Possible cut of OPEC production leads to rising oil prices

OPEC Secretary-General El-Badri, who will be stepping down at the end of this year, expressed the opinion yesterday that OPEC will lower its production by 500,000 barrels per day next year in order to balance the global oil market. At the same time, he repeated – more or less word for word – the latest statements by the oil ministers of Saudi Arabia and Kuwait, namely that prices always fluctuate seasonally and that the situation is likely to look considerably brighter in the late autumn when demand increases. It is difficult to say whether these statements were what tipped the scales and gave the oil price crucial positive impetus. In any case, it was certainly helped by a weaker US dollar, the unrest in Libya and the threat of a strike by workers at the Nigerian oil company NPPC that could limit the oil exports of this West African country. All the same, for prices to recover OPEC will need to be willing to reduce its supply – after all, the IEA now estimates next year’s call on OPEC at just 29.6 million barrels per day.

Price of Australian energy coal at 5-year low

It has been known for some time that China is considering banning the consumption of low-quality coal (with a high sulphur and ash content) in a bid to reduce air pollution. The National Development and Reform Commission (NDRC) has now put forward the first binding regulations that are to apply from 2015. At first glance, these are more lax than was initially expected: for example, a maximum ash content of 30% is permitted for imported coal that is transported less than 600 km. On the other hand, in some regions only the consumption of coal with an ash content of below 16% will be allowed – Australian export coal for instance has an average ash content of 24-25%, however. At the same time, larger utilities have been instructed by the Chinese regulatory authorities to import less coal in the fourth quarter. On balance, therefore, the bearish news predominates once again for the already embattled coal price.