Petroleum Complex Outlook - An Excerpt from CRB'S Futures Market Service

Crude oil prices are consolidating just below January’s 17-month high. That 17-month high of $83.95 was a 45% retracement of the 1-1/2 yr downmove from July 2008’s record high of $147.27 a barrel to December 2008’s 6-yr low of $32.40 a barrel. Bullish factors include (1) the fall in the dollar index to a 1-1/2 month low, (2) OPEC's decision to leave its production quotas unchanged following their meeting in Vienna, (3) the larger-than-expected decline in weekly gasoline inventories (-1.71 million bbl versus expectations of -750,000 bbl), (4) comments from Saudi Arabian Oil Minister Ali al-Naimi that crude oil prices are "beautiful" along with his prediction that global oil demand may grow about 1 million bpd in the second half of this year, and (5) the prediction from JPMorgan Chase that crude oil prices may surge if OPEC maintains existing production quotas as economic recovery in emerging markets may “spike” demand in a tighter-than-expected oil market. Bearish factors include (1) slack demand after total US fuel demand for the week ended Mar 12 slipped 4.2% to 18.8  million barrels a day, the biggest one-week decline in over 4 months, and (2) the prediction from the Center for Global Energy Studies that crude prices will fall 25% to $60 a barrel in Q4 as OPEC members continue to  disregard their quotas and overproduce.

OPEC Summary: OPEC-12 output in Feb rose by +125,000 bpd (+0.4%) to 29.170 mln bpd from 29.045 mln bpd in Jan, remaining below the July 08 record of 32.775 mln bpd. OPEC-11 (ex-Iraq) output in Feb rose by +145,000 bpd (+0.5%) to 26.785 mln bpd.

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