Prices and production
Prices hovered around $67 a barrel on Monday and Tuesday, then surged nearly $4 a barrel on Wednesday to close at $70.61. This leaves oil right in the middle of the $65-75 trading range where is has been since early June. The price jump came after the week’s stocks report showed rising demand for fuel in the US. Fresh economic, housing and employment data continue to disappoint those expecting an imminent economic recovery. The IMF warned that the world’s banks have only revealed about half their losses so far and that a further down-leg in the global recession was possible.
The government announced that revised US oil demand for July was the lowest for the month in the last 13 years.
Enthusiasm in Brazil for size of the deepwater pre-salt deposits seems to have no limits. This week a senior politician suggested that the find may contain 24 -100 billion barrels of oil – up significantly from a high of 80 billion barrels forecast last year.
In Nigeria the militants warned Beijing about making a large investment in Nigeria’s oil industry before the insurgency is settled.
China moves to curb overcapacity
On Wednesday, Beijing announced plans to curb severe industrial overcapacity that has been made worse by the $585 billion stimulus package. The government has banned further additions to capacity in a number of key industries including steelmaking, coke, and aluminum production. The government suggested that the intense competition caused by the overcapacity could derail economic recovery.
US Climate bill
Senate Democrats revealed a tougher cap and trade emissions bill than was expected on Wednesday. So far no Republicans have supported the proposal suggesting that there is still some hard negotiating ahead. Due to the recession, US emissions are running 9 percent lower than during the base year of 2005.
