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In Amenas attack and economic data boost crude prices

Geopolitical concerns and seasonal demand bolstered crude oil prices in January

The 16 January attack on the In Amenas gas project in Algeria, which, as Petroleum Economist went to press, claimed the lives of at least 48 hostages, cast “a dark cloud” over the outlook for the country’s energy sector, the International Energy Agency (IEA) said. An estimated 50,000 barrels a day of condensate production at the 9 billion cubic metre per year plant has been was shut in by the crisis.

Brent and WTI climbed to around $112/b and $96/b respectively on 18 January, up from around $108/b and $86/b respectively in mid-December.

Marc Ground, an analyst at Standard Bank, said the attack on In Amenas, jointly owned by Statoil, BP and Sonatrach, kept crude prices bolstered by the possible threat to other oil and gas facilities in the region, especially in Libya.

Better-than-expected economic data from the US and China also bolstered crude prices in January.

WTI closed at a four-month high of $95/b on 17 January as reports of improved US construction data and lower unemployment levels supported prices. US crude demand increased by 155,000 b/d in the fourth quarter of 2012, the IEA said, reaching 18.8m b/d.

Although total US crude demand for 2012 was around 100,000 b/d lower year-on-year, at 30.3m b/d, the fourth-quarter decline is the shallowest contraction in the country’s crude demand in nearly two years, the IEA said.

The IEA said global oil demand reached 89.8bn b/d in 2012, up 1% year-on-year, on stronger-than-expected economic data and consumption in China and Brazil. Chinese oil demand rose to 10.1m b/d in the fourth quarter of 2012, up 700,000 b/d year-on-year, as improved manufacturing and GDP data bolstered demand.

Prices had been under pressure throughout December from a stronger US dollar, which makes it more expensive for consumers to buy crude and oil products, and persistent economic weakness in the euro zone. The IEA said global oil demand growth for 2013 remains “relatively subdued” as fiscal uncertainty, particularly in Europe, persists. The IEA believes global oil demand will grow by 930,000 b/d in 2013, reaching 90.8m b/d.  

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