Prices back up, sulphur problems and French on strike

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices eased during May until fears of a winter heating oil shortage in the US caused middle distillate and crude oil prices to strengthen, pushing Brent back above $50 a barrel by early June, whilst in the US, WTI figures futures topped $55. Concerns about winter heating oil so early in the year gave rise to fears of even higher prices by autumn. Venezuelan President, Hugo Chavez, stated meanwhile that "most OPEC members" thought $50 a "fair price" for crude oil.     

Even more price records, new refineries and a technical hitch at the IPE

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
In a final burst before retreating, oil prices once again entered record territory. WTI went to $58.28 a barrel, while Brent shot up to $57.65. In Asia, meanwhile, Malaysia's benchmark Tapis grade climbed above $61.00. The scramble to buy crude oil finally began to show up in stock levels, however, and US inventory figures showing an 8% year-on-year rise at the start of April suggested that fears of a crude oil shortage were overplayed. Prices fell sharply leaving Brent and WTI just above $51.00 a barrel. An announcement by OPEC's president, Ahmad Fahad Al Sabah, that the cartel would produce an additional 500,000 bpd in May helped to relax fears further. Product prices remained relatively more robust on a combination of high demand in the US and Asia and unscheduled refinery maintenance in the US.     

More price records, OPEC produces more and Iraq exports less

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices surged to new highs as Norwegian oil workers threatened to strike. WTI futures settled at a record $60.54/bbl on 27th June while, on the same day, heating oil broke through all previous records on Nymex to reach $1.6761/gall. August IPE Brent remained just below the $60 mark, but the October and November contracts both closed above $60/bbl for the first time, with November the higher of the two at $60.58/bbl. These new price levels proved unsustainable as many traders cashed-in their profits to close-out the second quarter. The record prices appeared not to indicate any actual shortage of crude oil. US imports touched 10.97 mn bpd in the week-ending 24th June: the second-highest on record. As if accepting this as proof that it was producing sufficient crude oil, OPEC shelved plans to discuss a possible 0.5 mn bpd increase in quotas to 28.5 mn bpd. The cartel had earlier decided that it would raise its output ceiling from 27.5 mn bpd to 28.0 mn bpd with effect from 1st July, at its meeting in Vienna on 15th June.     

Oil prices in 2005: reading the runes

The year 2004 ranks alongside 1973 and 1979 as one of the most dramatic in the history of oil. As in the other two oil shocks, oil prices rose to unprecedented heights and the year ended with markets in a state of nervous uncertainty. Between early February and late October the prices of most crudes rose by nearly 80%, pushing many of the key reference grades above $50.00 a barrel for the first time ever. On Friday 22nd October, West Texas Intermediate (WTI) crude was quoted at $56.30, whilst on the same day Brent reached $52.15. The following Monday, Malaysia's Tapis blend hit $55.50.     

Price records, violence and dollar weakness (the usual mix)

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices went to new record levels in mid-March as traders contemplated the usual mix of violence in Iraq and Nigeria along with a falling US dollar, allied in this instance with a rise in the gold price above $1,000 an ounce and the paradoxical combination of fears of a world recession and high demand for oil products. The result was WTI front-month futures at an intra-day high of $111.80/bbl on 17th March, following a record $110.30/bbl in the cash market for prompt barrels set four days earlier. The 13th of March also saw Dated North Sea at a record $108.93/bbl, with prompt Brent some $2/bbl above this level. OPEC's price-basket also rose above $100/bbl for the first time. Many product prices also moved into record territory, including an intra-day high of $3.22/gall for Nymex spot heating oil on 14th March. The increases proved too much in the end and crude markets were back below $100/bbl by the end of the month.     

Still more records, Iraqi violence and Caspian exports

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices set further records at the start of May before falling back. December WTI hit an all-time high of $78.00/bbl on Nymex on 3rd May. IPE November Brent went up to a record $76.45/bbl. Both contracts eventually settled lower and prices in general weakened before staging a minor rally at the end of the month. Other price records were broken early in the month. In Asia, the Indonesian marker grade, Minas, was recorded at $74.04/bbl on 2nd May, whilst Malaysia's Tapis went above $76.70/bbl. Strong Asian demand also boosted the prices of West African crudes. The markets appeared to be reacting to growing tensions in Iraq, Iran and Nigeria. These considerations returned to haunt the markets later in the month. All crude oil loadings at Iraq's Persian Gulf marine terminal were suspended following a fire, though the main Gulf terminal at Basrah continued to operate. The Ceyhan terminal remained out of action. Tensions between the US and Iran over the latter's nuclear programme gave rise to fears of an embargo on Iranian oil exports. Several foreign oil workers were kidnapped following an armed attack on oil installations in Nigeria. OPEC ministers kept their production ceiling unchanged at 28 mn bpd at a meeting in Caracas.     

