Brent down 3.2% MTD at c$107/bbl. WTI at $94/bbl (-4%). Differential has settled around $13/bbl.
US production at a 25-year high.
Global oil supply at 92.23m b/d, up 1.16m b/d or 1.3% y/y. Within this OPEC supplies increased 310k b/d m/m to 29.82m b/d on higher output from Saudi Arabia & the UAE. Iraq was the only member to post a monthly decline in December.
Effective spare capacity is estimated at 3.33m b/d in Dec. Non-OPEC supplies declined 340k b/d in Dec to 55.99m b/d, with Brazilian ethanol production responsible for most of the decline.
In November US oil production exceeded 8m b/d level for the first time since 1988, with the main drivers being Texas shale plays, a return of Gulf of Mexico output from maintenance and a solid contribution from Alaska.
Crude has been helped by stronger product demand as the US prepared for another cold snap.
China GDP data released early this morning shows GDP for 4Q at +7.7% vs market at 7.6%. Data also shows December oil demand down 10.6% and a Reuters calculation has China crude demand for 2013 up a small 1.6%.
In Libya there are reports of fighting in the south with the government using its airforce to bomb fighters it claims are loyal to the former Gadaffi regime while plans are now being prepared by the government to re-take eastern export terminals currently under the control of rebels.
CFTC data released on Friday for the week to 14 Jan showed speculators cutting net long futures/options positions by 16,568 to 281,802 contracts.
US refinery utilization stands at 90.0% vs. a 5-year average of 84.9%. 4-week average gasoline demand was up 3.0% YoY, and 4-week average distillate demand was up 10.3% YoY.
Coal is up 4% this month at $86.60/mt driven by Chinese data showing solid but lower growth. Looks at risk of de-rating from here. China expects total energy consumption to rise 3.5% y-o-y in 2014 – NEA forecasts China’s total energy consumption may rise to 3.89bt of std. coal in 2014, assuming energy elasticity down to 0.43 from 0.506 in 2013. And the share of non-fossil and natural gas consumption could reach 10.7% and 6.1%.
CO2 is flat this month at v€5.05/mt. A leaked document claims that on 22nd Jan the EU will suggest reform of the CO2 market should centre on a “market stability reserve” to enable the market to better adjust to economic changes, but only from 2021. Hard to see that near-term impacting prices much.
US gas has been flat at $4.2/mmbtu. Total working storage is now at 2,530 Bcf, 659 Bcf below last year’s 3,189 Bcf and 443 Bcf below the 5-year average of 2,973 Bcf. Despite record withdrawals, supply-demand balance remains ample.
UK gas is down 2% at 66p/therm. Storage is at 4,011mcm (84.34% full), unlikely to drive prices higher.
Power prices in Europe do not improve… As industrial demand and thermal capacity continue to erode peak pricing power. Germany at €36.95/mwh and Nordpool at €33.85/mwh.