Ethanol set to bite into crude sales
Rising US consumption of ethanol will help flatten demand for petroleum-based fuels in the coming months, OPEC predicts. In its latest monthly oil market report issued yesterday, just a week before OPEC ministers meet in Vienna, the organisation's secretariat pointed to an eight-fold increase in US ethanol consumption since 2000. "With the continued rise in US [petrol] stocks and surging ethanol volumes in the [petrol] pool, as well as ample idle refinery capacity, any seasonal upwards movement in the [petrol] market is likely to be limited," the OPEC report said.
Ethanol, which can be blended with petrol in fuels for cars, is derived from sugars in plants such as maize and sugar cane. Subsidies offered to US farmers who grow maize and other biofuel crops, as well as regulations introduced by many US states mandating higher percentages of ethanol and biodiesel in the fuels sold at petrol stations, have contributed to rising consumption. OPEC also said the projected demand for its crude was "still much less" than the group's production. The oversupply amounted to about 1.5 million barrels per day (bpd), it estimated. Adding only a portion of that surplus to commercial inventories within the Organisation for Economic Co-operation and Development (OECD) would swell oil stockpiles, "adding to the already inflated levels of more than 90 million barrels above the five-year average".
OECD stocks of crude and petroleum products usually start shrinking at the start of the year, but this January both increased, OPEC reported. Nevertheless, the group raised its global oil demand forecast for this year by 100,000 bpd from last month's assessment. It also revised its projected OPEC crude demand upwards by 200,000 bpd. firstname.lastname@example.org
Published: March 11, 2010 04:00 AM