The met had warned yesterday of heavy rain and thunder as the country will experience surface low pressure, causing rainfall over the next few days
weather52 minutes ago
A survey of 14 analysts forecast the average price of benchmark Brent crude at $29.94 per barrel, up from a projection in a March poll of $27.13 and above an average last year of $28.48 a barrel.
The poll predicted an average price for US light crude this year of $32.72 a barrel, up from last year's average $30.99 on the New York Mercantile Exchange.
The upward revisions come despite attempts by influential Opec producer Saudi Arabia to bring crude down from a recent $40 high for US crude by calling for higher group output limits.
Crude markets have surged 20 per cent so far this year, underpinned by concern about gasoline tightness in the US during the summer, when demand peaks.
U.S gasoline futures have leaped by 36 per cent so far this year as stocks languish well below year-ago levels and refiners struggle to meet demand for a new grade of green fuels.
"When gasoline goes up, it drags crude up with it," said Seth Kleinman of consultants PFC Energy in Washington D.C. "There's genuine tightness in gasoline - tight supply and burgeoning demand." The US accounts for about 45 per cent of the world's gasoline consumption.
Oil's sustained strength over the past year has caught out many analysts. In January a similar poll came up with a 2004 Brent forecast of just $24.70 and back in September the experts were predicting that rising Iraqi supplies would see Brent average just $23.09 in 2004.
So far this year Brent has averaged $32.01, putting it on course for the highest average since 1982. US light crude has averaged $35.84 for the year to date.
Rising demand from China as economic growth there boosts vehicle ownership has fuelled the price rise, putting global refining capacity under a new strain.
Demand for sweet, light, gasoline-rich grades in the United States has also driven up the premium for US light crude over North Sea Brent in analysts' forecasts.
The survey predicted a 2004 average US light crude/Brent spread of $2.79 a barrel, from previous assumptions of between $1.50 and $2.
Opec, which accounts for about a third of total global production, mainly pumps heavier high sulphur crude, which produces a lower per centage of gasoline than light low sulphur crude.
"There's a bidding war over light sweet crude, and a bidding war over available product exports," said SG Securities economist Deborah White. "You have the Atlantic Basin competing with China."
Chinese oil consumption is set to rise by 13 per cent from 2003 to 6.2 million barrels per day this year, the International Energy Agency forecast last month. The country overtook Japan last year to become the world's second-largest oil consumer after the United States.
While demand surges, fears are growing about the security of supplies in the Middle East, adding a risk premium into already strong prices.
"Start with the tight physical market, due to shortages of refining capacity," said SG's White. "Then add speculation, the hedge funds' strong appetite for investing in oil, and very real concerns about geopolitical events threatening supply."
Attacks on oil pipelines in southern Iraq and attempts to bomb the country's Basra oil terminal in the past two weeks have reduced exports from the terminal and fuelled concern of a bigger attack on oil facilities in the region.
Oil production from Iraq will probably fall from first-quarter levels because its system was being stretched beyond sustainable limits and was more damaged than was being admitted, Barclays Capital said in a research note.
The met had warned yesterday of heavy rain and thunder as the country will experience surface low pressure, causing rainfall over the next few days
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