Bombs, hurricanes and more chaos in Iraq

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
The oil market's roller-coaster continued into July with rising prices for US gasoline ahead of the 4th July holiday and a jump in prices for WTI on fears of hurricane damage to US Gulf production. August Nymex gasoline settled at a record $1.8056/gall on the 7th July as figures were released showing US demand at record weekly levels. On the same date, a series of fatal terrorist bomb attacks in London propelled IPE Brent to its highest-ever level of $60.70/bbl whilst, in Asia, Dubai traded at an all-time high of $55.80/bbl. The market's strength rapidly proved to be evanescent. Within hours of the London bombings, Brent had given up $5.00/bbl. Crude oil and gasoline prices eased in subsequent days and middle distillate lost some of its recent strength relative to gasoline as US stock figures showed a steady improvement in inventory levels. Volatility returned towards the end of the month on worries about gasoline shortages in both the US and Europe and more price records fell on 1st August on news of the death of King Fahd of Saudi Arabia. WTI gained $1.00 on the day, settling at a record $61.57/bbl on Nymex, having been even higher during the day's trading, at $62.30/bbl. On the IPE in London, Brent rose to its highest-ever intra-day level of $60.98/bbl, before settling slightly lower. Some product prices also went into previously uncharted territory: notably jet fuel in North West Europe, which went above $600/t.     

Record prices

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Crude oil prices climbed to new record levels on fears of a future loss of supplies from Iran as Washington stepped up its efforts to persuade Tehran to abandon its programme to produce nuclear fuel. IPE's December Brent contract set a new record for the exchange by trading at $75.80/bbl on 21st April. On the same day October WTI reached an all-time high of $77.30/bbl on Nymex. US product prices gained as refiners struggled to produce sufficient middle distillate. Alarmed by the rising retail price of gasoline, the US Senate debated a reduction in the already low US tax rate on motor spirit. The House of Representatives passed a measure to prohibit overcharging for petrol, diesel and heating oil, but Democrats rejected a Republican proposal to speed-up the process for approving new refineries. President George W Bush announced a temporary easing of new gasoline and diesel specifications ( see 'Focus', March 2006 ) to allow more fuel to be produced. He also agreed to delay the repayment of some 2.1 mn bbl of crude oil lent to companies after last year's hurricanes from the Strategic Petroleum Reserve. California announced an inquiry into alleged overcharging for fuel by oil companies operating in the state.     

The relationship between international crude oil prices and China’s refined oil prices based on a structural VAR model

With the frequent fluctuations of international crude oil prices and China’s increasing dependence on foreign oil in recent years, the volatility of international oil prices has significantly influenced China domestic refined oil price. This paper aims to investigate the transmission and feedback mechanism between international crude oil prices and China’s refined oil prices for the time span from January 2011 to November 2015 by using the Granger causality test, vector autoregression model, impulse response function and variance decomposition methods. It is demonstrated that variation of international crude oil prices can cause China domestic refined oil price to change with a weak feedback effect. Moreover, international crude oil prices and China domestic refined oil prices are affected by their lag terms in positive and negative directions in different degrees. Besides, an international crude oil price shock has a significant positive impact on domestic refined oil prices while the impulse response of the international crude oil price variable to the domestic refined oil price shock is negatively insignificant. Furthermore, international crude oil prices and domestic refined oil prices have strong historical inheritance. According to the variance decomposition analysis, the international crude oil price is significantly affected by its own disturbance influence, and a domestic refined oil price shock has a slight impact on international crude oil price changes. The domestic refined oil price variance is mainly caused by international crude oil price disturbance, while the domestic refined oil price is slightly affected by its own disturbance. Generally, domestic refined oil prices do not immediately respond to an international crude oil price change, that is, there is a time lag.     

Economic Performance of China’s Oil and Petrochemical Industry in First Quarter

International oil price continued souring in the first quarter of 2008. It was bouncing up and down above $100/barrel and even getting close to $120/barrel by the end of April. Products related to energy and resources all responded with higher prices, triggering a general increase in cost of petroleum and petrochemical industry. World＇s economy was seriously affected by USA＇s subprime lending crisis, weakening US dollar, sullen stock markets, and etc, major economies lowered their expectations for economic growth rate. China also stipulated a series of adjusting policies, such as policies concerning labor costs, environment protection, export tariff rebate, and so on. Influences by the combination of the situation and new policies, plastic products and textile and other labor extensive sectors for export witnessed reduction of export and some petroleum and petrochemical products were over supplied than actually demanded.     

