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Crude price falls on China’s economic data

Crude prices eased in January as weaker economic data from China indicated slowing crude demand and soaring US oil output added pressure

Brent and WTI were trading around $107.7 per barrel (/b) and $94.6/b, respectively, on 21 January. On 23 December 2013, Brent traded at $112/b, while WTI was priced at $98.6/b. Brent and WTI prices rose in December, supported by seasonally stronger winter demand in the Atlantic basin, as well as continued supply outages in Libya.

Deutsche Bank has cut its 2014 price forecasts for Brent and WTI because of increased US crude production could create an oil glut in the country. In a noet published on 14 January, the German bank cut its 2014 forecast for Brent to $97.50/b, down from $106.25/b. It slashed its estimate for WTI as well, to $88.75/b  down from $98.75/b.

The International Energy Agency (IEA) expects global oil demand to increase by 1.3 million b/d in 2014, to total 92.5m b/d this year as the global economy gain strength. Last year, global oil demand reached 91.2m b/d, an increase of 1.2m b/d gain on 2012’s demand.

Although non-OECD countries accounted for the bulk of global demand growth in 2013, the IEA noted that OECD crude demand increased for the first time since 2010. OECD oil-demand growth for 2013 was 85,000 b/d, reversing the 520,000 b/d decline registered in 2012.

The IEA raised its estimate of global oil demand for the fourth quarter of 2013 by 135,000 b/d to 92.1m b/d. This was because of an unexpected 700,000 b/d boost to US oil demand from the industrial fuels sector. This partly offset a 290,000 b/d fall in Chinese demand, to 10.2m b/d.

Estimates for oil demand in Japan, Russia and Korea have also been raised, which has partially offset curtailments in India, Belgium, Mexico, Italy and France.

Figure 1: Dated Brent/North Sea dated crude
Figure 1: Dated Brent/North Sea dated crude
Figure 2: Crude oil prices, 2013/14
Figure 2: Crude oil prices, 2013/14
Figure 3: Refined product prices, 2013/14
Figure 3: Refined product prices, 2013/14
Figure 4:  Selected refining margins, 2012/13
Figure 4: Selected refining margins, 2012/13
Figure 5: Natural gas prices, 2013/14
Figure 5: Natural gas prices, 2013/14
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