Crude oil continued its surge and climbed to an annual high on the back of speculation OPEC will carry on slashing output as part of its price boosting campaign.
The cartel of oil producers should cut production to reduce the surplus in world markets, Iraqi Oil Minister Hussain al-Shahristani told the Wall Street Journal.
Crude oil for April delivery rose by nearly 3% to $46.76 a barrel, the highest intra-day price since January’s short-lived flourish.
The future delivery contract jumped by more than 4% to $45.52 a barrel last week, however, poor employment figures hurt the dollar and much of the spike was a reflection of this, but a return to commodities investment also helped.
OPEC has cut production three times since September and rig utilisation – a classic barometer of industry health is dropping.
Rina Samsudin of ODS Petrodata told ArabianOilandGas.com that there are around 105 marketed jack-up rigs in the Middle East (includes those in the Persian Gulf and Gulf of Suez), and of those, 10 jack-ups are currently idle or in yard without near-term future contracts – unthinkable eight months ago.
Today’s marketed jack-up utilisation in the Middle East is 88%, but just one year ago this figure was around 93% for the Middle East. In the second quarter of this year, Samsudin says this figure could drop to between 75% and 85%.
Middle East producers are keeping a keen eye on the health of Chinese and Indian heavy industries, as these are the only major consumers blocks expected to see growth in 2009.
Bloomberg reported that the global economy is likely to shrink for the first time since World War II, and trade will decline by the most in 80 years, according to the World Bank.
Based on this, ArabianOilandGas.com doesn’t expect to see a price rally, or, outside of short-term blips, the $60 barrier to be broken until at least September.
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