During the reporting week American refineries operated at 82.0% of their capacity and processed an average of 13.9 million barrels a day, or 145 thousand barrels a day more than last week figures. Petroleum production decreased during this week to 9.0 mln. barrels a day, while production of fuel distillates almost didn't change, remaining at 4.1 mln. barrels a day.
American imports of crude oil last week were an average of 8.3 million barrels a day or 290,000 barrels a day more than last week’s figures. Over the past four weeks crude oil imports have averaged 8.2 mln. barrels a day or 669,000 barrels a day below the average figure for 4 years. Petroleum imports fell last week to 761,000 barrels a day, distillate imports increased to 252,000 barrels a day.
American commercial reserves of crude oil (excluding the strategic oil reserve) lost 2.5 mln. barrels on the previous week reaching 348.9 mln. barrels, which is above average figures for this time of the year. Petroleum reserves increased by 5.5 mln. barrels last week and are in the upper part of the medium range. Distillate reserves fell 4.0 mln. barrels, which is above the average figure for this time of the year. Propane/propylene reserves fell 1.4 mln. barrels, which is below average figures. Total oil product reserves decreased last week by 6.3 mln. barrels.
Over the recent four weeks oil product deliveries averaged 19.5 mln. barrels a day, or 0.6 % less than in the same period last year. In the past 4 weeks demand for gasoline was 9.1 million barrels a day on average, or 2.3% above last year's figures. Demand for distillates in the same period reached an average of 3.9 mln. barrels a day, or 4.1% above the same period last year.
Demand for jet engine fuel went up 6.6% over the past 4 week as compared to the same 4 week period last year.
Last week global oil prices remained under pressure of Middle East events. Oil futures appreciated on Monday as bitter fighting persisted near key refineries in Libya and the oil market prepared itself for potential lack of Libyan oil for a long period of time.
According to witness reports, on Monday forces of Libyan leader Muammar Gaddafi made airstrikes on rebels’ positions near Ras Lanuf where there is a major refining complex. There were also reports about combat near other Libyan refineries. Because of combat underway, the country’s largest refinery has been stopped. Its production capacity is 220,000 barrels of oil a day. In the vicinity of the terminal oil tankers have been damaged by fire from land and air. Strong flashes have been noticed near the refinery.
Libya’s second largest refinery with a capacity of 120,000 barrels a day has also been closed because of military operations. It should be noted these two enterprises account for about 88% of Libyan oil refining capacity.
There is no end to the conflict, and market players are preparing for possible prolonged interruptions in oil deliveries from Libya. Immediately before the conflict, Libya produced about 1.6 mln. barrels of oil a day which was largely delivered to Europe. As estimated by the International Energy Agency, the market lost about 1 mln. barrels a day.
Oil prices continued rising even despite the commitment taken by Saudi Arabia and other members of the Organization of Petroleum Exporting Countries /OPEC/ to increase production in order to compensate for lack of Libyan oil. These commitments were unilaterally assumed by some OPEC countries. Leading OPEC members made it clear on Monday that the organization has no overall plans to increase oil production.
Despite reduced oil production in Libya, most developed countries are well provided with oil and can use their strategic oil reserves to dampen down price growth. During the weekend, the Administration of US President Obama indicated that it considered using strategic oil reserves of 725 mln. barrels to ease up upside pressures on petroleum prices. The US hasn’t taken such steps since Hurricane Katherine in 2005.
In addition, representatives of western countries’ authorities continue arguing about a possible military intervention in Libya in the context of reports on deaths among civilian population. On Monday President Barack Obama said that NATO representatives were looking at ‘possible military options’ during their meeting in Brussels.
One of China’s largest refineries, Sinopec, suspended refining operations in Maoming because of high oil prices. The refinery stopped delivering fuel and petroleum products in March 2011, according to one of the company’s top officials. According to him, fuel prices established by the government are currently equivalent to crude oil prices at $85-86 a barrel, given that actually oil prices are much higher. Maoming’s refinery used to delivery 270,000 barrels of petroleum products on a daily basis, according to Reuters.
Similar difficulties were previously faced by the Asian largest oil and gas company and second largest refinery in China, PetroChina Co Ltd. It announced losses in the oil refining segment resulting from a growth in oil prices in the context of increasingly stronger geopolitical tension in the Middle East. The company’s management estimates the acceptable oil price level that could make oil refining profitable at $90 a barrel.
At close of trading in New York Mercantile Exchange /NYMEX/ April futures for Light Sweet Crude Oil added 1.02 dollars or 1% reaching 105.44 dollars per barrel or the highest close since 26 September 2008. At close of ICE trading, Brent prices fell 93 cents or 0.8% to 115.04 dollars per barrel.
According to analysts of the Derivatives Trading Department within the , the bullish tendency still continues, but currently a certain correction is possible in the range of 100-101.
