29 September-5 October
Friday close: $78.91

Oil prices finally eased after the record-setting previous month (see ‘Oil Price Review’, October 2007). Fundamentals, however, appeared little changed as US stock levels remained worryingly low. Demand there was temporarily cut by refinery maintenance. Sour crudes fell further than sweet grades as refiners in most markets tried to meet the increased demand for low-sulphur middle distillate. Sour crude supplies were also up thanks to the resumption of Iraqi exports from Ceyhan. A reduction in fuel oil exports from Iran, on the other hand, pushed up the price of high sulphur fuel oil worldwide. Product prices otherwise followed those of crude oil downwards.

6-12 October
Friday close: $80.90

US crude oil stock levels continued to dominate market sentiment, with concerns focused both on crude oil and middle distillate levels. Threats by Turkey to send troops across the Iraqi border following attacks on its own territory by Kurdish separatists added to market tensions. Crude oil prices rose by more than $3/bbl in some instances, finishing the week close to previous record levels. Sour crudes regained some of their relative strength to sweet grades with a fall in exports of Russia’s Urals blend. Product prices were up on the back of crude, making it into record territory in Europe and Asia. Demand was mainly for naphtha, jet fuel and high sulphur fuel oil.

13-19 October
Friday close: $84.32

More price records were broken-this time by crude oil as well-as Turkey renewed its threats to attack Kurdish fighters inside Iraq. Low crude oil stocks in the US led to a rise in imports, helping the price of light, sweet crudes in particular. Sour crude price rises continued to lag behind those of sweet blends. Demand for refined products remained strong. Naphtha was in high demand as petrochemical buyers switched away from higher priced propane and butane. Asian buyers began to restock kerosine in advance of winter demand and high sulphur fuel oil prices were helped further into record territory by a fall in exports from the Persian Gulf.

20-26 October
Friday close: $87.83

WTI finally broke the $90/bbl barrier as the US benchmark hit $93.06/bbl. Low crude inventories and concerns about Turkey continued to worry the North American market and a new concern emerged in the form of anxiety over Iran’s possible reaction to the imposition of US sanctions over its nuclear programme. Much of the panic took place in the US itself, where the weekly stocks’ report showed crude oil inventories at their lowest level all year. North Sea prices rose by much less, leading to a spread of nearly $8/bbl between WTI and Dated BFOE. North Sea weakness was mainly attributable to low refinery demand in Europe where several units were undergoing maintenance. European product prices were strong as a result of this, especially middle distillate. Naphtha remained strong in Asia, setting new price records.

27 October-2 November
Friday close: $92.08

Brent followed WTI above $90/bbl for the first time. Some North Sea grades rose by almost $6/bbl. Market concerns were mainly centred on the weakness of the US dollar, though US buyers had a further worry in the form of lower Mexican crude exports caused by bad weather. Several price records for refined products were broken in Europe following a fire at the 180,000Coryton refinery in England, which cut deliveries to an already tight market (see above) and caused jet fuel prices in particular to soar. Middle distillate was strong across the board, pushing Russian gasoil above $800/t for the first time.

3-9 November
Friday close: $93.19

More price records were set mid-week before prices eased slightly. WTI futures reached $98.62/bbl on 7th November. Brent futures also entered record territory the same day, at $95.19/bbl. Buying activity was largely concentrated on sweet crudes. Sour crudes went down relative to sweet grades as OPEC production rose in response to a decision made in September to raise output by 500,000from the beginning of November. Much of the extra crude was sour grades from the Persian Gulf. Sweet crude received a further price boost from the temporary loss of 300,000of North Sea production caused by storms. Middle distillate was strong across most markets and fuel oil prices remained at record levels, especially in Asia.

10-16 November
Friday close: $91.52

Crude oil prices gave up their gains of the previous week as fears of a US recession emerged. There was also a general rise in crude supplies as Mexican and North Sea production began to return to normal following storm-related shut-ins. A meeting of OPEC’s heads of state in Riyadh on 17-18 November did not discuss crude production but hinted at a rise in quotas in the near future, which was also bearish for prices. Asian prices fell by less than those in the US and Europe thanks to strong demand east of Suez. Product prices fell across the board in line with those of crude.

17-23 November
Friday close: $95.45

The previous week’s price weakness proved only temporary as concerns about the dollar’s weakness re-emerged and cold weather in the US and Europe prompted fears of an imminent shortage of heating oil, whilst an increase in oil-burning by power companies in Japan pushed up prices for heavy, sweet Asia/Pacific crudes. Malaysia’s Tapis became the first major benchmark crude to be quoted above $100/bbl on the spot market. WTI went close to that level on 21 November, when it touched $99.29/bbl in futures trading. The same day saw Brent futures at a record $96.53/bbl, representing a rise of more than $6.50/bbl in just five days. Heating oil proved the strongest product in most world markets.

24-30 November
Friday close: $87.84

Prices came back down amid plentiful crude supplies. Supplies were boosted temporarily in the US following inventory sales by some refiners for tax reasons though there was a short term rise in US crude prices when an explosion temporarily interrupted imports from Canada via the Edenbridge pipeline. Sour crudes were generally weaker than sweets owing to higher production in the Persian Gulf. Rising US refinery output helped prices of middle distillate downwards both in the US and Europe, which stepped up imports from the US. Asian product prices fell except for low sulphur waxy residue, which was in demand for electricity generation.

1-7 December
Friday close: $88.20

Crude markets fell further before staging a slight recovery. At one stage, Dated BFOE was down more than $3.30 on the week. The end-week rally owed something to OPEC’s decision not to raise its output ceiling at its meeting of 5 December in Abu Dhabi. The official communiqué claimed that an increase was unnecessary since world markets were “well supplied”. US markets nevertheless remained tight thanks to low stock levels and high freight rates, which inhibited imports of crude. Demand for middle distillates was strong in Asia. Fuel oil weakened, however, on oversupply.

8-14 December
Friday close: $91.81

Disappointment over OPEC’s decision in Abu Dhabi on oil production, combined with concerns over the low level of US stocks, brought strength back to the crude oil market, pushing many prices back above $90/bbl. Some North Sea prices went above $94/bbl. High freight rates continued to keep many crudes out of the US, but African exporters found strong interest in Asia, where the lighter Persian Gulf grades were also much sought-after for their middle distillate yields. Middle distillate prices were strong across all major markets, helped in the US by falling refinery output. A fall in Iranian exports helped Asia’s fuel oil prices to recover.

15-21 December
Friday close: $91.49

US and North Sea crudes fell by more than $1/bbl before staging a slight recovery. Rising production from the Persian Gulf caused sour crude prices to fall by more than $2/bbl in some cases before they too recovered. There was further downward pressure on sour crudes from the continuing flow of Iraqi oil exports via Ceyhan (see ‘The Month in Brief’). Sweet crude prices were held in check by high freight rates which made North Sea and African grades expensive in both US and Asia. High refinery runs helped product prices to ease across Europe. The US product sector was also down except for low sulphur fuel oil, which rose on utility demand. Low sulphur waxy residue posted a small gain in Asia for the same reason.

22-28 December
Friday close: $96.01

Traders returned from their Christmas holidays in bullish mood, encouraged by a further decline in US crude stock levels. Product inventories were also seen as too low to meet the expected winter demand. Geopolitical tensions were provided by the assassination of Benazir Bhutto in Pakistan and crude oil prices moved up in all markets. North Sea markets saw good European demand, which also lifted some sour crude prices.