This came about as a result of a series of outages at key refineries which have cut refinery runs ahead of the main refinery maintenance period that begins in late August and continues through to October.
The crude oil futures prices similarly declined during the month, influenced by a combination of slower demand, weak refining margins and an easing of concerns about Iraqi and Libyan oil supplies.
ICE Brent futures for December delivery retreated by $4.1 per bbl during the month, closing at $106.9.
For the first time in three years, the price of a Brent futures contract moved higher than the spot price, a price structure known as contango.
World oil demand
The forecast for world oil demand growth during the year has been revised downwards by the International Energy Agency (IEA) by 90,000 barrels per day (bd) to 92.7 million bd.
Compared to last year, global demand is therefore forecast to expand this year 1.2 million bd (1.4 per cent) and global oil demand is projected to expand by 1.4 million bd (1.5) next year to 94.1 million bd, with emerging market economies leading the way. Demand from OECD economies, in contrast, is forecast to decline.
World oil supply
Total crude output (including Iraq) from Organisation of Petroleum Exporting Countries (Opec) in June fell by 186,000 bd compared to the previous month, to 30.6 million bd, according to Opec data obtained through direct communication.
This is despite an increase in output from swing producer Saudi Arabia, which ramped up production by 75,000 bd to about 9.8 million bd in June ahead of the summer peak electricity demand season and in response to extra refinery demand. This is the largest production increase since February and the third consecutive month that Saudi Arabia has increased its output, according to the IEA.
In contrast, Kuwait, Iran and Iraq experienced production declines and non-Opec supplies are projected to increase by 1.4 million bd to 56.3 million bd this year and 1.2 million bd to 57.5 million bd next year, it added. - TradeArabia News Service