Oil Prices Fall Amid Dollar Strength and Rising Crude Inventories

Strategic Insights -

Oil prices declined in early morning trade as the US dollar continued to gain strength against major currencies, fueled by persistent worries about the eurozone. The American Petroleum Institute reported a 7.51 million barrel increase in crude inventories to 351.5 million in the United States, marking the eighth straight weekly increase. Analysts surveyed by Bloomberg News expect a further 1.65 million barrel rise, while Russia's LUKOIL posted a 23% decline in 2009 profit. However, oil giants are optimistic about infrastructure investments, with Saudi Aramco and Total SA joining forces to raise $8 billion for a joint refinery and petrochemical project.

Key Takeaways:

  • Crude oil inventories increased by 7.51 million barrels to 351.5 million in the United States, marking the eighth straight weekly increase, according to the American Petroleum Institute.
  • Analysts surveyed by Bloomberg News expect a further 1.65 million barrel rise in weekly inventories.
  • Russia's LUKOIL reported a 23% decline in 2009 profit, and traders expect an announcement by ConocoPhillips (COP) to halve its 20% stake in LUKOIL.
  • Oil giants are optimistic about infrastructure investments, with Saudi Aramco and Total SA joining forces to raise $8 billion for a joint refinery and petrochemical project in Jubail, Saudi Arabia.
  • The refinery is expected to pump 400,000 barrels a day and cost over $12 billion, with funding to be raised in "coming months" according to Aramco's CEO Salem Shaheen.
  • National Petroleum Construction Co. won a $560 million contract to build facilities for the Qasyura field in Abu Dhabi, which has the potential to produce 30,000 barrels a day by 2013.
  • BP pl (BP) expects its Brazilian assets purchased from Devon Energy Corp. (DVN) to produce at least 100,000 barrels of oil a day by the end of the decade.

Statistics:

  • Crude oil inventories increased by 7.51 million barrels to 351.5 million in the United States.
  • Analysts surveyed by Bloomberg News expect a further 1.65 million barrel rise in weekly inventories.
  • Russia's LUKOIL reported a 23% decline in 2009 profit.
  • Saudi Aramco and Total SA are raising $8 billion for a joint refinery and petrochemical project.
  • The refinery is expected to pump 400,000 barrels a day.
  • Funding is expected to be raised in "coming months" according to Aramco's CEO Salem Shaheen.
  • National Petroleum Construction Co. won a $560 million contract to build facilities for the Qasyura field.
  • BP pl (BP) expects its Brazilian assets purchased from Devon Energy Corp. (DVN) to produce at least 100,000 barrels of oil a day by the end of the decade.

Sources:

  • MidnightTrader via COMTEX
  • American Petroleum Institute
  • Bloomberg News
  • LUKOIL
  • ConocoPhillips (COP)
  • Saudi Aramco
  • Total SA (TOT)
  • National Petroleum Construction Co.
  • BP plc (BP)
  • Devon Energy Corp. (DVN)