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HeadlinesOil glut in the horizon

US consumer confidence recovering

Oil glut in the horizon Oil Producing Export Countries, OPEC, will have to reduce production if they want to ensure market prices remain in the range of 22/28 US dollars the barrel according to the latest report from the London based Centre for Global Energy Studies, CGES.

"The immediate production reduction necessary to balance the market in the second half of 2003 is not enormous", indicates CGES.

If Iraqi production remains absent from the market most of the second half of 2003, CGES estimates that a daily half a million barrels reduction should be enough to keep prices in the desired level.

However, following the second half OPEC will have to operate a daily 2 million barrel reduction to compensate the resumption of Iraqi production.

CGES forecast was supported by a recent statement from an American oil engineer from the US Army Engineer Corps who said the Kirkuk oil wells in north Iraq could begin pumping in a few weeks time.

"Depending on how fast workers resume their jobs in 12 weeks time we could have production back to between 300,000 and a million barrels per day", said engineer Tom Logsdon who belongs to the team responsible with starting the Iraq oil industry again. Iraq's OPEC production quota before the war was 2,5 million barrels per day.

US consumer confidence recovering

The latest figures from the US Department of Commerce indicate that retail sales jumped 2,1% in March the highest since October 2001, while the University of Michigan index is showing a recovery of consumer confidence that has increased from 77,6 points in March to 83,2 in April.

With the military events of the Iraq war coming to an end markets and analysts in Wall Street are looking more to the health of the US economy, particularly retail sales since consumer spending represents two thirds of economic activity.

The March retail sales index follows a dismal February when extreme weather hit the country.

However some analysts have cautioned about the real impact of the March index since they believe it has a strong component of car sales, following a very aggressive sales campaign, and building materials demand given the snow storms that swept the country.

Last week the US Congress approved a record federal budget of 2,27 trillion US dollars including tax cuts of 350 billion during the coming ten years earmarked to stimulate the economy.

Tax cuts however are considerably less than the 726 billion originally requested by President Bush. Moderate Republicans forced the White House to promise to keep tax cuts to 350 billion US dollars.

Just before the Easter recess US Congress also approved the 80 billion US dollars to finance the Iraq war including 3 billion for the hard pressed airline industry and staff left redundant.

President Bush said the bill delivers the "resources necessary to win the war and help secure ensuring freedom and democracy for the Iraqi people".

The 80 billion dollars bill is basically split as follows: 44 billion for military operations; 10 billion for reserves; munitions 6,5 billion; Iraq reconstruction aid 2,5 billion; 8 billion to improve security for US diplomatic legations including a billion each for fighting terrorism to Turkey, Israel, Jordan and Colombia; 2,2 billion for other security agencies and 3 billion for the airline industry.