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1. Production and Prices

2. Nigeria

3. Grangemouth

4. Natural Gas Prices

5. Energy Briefs

1. Production and Prices

It was yet another week of historic peaks for oil prices. On Monday crude reached a new high of $117.40 a barrel based on the weak dollar and OPEC's refusal to increase production. On Tuesday, a second new high of nearly $120 was reached as insurgent attacks in Nigeria were added into the mix.

By Wednesday crude was falling again with a stronger dollar and a US stocks report that showed more US refining capacity coming back online, imports growing by 1.2 million b/d over the previous week, and crude stockpiles increasing by 2.4 million barrels.

However, the report also said that petroleum consumption in the US was up by 0.8 percent over the same four-week period last year and gasoline consumption increased by 0.9 percent. US gasoline inventories declined by 3.2 million barrels and distillate inventories declined by 1.4 million barrels. Gasoline inventories are still satisfactory, but have been dropping rapidly from abnormal highs for the last 6 weeks. Distillate stocks, which have been dropping during the winter heating season, are now scraping the bottom of the normal range for this time of year.

The week ended with another surge putting crude above $119 again on a report of shooting in the Persian Gulf and yet another pipeline attack in Nigeria. US retail gasoline prices continued to rise during the week nearing $3.60 on Friday.

We are now at the time of year when gasoline and distillate inventories usually rise in preparation for the summer driving season and heating oil stocks build for next winter. These inventory numbers will bear close watching over the next few weeks for if they do not start rising there will be higher prices and possibly even shortages ahead. The strikes that currently are going on in the UK and Nigeria, coupled with increased insurgent activity in Nigeria and the surge in Chinese imports, suggest that it may be difficult for the US to import sufficient products in the next couple of months to keep up with demand.

2. Nigeria

Nigerian oil production took a double hit last week when a combination of five insurgent attacks on pipelines and a rare oil-workers strike against Exxon reduced crude production from the 1.9 million b/d averaged in March to about 1 million b/d. The estimated loss in production may be even worse as they do not include any oil shut-in by the latest pipeline attacks.