Paula Dittrick
OGJ Senior Writer
HOUSTON, Oct. 30 -- Oil prices rose on the New York market Oct. 29 following reports the gross domestic product jumped higher than expected during the latest quarter, renewing optimism about the end of the economic slump.
“Crude oil shook off a 4-day decline spurred from higher than expected inventory builds…and rallied on dollar weakness and optimism of increased petroleum demand from stronger than expected gross GDP growth,” said Brian Uhlmer of Pritchard Partners LLC in New Orleans.
Prices for benchmark US light, sweet crudes shot up in early trading Oct. 29 on a report the third-quarter US GDP grew at a rate of 3.5% vs. Wall Street’s expectations for 3.3% growth. During the Oct. 29 trading session on the New York Mercantile Exchange, oil reached a high of $80.46/bbl before settling lower.
Uhlmer believes oil “could be poised to retest the 1-year high of $82/bbl in the near future.”
OPEC restarting projects
Organization of Petroleum Exporting Countries Sec. Gen. Abdalla Salem El-Badri told the Wall Street Journal that OPEC is restarting some projects. In February, about 35 OPEC projects were being shelved because of fallout from the recession.
In an Oct. 20 interview with WSJ, El-Badri said seven of the projects, totaling 1.2 million b/d in capacity, had restarted development in past weeks. The projects are expected to enter service in 2-4 years. El-Badri declined to identify or provide specifics on the projects that are being restarted.
El-Badri also said OPEC members still have concerns about longer-term demand. The next OPEC meeting is scheduled for Dec. 22 in Luanda, Angola.
Separately, the National newspaper on Oct. 30 reported that Abu Dhabi National Oil Co. told customers it will raise exports from two big offshore oil fields in December.
Asia demand recovering
Barclays Capital analyst Kevin Norrish noted that a swift recovery in Asian demand has played a key role in supporting the oil price rebound this year, and they expect future oil demand improvements there.
“We estimate total oil product demand across seven major Asian countries continued to improve in August,” Norrish said in an Oct. 30 research note, noting year-on-year growth is showing its fastest pace since July 2008.
“While China has often dominated headlines, other parts of non-OECD Asia have been growing for 5 consecutive months, and growth rates have been able to match or exceed that of China,” he said.
China alone accounted for more than 50% of emerging Asian demand growth during January-August. Analysts noted a decline rate in OECD Pacific demand, saying total Japan and South Korea demand fell during August. Yet, Japan is expected to make up 33% of global demand this year.
Energy prices
The December and January contracts for benchmark US light, sweet crudes jumped more than $2 each. Crude for December delivery closed at $79.87/bbl, up $2.41, while crude for January delivery closed at $80.40/bbl, up $2.34, Oct. 29 on NYMEX.
On the US spot market, WTI at Cushing, Okla., was up $2.41 to $79.87/bbl. Heating oil for November rose 5.73¢ to $2.05/gal on NYMEX. RBOB for the same month gained 3.26¢ to $2.019/gal.
The December natural gas contract fell 0.4¢ to $5.06/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., decreased 4.45¢ to $4.10/MMbtu.
In London, the December IPE contract for North Sea Brent crude rose $2.18 to $78.04/bbl. Gas oil for November climbed $19.25 to $644/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 12 reference crudes was up 41¢ to $75.94/bbl on Oct. 29.
Contact Paula Dittrick at [email protected].
Rystad Energy.