利用ARIMA模型预测2007年油价走势

运用Box-Jenkins方法，以2003年初至2006年末的WTI原油月平均价格数据为基础，借助统计分析软件，构建了ARIMA预测模型。利用该预测模型对2007年度的WTI油价走势进行了分析和预测，预测结果以预测值、预测下限和上限的区间数据形式表现出来。预测结果显示，2007年的WTI油价将继续维持高位运行状态，运行区间为60—70美元，桶，价格运行表现出受季节影响较为明显的特征。     

More price records, more unrest and more refineries

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices continued to set new records despite a decision by OPEC to raise production by 0.5 mn bpd to 27.5 mn bpd from 16th March. On 1st April, WTI futures in New York set a new closing high of $57.27 a barrel, having traded earlier in the day at $57.70. IPE Brent remained just below its previous record, touching $56.15. Crude oil's strength pushed the official prices of some Asian crudes to record levels, including Malaysia's benchmark Tapis grade, which was set at $58.89 a barrel. Product prices rose to new highs as well. In New York, May heating oil reached $1.6638/gall and May gasoline settled at $1.7310 on 1st April, while, in Europe, gasoline rose to an all-time high of $558/t. The market's view on OPEC's decision was that the rise in output was too little, too late. Even a statement by the cartel's President, Shaikh Ahmad Fahd Al Sabah, that OPEC would consider a further rise of 0.5 mn bpd for May did nothing to calm fears.     

Markets panic, crude goes above $80, more trouble in Nigeria

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
The capture of two Israeli soldiers by Iranian-backed Hizbollah guerrillas operating out of Lebanon flared-up into a full-scale military confrontation, with Israeli attacks on Lebanon's energy infrastructure ( see 'Looking Ahead'). Oil traders, fearing a wider Middle Eastern conflagration, bid-up the price of crude oil to new record levels. Prompt WTI futures hit $78.40/bbl on 14th July and three days later, prompt IPE Brent went to a record $78.18/bbl. The outer months rose even higher, with March, April and May WTI all above $80/bbl. Iran tried to dampen the markets by saying it would not use the oil weapon in support of its Hizbollah allies, and prices eventually eased. The seaborne trade in oil in the Eastern Mediterranean was disrupted by the closure of ports in Israel and Lebanon and a rise in insurance premiums for voyages to ports nearby. Outside the Levant, markets remained well-supplied with oil.     

Hurricane in US, chaos in Iraq and even more price records

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
A hurricane named Katrina devastated oil installations along the US Gulf Coast as well as the city of New Orleans, sending oil prices to new record levels. Nearly 1.4 mn bpd of offshore oil production was shut-in, along with 8.3 bn cfd of the Gulf's natural gas. More production was closed down onshore along with nearly 2.4 mn bpd of refining capacity. Crude and product prices shot up worldwide. The 30th August saw October WTI close at a record $69.81/bbl, having traded earlier in the day up to $70.85/bbl. On 31st August, Nymex gasoline closed at a new high of $2.6145/gall as the Gulf Coast's refineries remained off-line. Gulf spot prices rose above $3/gall. The following day, October heating oil set a new record by closing at $2.1985/gall. Records fell outside the US, with Tapis at $70.97 on 31st August. The previous day saw IPE October Brent settle at a record $67.57, whilst the November and December contracts both saw trades above $69.00/bbl. Natural gas prices also moved into record territory in the US, topping $12 per mn BTU on Nymex during the morning of 30th August.     

More price records, Iraqi tensions and oil companies in court

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices ended October at record levels. Spot month Brent futures hit $91.18/bbl before settling at a record $90.63/bbl on 31st October. WTI went as high as $95.28/bbl before settling-again at a record-of $94.53/bbl. Traders were worried about political tensions in the Middle East and US markets were spooked by a fall in crude inventories at Cushing, Oklahoma, the delivery point for Nymex crude. Product prices rose sharply, boosted by a fire at the Coryton refinery in England. Gasoline barges rose above $800/t in North West Europe. Across the world in Asia, jet fuel went above $100/bbl for the first time in Singapore, just as the first Airbus 380 airliner completed its maiden flight from Singapore to Sydney.     

