LONDON: Oil rose above $36 a barrel on Friday after the United Arab Emirates joined leading exporter Saudi Arabia in deepening supply curbs in line with OPEC’s biggest ever output cut announced last week. U.S. crude gained $1.01 to $36.36 a barrel by 1219 GMT, off a session high of $36.90while, London Brent rose 94 cents to $37.55. “The only positive news (for the market) came from the UAE,” Olivier Jakob of Petromatrix wrote in a report. “For now at least, Saudi Arabia and the UAE seem to be fully complying with the cuts.”

Abu Dhabi National Oil Co (ADNOC), the main producer in the UAE, the world’s fifth-largest oil exporter, said it would cut supplies of February Murban and Upper Zakum allocations by 15 percent and Lower Zakum and Umm Shaif by 10 percent each.

A source with an Asian refiner said the ADNOC cuts were more than expected.
“ADNOC had already allocated January volumes, but they reversed the decision, so that messes up our schedule,” the source said. “For February, the reduction volumes are very large, so we may need to adjust our ship loadings.”

The allocations follow a decision last week by the Organization of the Petroleum Exporting Countries to reduce supplies by 2.2 million barrels per day. Saudi Arabia informed its customers even before the OPEC meeting they would be receiving less oil.

The OPEC reduction is its deepest ever as the producer group battles a market slump that has sliced around $110 off the price since a July peak above $147 a barrel. Japan’s deepening recession is expected to cut oil demand in the world’s third-biggest oil consumer after the United States and China, by almost 5 percent in the year starting April. Consumption was also seen sliding by 5.7 percent in the fiscal year ending next March, the Institute of Energy Economics, Japan, said this week.-SANA

LONDON: Oil fell below $34 on Friday to its lowest level in almost five years as the global economic slowdown overshadowed OPEC’s record supply cuts. U.S. light crude for January delivery CLc1 fell $2.64 to $33.58 a barrel by 1150 GMT. It earlier touched $33.44, the lowest since early February 2004.

London Brent crude LCOc1 was trading 18 cents up at $43.54. Oil prices have fallen by more than $110 from their peak above $147 in July. They look set for their second biggest weekly decline since 2003. “Until traders see a sustained drop-off in the rate of demand destruction, the market will have a hard time establishing a floor,” Jonathan Kornafel, Asia Director of Hudson Capital Energy, said. “From a credibility standpoint, OPEC has no choice but to bite the bullet for the next few months.”

Oil has continued to drop despite pledges by the Organization of the Petroleum Exporting Countries (OPEC) this week to remove 2.2 million barrels per day from its supply, which will be the largest ever reduction by the producer group. OPEC kingpin Saudi Arabia’s Oil Minister Ali al-Naimi, speaking in London, said on Friday the kingdom would be pumping less oil in January and would be at its new output target in line with the group’s latest cut.

OPEC to cut output until prices stabilize: president
The OPEC oil producing cartel will continue cutting output until the price of crude stabilizes, its president Chakib Khelil said on Friday. “We will continue this reduction until the price will stabilize,” he told reporters in the sidelines of a conference of oil ministers in London, two days after OPEC had agreed to cut output by 2.2 million barrels per day (bpd).

The OPEC cut, agreed at a meeting in Algeria, failed to reverse the fall in crude prices which fell to four-year lows below 40 dollars a barrel on Thursday. Khelil, who is also Algeria’s energy minister, said prices could have gone even lower if the Organization of Petroleum Exporting Countries had not already made cuts in September and October.

“I think the question that people don’t ask is where would the price be today if we did not take a decision in September of reducing 500,000 (bpd), and if we did not make the decision in October to reduce by 1.5 (million bpd),” he said. “The prices today would have been very low, so I think we did have an impact although we did not succeed in stabilizing”

And he added: “The most important thing for us, for the producers, is how to monitor control and regulate the financial speculation which affects the oil price, whether oil price is going up and down.
“We feel very strongly that what happened in 2008 and what’s happening now is due in great part to the speculation,” he added.-SANA

Pakistan Economy Watch said decision to use ethanol as fuel could result in severe food crisis and environmental hazards. Apart from energy, it requires four to five gallons of water to produce one gallon of ethanol. Later the water becomes toxic. Increase in greenhouse gases is also an effect.

The recent global food crisis was not result of any calamities but the economic vision of George W Bush who religiously pushed the policy to use food as fuel, said Dr. Murtaza Mughal, President Pakistan Economy Watch. The decision was taken to minimise dependence of Arab fossil fuel which backfired in the first year of execution, he added.

He said that European Union also followed the suit without considering the consequences which compounded the crisis. Many rich nations escaped the situation owing to their buying power but poor in Africa and Asia paid the price. “Few gallons of fuel produced by processing sugar, corn or other edibles can feed a normal family for couple of months,” he said adding that food is supposed for the human consumption and it should not end up in petrol tanks. Automotives should not be considered as more important than human.

