Crude oil prices zigzagged in the past couple of days with no clear trend as the oil market’s volatility substantially declined in the past several business days, what will be next for oil prices?
Here’s the main news items relates to the crude oil market for March 30th:
Middle East and North Africa – update
Libyan war- update
The rebels retreated because of they were met with resistance from Qaddafi’s armed forces. Qaddafi’s people managed to recapture the oil port of Ras Lanuf.
Today, the US is expected to relinquish the lead on this operation in Libya to NATO, as Obama stated yesterday in his speech.
According to rebel council official, Qatar became the first Arab country to recognize the rebel’s legitimacy and signed a contract to market Libyan oil exports. 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. This new however might indicate that Libya’s oil production will start to pick up.
There are still riots and unrest in other countries in the Middle East including Syria, Yemen and Bahrain (see here for more news updates on these countries).
Japan’s turmoil – update
The early estimate of Japan’s damage caused by the earthquake and tsunami attack is over 300 billion US dollars.
Japanese officials said that the number of dead has increased to over 10,000 and there are over 17,000 missing people, so that there might be additional dead found.
Most of Japan’s oil ports are open and operate normally as of March 29th and there is normal service of shipments coming to and from Japan.
Petroleum stocks in the US
Today the EIA will publish its report on petroleum stocks: The current estimate around this report, according to Bloomberg, US crude oil stocks rose by 1.5 million barrels, compare to previous week. In the previous week he US declined moderately for the sixth straight week; last week they have declined by 0.1%, a decrease of 0.9 million barrels of crude oil to reach 1,765 million barrels (For the previous petroleum report, see here).
OPEC’s report on oil market for February 2011
According the recent March report of OPEC in regards to February 2011, there is a drop in Libyan oil production during February of nearly 232 thousand bbl/d, from 1,579 thousand bbl/d in January to 1,347 thousand bbl/d in February. In the same time there was a rise in Saudi Arabia’s production during February by 279.6 from 8,589 thousand bbl/d in January to 8,869 thousand bbl/d in February. And the total OPEC production in February reached 30,016 thousand bbl/d a rise of 110.5. This shows that during February despite the war in Libya, Saudi Arabia managed to raise its production.
Furthermore, it’s also suggested that China’s decision to raise its required bank reserves to 19.5% in AN attempt to fight inflation might also be a factor affecting the crude oil prices. And yet, OPEC’s forecast in 2011 still shows a rise of 5.74 in China’s crude oil demand, compared to 2010.
Current crude oil prices
European markets currently show moderate changes in major oil prices:
The Nymex crude oil price, short term futures (April 2011 delivery) is traded at 104.60 USD / barrel, a 0.19 USD/b decrease or 0.18%, as of 08.49*.
The Dated Brent spot crude oil is at 115.67 USD / barrel – a 0.19 USD/ barrel increase as of 08.59*.
(* GMT)
Crude Oil price outlook and analysis:
As stated before, since oil prices are high, most of the uncertainty related with the turmoil in Japan, the war in Libya and the unrest in the Middle East is already incorporated into them. Therefore it’s likely that crude oil prices will remain unchanged with little price fluctuations and no clear trend.
Difference between Brent oil and WTI spread: on Tuesday, 29th of March 2011 the premium of Brent over WTI didn’t change much and reached 10.69$/b; the average premium during last weeks was 10.97$/b. I think that we will probably continue to see the premium remaining around the range of 10-13$/b.
Here is a reminder of the top events and reports that are planed for today and tomorrow (all times GMT):
Today:
15.30 – EIA report about Crude oil inventories
Tomorrow:
13.30 – Department of Labor report – US unemployment claims
13:30– Canada GDP by industry
15.30 – EIA report about Natural gas storage
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