Crude oil prices outlook – 5 April

Crude oil prices moderately inclined yesterday and thus the unclear trend for oil prices continue. Current oil prices are moderately declining. Let’s examine the main news for today, April 5th that might affect the crude oil markets.


Libyan conflict – update


The war in Libya continues and now it’s reported that the rebels are trying to sell their oil form the East of Libya where they dwell. The rebels are concerned with their financial resources to fight off Qaddafi’s troops.

While the UN has sanctioned the Libyan National Oil Corporation and the Libyan central bank which are linked to Qaddafi. And yet, the Libyan oil isn’t boycotted by the U.N. as long as it’s not exported by any blacklisted Libyan corporations.

The rebels are expected to export their first oil export as early as Tuesday.

Libya used to produce oil at a rate of 1.6 million barrels per day. Currently its oil production is less than third. There are analysts who report that the average oil production of Libyan oil during March was 343,000 bbl/d, a decrease of over a 1 million bbl/d compared to February.

NATO is still trying to end the Libya conflict between Qaddafi and the rebels by reaching diplomatic solution. Diplomats from the U.K. were reported to head to the rebels’ city of Benghazi, to meet with rebels’ leaders.

Qaddafi’s troops continue their assault on Libyan cities, where the rebels reside.

There are still uprisings in Syria, Yemen and Bahrain (see here for the latest news about Syria).

OPEC output for March

According to a recent survey, OPEC oil output declined during March to an average 29.343, mainly due to the near halt in oil production in Libya; this is a drop of over 411,000 bl/d compared to February 2011. The biggest boost came from Saudi Arabia with an increase of over 0.5 million bbl/d to 9.05 Mbl/d. Kuwait and United Arab Emirates also raised their average production during March by 37,000 bl/d and 90,000 bl/d, respectively.

US demand and oil stocks

Some speculate that in the upcoming EIA report about petroleum stocks and consumption, it will show an additional rise in stocks by 0.3%, which could imply a decrease in demand or rise in supply or both.

Japan’s energy imports

Japan is still recovering from the recent turmoil, and there are still concerns around the nuclear reactor in Fukushima (see here an analysis about Japan’s energy outlook).

There is a report that a UK firm that it signed to supply 200 megawatts of both gas and diesel-fired emergency power to Tokyo Electric Power Company.

Current crude oil prices

Major oil prices are traded in the European markets with moderate falls:

The Nymex crude oil price, short term futures (May 2011 delivery) is traded at 107.68 USD / barrel, a 0.79 USD/b decrease or 0.73%, as of 11.13*.

The Dated Brent spot crude oil is at 120.05 USD / barrel – a 0.62 USD/ barrel decrease as of 11.23*.

(* GMT)

Thus, the current premium of Brent over WTI is at 12.37$/b.

Crude Oil price outlook and analysis:


Crude oil prices will remain with little to no clear change as the day will progress, as the risk premium is already added to the oil market. The risk is related to the slowdown in oil production in Libya, and the shock caused to the financial markets because of the tsunami attack in Japan.

I still think that oil prices are high; since the oil market in Europe, this will keep the Brent oil premium over WTI oil at the range of 10-13 USD/b Finally, Japan’s energy shortage will probably continue to affect the oil market in the midterm and if so, all things being equal, it will moderately raise the prices in the next several weeks.

Difference between Brent oil and WTI spread: Yesterday, April 4th, the premium of Brent over WTI grew to 12.20$/b as it remained between 10 and 13$/b.

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


5.30 – Reserve Bank of Australia – rate statements


14.30 – Australian Bureau of Stat. will publish the unemployment rate

15.30 – EIA report about Crude oil inventories



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