Majority of countries have abandoned policy to use food items for making clean-burning additive to petrol. Almost all countries are busy in ensuring food security through building strategic food reserves and promoting agriculture while we leading in the opposite direction.

The decision cannot be justified in the backdrop of receding global oil prices; especially in a country that is dependent on food imports, said Dr. Murtaza Mughal. Some fifty ethanol plans in the US alone have been closed and the number is projected to cross 100 by the next year; same is the case with the EU. Not masses but a lobby need these plants.-SANA

KARACHI: Shell Pakistan has denied 100 per cent supply of oil to Civil Aviation Authority (CAA). This might affect the fuel supply to flights scheduled to carry Hajj pilgrims to Saudi Arabia in these days. Fuel supply to armed forces was also reduced after the oil companies faced shortage in their strategic stocks.

ISLAMABAD: The National Assembly has been informed that the government is providing subsidy on petroleum products by not passing the full impact of international price increase to the consumers to provide them oil on reasonable prices. Parliamentary Secretary for petroleum Chaudhry Ejaz Virk informed the House during question hour that the government is subsidizing high speed diesel by 19.63 rupees light diesel oil by 16.82 rupees and kerosene oil 18.47 rupees per litre. Read the full story

ISLAMABAD: Prime Minister Syed Yousuf Raza Gilani has approved the hike in POL prices and the summary has been sent to Oil and Gas Regulatory Authority (OGRA), sources said. After the increase in POL prices, the price of petrol will be hiked by Rs 10.97 per liter, Kerosene Oil by Rs. 8.20 while the price of diesel will go up to 9.49 per liter. Earlier, OGRA had sent a summary in this regard to the Prime Minister for approval.-SANA

SBP increases discount and bank interest
The benchmark KSE 100-Index shed 347 points to close at 13627 speculations about stringent economic measures by the central bank triggered selling in banking and insurance stocks. Share prices at the Karachi stock exchange fell more than 2 percent, as the market remained jittery on expectations of a discount rate hike — amid heavy selling after downgrade in country-ratings on Wednesday. Read the full story

KARACHI: Oil prices hit a record hitting up 130.05 dollars a barrel on Wednesday. The unprecedented soaring oil prices are due to the prevailing anxiety about stretched supplies in the face of strong demand for energy, and the downward trend of dollar in the international currency market, said the traders.

Karachi Stock Exchange gained 71 points following mass buying of oil stocks against the soaring international oil prices here Wednesday. Institutional interest was seen reviving in the market Wednesday. Investor interest was renewed by surging international oil prices.-SANA

The world’s financial experts have placed Pakistan on a list of 36 countries that face a serious food crisis, warning that if the situation worsens people may raid storage facilities for food. Like rest of the world Pakistan is also facing food crisis, and it has two sides; one is unavailability of edibles and second is soaring prices due to gap in demand and supply of edibles. According to the website of UN International task force on global food crisis the price of food commodities has risen by 83 per cent over the last 36 months on international markets, and it is estimated that 854 million people are in a state of food insecurity around the world.

World prices of food grains have risen manifold in the last several months due to varied reasons including increased demand in emerging economies, to poor harvests and farming methods, oil prices, massive diversion of food grains for making bio-fuels, provision of land for bio-fuels, global warming, high population growth, changed eating habits, manipulative role of international financial markets with reduced role of national government. United Nations Secretary General Ban Ki-moon lead a concerted effort by 27 key UN agencies to tackle the growing crisis caused by a worldwide sharp rise in basic foodstuff prices at a conference in the Swiss capital Bern. In case of Pakistan, the food crisis comes hand in hand with an energy crisis and in uncertain political environment along with the extremist threats. It is expected that food and energy shortages could become worse this summer. Food shortages do not make a companion to long periods of energy outages (load-shedding). This dangerous mix can bring the political plans of political shenanigans to dogs if these basic needs remain unmet. More problem appears to those economies that are not agriculture based and Pakistan is a wheat and rice producing country and shouldn’t have had to face an acute shortage. a very important question arises here how did it get to this stage? Read the full story

ISLAMABAD: Federal government decided on Thursday to keep Petroleum prices unchanged for at least coming 15 days. The Initial proposal was prepared by the ministry of finance in light of the picture drawn by Oil and gas regulatory authority. The summary had proposed a hike of at least 3 rupees across the board in high speed diesel, HOBC and kerosene oil.

The decision has been deferred by Prime Minister Yousuf Raza Gilani. Prices of all petroleum products except kerosene oil were last revised by 3 rupees on 1st of May. Diesel was raised to 44.5 rupees and petrol to 68.8 rupees a liter. It is pertinent to mention that oil rebounded to near $125 a barrel on Friday, led by the bullish heating oil market as China and Europe scramble for barrels, thinning global supply. US crude for June delivery rose 74 cents to $124.86 a barrel just 1.7 percent below Tuesday’s all-time peak of $126.98. New front month July ICE Brent was 97 cents higher at$123.60 a barrel, off an intraday high of $123.71.-SANA