The Middle East turmoil is affecting the supply of oil, and has an affect on crude oil markets as many investors are keeping close tabs on the development in the Middle East and reacting accordingly. The news from the region is probably one of the main contributing factors for the rise in crude oil price in the past month.
In the recent EIA petroleum report, pertaining crude oil price and petroleum stocks, there is an analysis about the main factors to consider regarding the supply disruption in Libya, and how it could affect oil markets in the US and Europe.
A few of the factors they point out are that Libya provides sweet crude oil (high quality) and even though Libya’s production is only 2% from the world oil production, different oils aren’t perfect substitute, and the recent loss in production and export from Libya, is more than just the sum of Libya’s production.
The report also point out that this recent supply disruption is affecting Europe more than US not only because most of Libya’s export is to Europe, but also because the Europe market is more tight; even a small fall in supply could cause more damage than in the US, where the oil market is less tight since the US has vast oil stocks.
Nonetheless, the US market might be affected by Libya’s turmoil because the US uses more than a third of Algeria’s sweet crude oil, and if Europe will use Algeria’s oil to compensate for Libya’s, it could have adverse consequences on the oil supply to the US.
In this weekly review I will address the main news of the EIA report for the week ending on February 25th on crude oil price, petroleum stocks, production, imports and consumption.
Crude oil price for the week of February 25th
Crude oil price (WTI spot) weekly average rose by 10.9% to reach 93.3$/b compare to last week’s average price of 84.13$/b. On average, crude oil price (WTI) daily change was 2.72%, and its price inclined by 14.05% from beginning to end of the week.
The U.S. average retail price on gasoline made the second largest rise since 1990, as it increased by 0.19 $ per gallon compare to the previous week’s average, to reach 3.38 $/g which is 0.68 $/g higher than for the same period in 2010.
Diesel prices also continue to rise, last week by over 14 cents compare to the previous week as it reached 3.72$/g – 0.86$/g higher than last year’s average price at same time.
Petroleum Stocks, production and consumption
Petroleum stocks in the US continued falling for the third straight week; last week they have declined by 0.4%, a decrease of nearly 6.5 million barrels of crude oil to reach 1,777 million barrels.
This fall is related to the decline of Stocks of Total Gasoline by 1.5% or 3.5 million barrels– reaching 234 million barrels.
The average US productions (million of barrels a day) was 5.601 on a four week average, higher than last week by 0.1%, and also higher by 2.0% compare to the average production at the same time last year;
Crude oil imports have decreased during the week of February 25th (4 week average) by 2.93% compare to the week of 18/2/2011, and also declined by 5.5% compare to last year’s same time.
The crude oil refinery inputs(4 week average) reached 13.885 (million b/d), which is the same compare to the same week last year; however, it fell by 0.9% compare to the previous week of 18/2/2011.
In total, there was a fall in petroleum stocks, imports and refineries inputs and a rise in oil prices and US production.
Heating oil and propane prices continue to rise: residential propane price rose by 0.04$ per gallon to reach 2.86$/g; propane stocks continue to fall; according to the latest report, they fell by 1.0 million barrels – a 3.4% decline – reaching 28.5 million barrels – the lowest level since April 2010.
For further reading (in this site):
- How does the Middle East turmoil affecting the Brent oil WTI spread
- Oil prices outlook – 2 March
- How not to speculate on the WTI and Brent oil spread
- Crude oil price in 2010 and outlook for 2011
Previous posts on this subject:
- Petroleum stocks continue falling | review of WTI Brent spread – February 25
- Petroleum stocks decline for first time in weeks – February 17
- Petroleum stocks on the rise – February 10
- Petroleum stocks keep on rising – February 3