Brent rises $3/bbl on Saudi cuts, China stimulus

10 November 2008 08:51  [Source: ICIS news]

SINGAPORE (ICIS news)--Crude prices rose more than $3/bbl on Monday, boosted by cuts in Saudi Arabia’s term supplies to Asia, and news that China had launched a stimulus package worth about $600bn (€468bn) to alleviate the effects of the global economic slowdown.


At 16:11 hours Singapore time (0811) GMT on Monday, December NYMEX light sweet crude futures were trading at $63.56/bbl, up $2.52/bbl on last Friday’s settlement level, after rising as much as $3.26/bbl at $64.30/bbl earlier.


At the same time, December Brent on London’s ICE futures was up $2.25/bbl at $59.60/bbl from last Friday’s settlement price, after jumping $3.11/bbl earlier at $60.46/bbl.


Rises in crude mirrored sharp gains in Asian stock markets, with the Nikkei in Japan gaining 5.8%. The market surge was principally generated by China’s announcement on Sunday of a massive stimulus package for implementation through to 2010. The investment will be focused on infrastructure and social projects within the world’s most populous nation.


The announcement came amid the G20 economic summit in Brazil where governments voiced support for concerted action to stave off a major recession amid the global economic downturn and credit crisis.


Prices were also buoyed by news that Saudi Arabia had informed customers in Asia that it will cut December term supplies by 5%. The move is evidence of Saudi compliance with the OPEC agreement made in Vienna on 24 October to cut output by 1.5m bbl/day effective from 1 November. Saudi exports around 50% of its production to Asia.


($1 = €0.78)


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By: James Dennis
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