China’s effect on Crude oil prices in 2011 –Dec 21st

Crude oil prices started the week with moderate rises after the weekend; these rises continue today for the second day of the week. On the other hand, natural gas prices after presenting bullish behavior, settled down today, and currently they are traded at lower rates than yesterday. This switch in natural gas prices might be because of the overshooting estimates of the cold weather and its effects in Europe and Northeast U.D. and its effects on energy prices as demand for natural gas rises for heating purposes.

In regards to China, one of the biggest consumers of energy worldwide, there is an increase in speculation around its effect on crude oil price in 2011. Consider that according to Bloomberg, their analysts estimate that China’s demand for imported crude oil will rise in 2011 by 6.3%, compare to a rise of 20% in 2010. This slow down in growth could be because of speculation around their central bank expectations to raise interest rates, because of the bank’s concern for the rising inflations rates; This step could slow down the economic growth and consequentially the demand for crude oil. If this will be true, then it could adversely affect Saudi Arabia and Angola, which are China’s biggest oil suppliers.

Another concern which could reduce the demand of crude oil in China is the expected decline in the big refineries’ processing rates.

All in all, China is expected to play a major rule next year, as it did in 2010, in affecting the crude oil price. If this speculation has merit, it could mean that China’s growth might slow down compare to 2010, and thus China will have a lesser role in driving crude oil price up in 2011.

For now, consider that Bloomberg also reported that China is expected to raise gasoline prices by 4% due to increases in international crude costs. Only goes to show the difference between long term and short term effects…

Silver and gold prices, after several days of rises, are moderately falling, however they are still close to the 1,400 USD/t. oz. and 30 USD/ t. oz. marks, respectively.


Here is an update on the prices of main energy and precious metals commodities for December 21st:


The crude oil price of short term futures (Nymex) – delivery for february 2011, as of 17.39 PM GMT, on the New York Mercantile Exchange, is currently traded at 89.79 USD per barrel, which represents a 0.42 USD/b increase or a 0.47% rise.

The Dated Brent spot crude oil is at 92.76 USD per barrel – a 0.54 USD per barrel rise as of 17.49 PM GMT.

The WTI spot price is trading as of 17.10 PM GMT at 89.2 USD per barrel, a moderate increase of 0.44% compare to the end of last week.

Natural gas future price (the Nymex Henry Hub Future) is currently traded as of 16.53 PM GMT, at 4.11 $ MMBTU (one million BTU), a decrease of 0.13 which is 2.95%.

Precious Metals

Gold price continue to rise as it as it did at the end of the last week, as the short term february delivery future (Gold 100 oz.) is currently traded at 1,384.4 USD /t. oz., a moderate 0.12% decrease or 1.7 USD /t. oz. at 16.35 PM GMT.

Silver price, as of 16.35 PM GMT, is traded at 29.28 $/t oz. a 0.26% decrease or 0.075 $/t oz, however Silver is still close to the 30 USD mark.

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