Brent oil platform
Crude oil futures rose on September 18 after the US Federal Reserve announced plans to continue an economic stimulus program in a move that surprised oil traders and investors.
Previously, the Fed had indicated it was leaning toward reducing the stimulus program. But the Open Market Committee, the Fed’s policy-making arm, concluded a September meeting by saying it will continue buying $85 billion/month in Treasuries and mortgage-backed securities.
The economic stimulus program continuation also boosts crude oil prices by weakening the dollar, making US crude cheaper to buy using other currencies. Consequently, a Barclays Research analyst in London issued a Sept. 18 research note saying Barclays analysts expect oil prices will remain at current levels or higher throughout 2013. “The window for emerging market oil demand growth…to the upside is now open, as the current constraint for these countries–high import cost–fades and prospects for domestic consumption improve,” said Miswin Mahesh of Barclays Research, part of Barclays Bank PLC.
The Fed’s announcement to refrain from tapering the economic stimulus program “comes at the same time as relatively low spare capacity and relatively low crude [and product] stocks,” Mahesh said. “These factors are expected to remain prevalent in the next year, reinforcing our price view of a $110/bbl average for Brent in 2014.”
The October contract for benchmark US light, sweet crudes on the New York Mercantile Exchange rose $2.65 on Sept. 18, settling at $108.07/bbl. The November crude contract gained $2.46 to settle at $107.28/bbl.
In London, the October IPE contract for North Sea Brent crude gained $2.41 to $110.60/bbl. The October contract for gas oil settled at $924.25/tonne, down $1.50.
The Organization of Petroleum Exporting Countries reported its basket of 12 benchmark crudes was down 38¢ to $107.26/bbl on Sept. 18.
If the dollar stays weak a higher oil price means that, in Euro, the price will be the same for EU, but if the EU are selling goods and are paid in dollars they will not make as much profit as before. A weak dollar will help the economy in the USA.
Sweden is importing around 550,000 barrels per day and with a price of $110/bbl we need to pay around 60 million dollars or around 380 million SKR per day. Per year Sweden’s bill is close to 140 billion SKR for 2014.