This commentary is from USAK’s Energy Review Newsletter
http://www.turkishweekly.net/energy
To subscribe email to energyreview@turkishweekly.net
This week an important step was taken for a dream to come true; first stone was laid for the “Samsun Ceyhan crude oil pipeline project” in Turkey. Also known as Trans-Anatolia Project, Samsun Ceyhan Crude oil pipeline is another leg of Turkey’s initiative of becoming an energy corridor between western markets and the eastern energy resources.
The project will be undertaken by two prestigious groups and will cost nearly $1.5 billion. One of the partners of the project is Turkey’s well known Calik Holding and the other one is Italian energy giant ENI. Having a 555 kilometer length, the pipeline initially will carry 1 million barrels of oil per day and then it is expected this number to increase to 1.5 million barrels of oil per day. This pipeline with the existing Baku Tbilisi Ceyhan (BTC) crude oil pipeline will be another main route for the Caspian Basin’s energy resources to be transported to the western markets and present a good alternative for the sake of energy resource diversity.
This week also another important development was happened in Turkey not only for international politics but also for the oil markets. Iran’s nuclear envoy Larijani and EU’s senior foreign policy official Javier Solana had a meeting in Turkey’s capital Ankara. They discussed the uranium enrichment program of Iran. After the meeting, Larijani said that "In some areas we are approaching a united view,”. It should be noted that being a speculative and a delicate issue for the oil markets any improvement in this context is important for the stability in the markets.
This week was stable for the Brent oil; it only increased $1 when compared to last week’s closure. However, WTI increased $3.3 and became $65.98. This increase also helped the difference between WTI and Brent to decrease in the markets. Since the middle of the March WTI has lost its price superiority over Brent due to WTI’s ample supply in the Cushing region.
On Friday, capture of Al-Qaeda militants in Saudi Arabia also supported price increases. It was stated that these captured terrorist, for about 172 people, were planning to conduct terrorist attacks to refineries and oil installations. This kind of a possibility caused the tension in Middle East to increase. It should be noted that Saudi Arabia has the biggest oil reserves and the biggest producer in the world.
Oil Prices (USD$)
Source: Financial Times
Last week, also the oil stock values of the previous week’s (20 April) in the US were announced. Gasoline continued to decline whereas oil stocks increased by 2.07 million barrels. However, the stocks in crude oil are 10 million barrels less when compared to the last years’ 345 million barrels of oil stock.
Stocks in the US
Source: Energy Information Administration
Now, there are three important geopolitical threats for the oil markets; current political situation in Nigeria, possibility of Al-Qaeda attacks to the refineries and oil installations in the Middle East and Iran’s Nuclear Crisis. Moreover, in the middle term, the decline in gasoline stocks can cause a further demand pressure on crude oil with the returning of refineries back to production after the term of rehabilitation.
For this week, 14 of 33 analysts that participate in Bloomberg’s survey expect a rise in prices and 11 of them expect oil prices to decrease. Bulls that expect prices to rise claim that the speculation of U.S. gasoline supplies will remain below normal going into the summer after refiners shut units for repairs can cause prices to increases. (Bloomberg)
For your comments:
hozertem@gmail.com
This commentary is from USAK’s Energy Review Newsletter
http://www.turkishweekly.net/energy
To subscribe email to energyreview@turkishweekly.net