Gasoline records, Nigerian troubles and security problems

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Gasoline reached record prices in the US as inventories fell and demand rose. Average retail prices hit $3.11/gal in mid-month before falling slightly. Supplies were squeezed by a series of unexpected refinery shutdowns and problems were reported meeting new fuel specification ( see 'Focus', March 2006 ). Partly in response to the lower than expected refinery runs, the price differential of WTI fell to a record $6.30/bbl below BFO. The US remained generally oversupplied with crude oil despite the temporary loss of 100,000 bpd of Alaska North Slope (ANS) production in yet another disruption to BP's operations there ( see 'The Month in Brief', November 2006 ). President George W Bush meanwhile declared that federal government departments must investigate further ways of improving US energy efficiency.     

Iraq goes to polls, China seeks more oil and UK worries about petrol

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Following a month in which US and British forces suffered their heaviest daily casualties, the Iraqi people voted in large numbers for a new national assembly ( see 'Focus'). Violence, however, continued after the election and oil installations were reported damaged, including a pipeline linking the Kirkuk oil field to the Baiji refinery and a further line between Baiji and the refinery at Daurah. The export line connecting Kirkuk to the Turkish Mediterranean port of Ceyhan was also hit. Sabotage to electricity installations affected oil pumping stations in the south of the country cutting production and forcing the Iraqis to announce a 10% cut in contract volumes of Basrah Light until the middle of the year. An official investigation into the UN-administered Oil-for-Food Programme concluded that the man in charge, Benon Sevan "repeatedly solicited" oil for a company called Africa Middle East Petroleum. A further report into other allegations of corruption in connection with the programme, which supervised export sales of Iraqi petroleum from 1993 to 2003, is due later this year. Relief at the apparent success of the Iraqi election caused crude oil prices to fall by about $3 a barrel. OPEC ministers did their bit for oil prices by agreeing not to cut output at their meeting on 30th January. Quotas remain unchanged at 27 mn bpd. The organization's target price band of $22-28 a barrel, however, has been suspended. A new one will be discussed in March. Kuwait announced it was to increase security at its oil installations following an attack by armed men in an area close to the emirate's largest refinery, at Mina al-Ahmadi.     

More price records, more Nigerian troubles and privatization woes

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Crude oil prices rose steadily during July, establishing new records in some instances. Dated BFOE went above $78.90/bbl for the first time, whilst on 1st August, September WTI futures hit a record $78.77/bbl after US crude oil inventories recorded a sharp drop. North Sea markets were affected by the shut-down of a gas pipeline which threatened production of more than 100,000 bpd of NGL. OPEC declined to come to the market's rescue by producing more oil, claiming that the high price levels were caused by geopolitical factors and shortages of refined products rather than insufficient supplies of crude. Demand for oil was boosted in Asia by the shut-down of Japan's largest nuclear power station.     

Another hurricane, high prices and more chaos in Iraq

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Another hurricane, this time called Rita, battered the US Gulf Coast, sending oil prices up worldwide, though not to the heights seen when its predecessor, Katrina, arrived. As before, a large swathe of US refinery capacity was temporarily put out of action: this time mainly in Texas. For around a week in late September, when Rita arrived, nearly 4.1 mn bpd of crude distillation capacity was taken off-line. At the same time, some 0.9 mn bpd was still unusable as a result of the depredations of Katrina in late August, leaving the US briefly minus nearly one third of its refinery capacity. The situation improved as some capacity was brought slowly back on-line, but by the beginning of October around 3.0 mn bpd was still not back in operation. The main price effects of Katrina were on gasoline, prompting demands in the Congress and elsewhere for investigations into overcharging by refiners and retailers ( see 'Focus'). A record weekly increase in the first week of September propelled the average price of regular gasoline across the US to $3.07/gall. Rita's principal effect was on heating oil, which went up in the last week of September by nearly 20% to $2.51/gall in the US Gulf. US crude oil prices remained below their immediate post-Katrina record highs ( see 'The Month in Brief', September 2005 ) despite the loss of the entire 1.5 mn bpd production in the Gulf of Mexico following Rita's arrival.     

Jet fuel squeezed as gasoil demand booms

As the US summer gasoline season begins ( see 'The Month in Brief') it is not gasoline but middle distillate that is driving product prices in that country. Fears of a heating oil shortage next winter have pushed the price of heating oil above that of motor spirit. Diesel prices have been above those of gasoline for several weeks. Strong demand for diesel and heating oil is predicted for the rest of the year, and US refiners will have to try and structure their operations so as to maximize their output of these two fuels whilst still continuing to keep the world's largest gasoline market adequately supplied. The main effect of these attempts to squeeze more gasoline, diesel and heating oil from the crude oil barrel is likely to be experienced by the product that lies in the middle: jet kerosine.