Crude oil prices outlook – 28 March

The crude oil market didn’t do much at the end of last week; however the unrest in the Middle East might stir up again the crude oil market.

Here’s the main news items relates to the crude oil market for March 28th:

Middle East and North Africa – update

Libya: The rebels have progressed westward towards Sirte – Qaddafi’s hometown, and captured it with little resistance. This progress was due to NATO’s air strike on Qaddafi’s forces. The rebels have also recaptured the cities along Libya’s coast line, including the oil ports Brega and Ras Lanuf. The current Allies’ attacks are directed towards Libya capital, Tripoli as well as Sirte.

The rebels claim that in the areas they have control they are currently producing about 100-130 thousand bbl/d and they can increase the production to nearly 300 thousand bbl/d. One the rebels further claims that the rebels will use Qatar to export the crude oil produced in the lands they have concurred, mainly in the East of Libya.

The oil production in Libya is still low as it dropped from nearly 1.65 million barrels per day to an estimated of 400,000 bbl/d.

In such times of uncertainty mainly in war zones, however it’s very hard to receive reliable information so that these figures should be taken with caution.

Syria: Bashar Assad is reported to consider making some reforms in his regime including firing his government and changing laws. The protests progress with over a hindered people injured and dozens died due to confrontation between the protestors and the police.

Yemen: The uprise in Yemen and the protests against President Ali Abdullah Saleh continue, despite his concession in making changes in his government and promise to step down of his presidency by the end of the year. Saleh claims he won’t offer any other concessions and won’t retire from his presidency immediately. Thus the current situation there could further escalate.

There are also ongoing protests in Bahrain.


Japan’s nuclear disaster– update

The nuclear reactor in Fukushima disaster is far from over, and the cores weren’t all stabilized. There are concerns of radiation contamination if Japan’s food supply.

There are ongoing speculations around Japan’s recovery in regards to its energy sources, now that its nuclear power source fell substantially.

According to PwC, Japan’s recent nuclear disaster might drive up the interest in renewable energy market and defer investments from nuclear power.

US oil rigs went up last week

According to Baker Hughes, the US oil rigs rose last week by 12 to reach 851 rigs. This news coincides with the recent EIA report showing a rise in refineries input. On the other hand, Canada’s rig count dropped precipitately from 586 to 429 rigs due to weather conditions..  and a drop in imports


Venezuela’s oil output

Venezuela’s Energy Minister Rafael Ramirez said that his country is aiming to raise its oil production in the next three years to reach 4.5 to 5 million barrels per day by 2014. According to EIA, in recent years there was a decline in Venezuela’s oil production from 2.8 million bbl/d to 2.36 million bbl/d – nearly 16% drop.

EU economic summit

The EU economic summit during the weekend didn’t produce any big headlines. In the summit the Europeans agreed, however, to establish a European Stability Mechanism, which will start at less than 40 billion euros of capital.

Current crude oil prices

European markets started off the week with moderate falls in major oil prices:

The Nymex crude oil price, short term futures (April 2011 delivery) is traded at 104.82 USD / barrel, a 0.58 USD/b decrease or 0.55%, as of 9.00*.

The Dated Brent spot crude oil is at 114.86 USD / barrel – a 0.98 USD/ barrel decrease as of 9.11*.

(* GMT)

Crude Oil price Outlook and Analysis:

Oil market didn’t react during last week to the news items from Middle East, mainly since they don’t have a direct link towards crude oil prices, however if the instability in the Middle East will further deteriorate, it might adversely affect the energy market and raise oil prices.

I still speculate that crude oil prices won’t show any rapid price hikes and will moderately change with no clear trend as the week will progress.

Difference between Brent oil and WTI spread: as of the last day of the week, Friday, 25th of March 2011 the premium of Brent over WTI reached 10.83$/b; the average premium for the month of March 2011 was 12.01$/b.

Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):


16.00 – ECB president’s speech


9.30 – Great Britain Balance of Payments


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