Nymex Crude Settles At Record (Dow Jones)

NEW YORK (Dow Jones)–Crude oil futures closed above $117 a barrel for the first time Monday, boosted by supply instability. Light, sweet crude for May delivery settled up 79 cents, or 0.7%, at a record $117.48 a barrel on the New York Mercantile Exchange. The May contract expires Tuesday. June Brent crude on the ICE futures exchange settled up 51 cents at $114.43 a barrel, also a record. In Nigeria, about 169,000 barrels a day of crude production was shut in following an attack on a pipeline operated by Shell Petroleum Development Co. The company declared force majeure on its April and May oil delivery contracts from its 400,000 barrel a day Bonny fields effective April 22, a move that indemnifies it from litigation if it fails to deliver on contractual obligations to buyers. Nigeria is a key producer of high-quality light crude that is easily refined into gasoline. About a fifth of the country’s roughly 2.47 million barrels a day in production capacity is on hold amid security problems, the International Energy Agency reports. “169,000 barrels in force majeure on Bonny Light is very significant,” said Christopher Mennis, president of brokerage New Wave Energy in Aptos, Calif. “That trumped the market.” The head of the IEA said Monday that tight supply and vigorous demand in China and other emerging markets are the main factors driving oil prices to records. Nobuo Tanaka, the Paris-based watchdog group’s executive director, said prices are too high for consumers. Perceptions of tight supply come as consumption in the world’s largest oil consumer loosens up. U.S. oil demand has fallen 1.9% year to date, according to the Energy Information Administration. The agency, an independent analytical and statistical wing of the U.S. Department of Energy, is expected on Wednesday to show U.S. crude oil stockpiles grew by 1.5 million barrels last week, while gasoline stocks fell by 2.3 million barrels and stocks of distillate, which include heating oil and diesel, remained unchanged, according to a Dow Jones Newswires survey of analysts. “If there’s a perception global demand can offset lag of demand in the U.S., that’s going to throw a monkey wrench into the bears’ best-laid plans,” said Stephen Schork, editor of Villanova, Pa.-based market newsletter the Schork Report. Supply perceptions were also shaken after a suspected pirate ship Monday fired on a Japanese oil tanker off the eastern coast of Yemen, according to the Associated Press. The 150,000-ton tanker Takayama, operated by Nippon Yusen K.K. (NPNYY) and headed for Saudi Arabia, leaked hundreds of gallons of fuel after the attack. Other supply developments also factored into the market. In Mexico, oil production slipped 7.8% in the first quarter to 2.91 million barrels a day as output at the country’s traditional oil fields wanes, state oil company Petroleos Mexicanos said. In Scotland, workers at Ineos PLC’s 196,000 barrel-a-day Grangemouth refinery and petrochemical plant have threatened to strike for 48 hours from April 27 over changes to an employee pension plan. Despite faltering U.S. oil demand, some observers say the market is less moved by such concerns than by short-term flows of investment funds. “The question is, how high is high?” said Scott Meyers, senior trading analyst at Pioneer Futures in New York. “There really is no number because we are in uncharted territory.” Front-month May reformulated gasoline blendstock, or RBOB, fell 1.02 cents, or 0.3%, to $2.9791 a gallon. May heating oil rose 1.91 cents, or 0.6%, to a new record $3.3114 a gallon. More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines: Nymex Light Crude Oil Close Nymex Harbor RBOB Gasoline Close Nymex Heating Oil Close ICE Brent Crude Oil Close ICE Gas Oil Close -By Gregory Meyer, Dow Jones Newswires; 201-938-4377; greg.meyer@dowjones.com (END) Dow Jones Newswires 04-21-08 1544ET Copyright (c) 2008 Dow Jones & Company, Inc.

How to cool growth

*UPWARD revisions of China’s economic growth rates during the past two years and a big jump in inward investment last month highlight the challenges Beijing’s policymakers face as they attempt to cool growth, economists warn.*
China’s National Bureau of Statistics said it raised its estimate of gross domestic product growth in 2007 to 11.9 per cent from 11.4 per cent, and its estimate of GDP growth in 2006 to 11.6 per cent from 11.1 per cent.
“This adds emphasis to the view that growth and inflation remain high, and that slower growth will be difficult to engineer,” Royal Bank of Scotland economist Ben Simpfendorfer said.
“Even as the global economy slows, there can’t be a relaxation in China’s tight monetary policy.”
Macquarie Securities economist Paul Cavey said analysts were likely to upgrade their forecasts of GDP growth and inflation this year, following the revisions.
The International Monetary Fund said on Wednesday that it expected China’s GDP growth to slow to 9.3 per cent in 2008, still a rapid rate by global standards, but Mr Cavey said he thought it was unlikely to fall below 10 per cent, especially in light of yesterday’s revisions.
The People’s Bank of China also said yesterday that global inflation pressures would add to inflationary pressures in China, and that global grain prices could continue to rise.
China’s consumer price inflation accelerated sharply to 8.7 per cent in February from a year earlier, marking its fastest pace in nearly 12 years, driven mainly by a 23.3 per cent surge in food prices.
Also yesterday, the Ministry of Commerce said China had attracted $US9.29 billion ($10 billion) in foreign direct investment in March, 39.6 per cent more than in the same month last year.
In the first three months of this year, China’s actual FDI surged 61.26 per cent to $US27.41 billion, driven by a more than doubling in FDI in January.
Macquarie’s Mr Cavey said the figures showed increasing amounts of money were pouring into the country in anticipation of further appreciation of the yuan.
The Chinese yuan has risen 16 per cent against the dollar since 2005, when Beijing revalued the local unit 2.1 per cent and began allowing it to trade in a tightly managed band.
The yuan’s appreciation has accelerated this year, with the currency up 4.5 per cent against the dollar since January 1, compared with its 6.9 per cent rise for the whole of last year.
Yesterday, the US dollar fell below the key CNY7.0000 level for the first time in the modern era.
“Direct investment is one of the easiest legal ways to get money into the country quickly,” Mr Cavey said.
But Mr Simpfendorfer cautioned against reading too much into a few months of FDI data, saying there was often a surge early in the year.
China’s foreign exchange reserves reached $US1.590 trillion in January, up sharply from $US1.53 trillion at the end of last year, as foreigners converted foreign currency to yuan at a rapid rate.
The influx of money into China, seeking returns on yuan appreciation, complicated monetary policy, Mr Cavey said.
He said the central bank could not raise interest rates too far without attracting more foreign deposits.
Mr Cavey said he expected “a couple more” interest rate rises by the end of 2008, and for the ratio of deposits that banks must hold in reserve to rise to 18-19 per cent from 15.5 per cent now.
“Given the amount of money that’s coming in, they have to take some money out of system in one way or another,” he said.

Aluminum Seen Down Towards $2550/Ton

DJ MARKET TALK: Aluminum Seen Down Towards $2550/Ton By Year End 1721 GMT [Dow Jones] Aluminum prices are expected to trend lower to around $2,550/ton, says Standard Chartered. Says prices should remain high in the weeks ahead, with a weak dollar expected to support commodity prices generally. However, the physical market is likely to soften as Chinese smelters restart and new greenfield smelters such as Sohar start to come on-stream. Moreover, the bank says it is assuming that economic weakness spreads from the US to other countries during the year, helping to slow consumption growth. LME aluminum is trading at $3030/ton, +2.9% from Wednesday’s close. (DNM) Contact us in London. +44-20-7842-9413 londonmetals@dowjones.com (END) Dow Jones Newswires