MercoPress. South Atlantic News Agency

Petrobras discovers excellent quality oil off Bahia

Brazil's government owned oil company Petrobras announced Thursday it has discovered oil of ??excellent'' quality in the north-eastern state of Bahia.

The oil was found at a depth of 420 metres in the Fazenda Palmeira One exploration well, 170 kilometres from the state capital of Salvador, 1,200 kilometres northeast of Rio de Janeiro.

Petrobras said the find is similar to a September 2004 discovery in the Jandaia field in the same area, where the company already produces 2,400 barrels of oil a day.

Petrobras announced it will send a proposal to Brazil's National Petroleum Agency on how to evaluate the new discovery.

The new oil find is in the Reconcavo area of Bahia state, where Petrobras is trying to revive production on relatively small or mature onshore oil fields.

Petrobras has drilled four wells in the area in the past two years, and performed seismic evaluations tests in a 60-square-kilometre area in the region.

Meanwhile international oil prices traded below 57 US dollars a barrel after slipping to a four-month low on expectations of growing US oil inventories.

Analysts said that continued warm weather and a move into other markets by investors also were depressing prices.

Commercial crude inventories are expected to rise 1.3 million barrels, according to the average estimates of 10 energy analysts surveyed by Dow Jones Newswires. Distillate stocks, which include heating oil and diesel fuel, are expected to increase by 300,000 barrels, while gasoline stocks are expected to rise 1.35 million barrels, according to the survey.

The Organization of Petroleum Exporting Countries, OPEC, in its monthly report forecasts that world demand in 2006 will increase 1.51 million bpd, that is 1,8%, which represents a 0,05 million bpd expansion over the previous report.

An optimist outlook of the world economy and a vigorous expansion from developing countries has pushed aside forecasts that high prices were suffocating medium term demand, indicates the OPEC report.