Crude oil prices moderately declined yesterday. This is part of the “no-trend” oil prices have been demonstrating this week. Current oil prices are moderately rising, but will this trend continue throughout the day?
Here’s the main news items relates to the crude oil market for March 31st:
Middle East and North Africa – update
Libyan war- update
Yesterday, the US relinquished its lead on the Libyan operation to NATO, as Obama promised on Tuesday.
Despite the air-strikes of the Allies’ forces, Qaddafi’s people managed to recapture the oil port of Ras Lanuf. The rebels retreated because of they were met with resistance from Qaddafi’s armed forces.
In the mean time, the oil production in Libya remains low and the current estimates are that Libya currently produces only a quarter of it’s normal output, which was before the war nearly 1.65 million bbl/d. Libya also has the largest oil reserves in Africa with over 46.4 billion barrels.
OPEC continues to increase their output in order to meet with the shortage in oil made due to the war in Libya, and yet their output moderately declined in March. It’s reported that the supply from 12 OPEC members averaged 29.13 million bbl/d during March, a decrease of 1% during February.
Syria: Yesterday, March 30th, Syria’s President Bashar al-Assad talked about the protests in Syria. He said he will implement politic changes that will benefit Syria, but he won’t rush into them. Assad also accused Israel and the US in plotting against Syria; this plot led to the current protests against his regime.
Petroleum stocks in the US – latest report
Yesterday, EIA published its weekly report on petroleum stocks, and there was a rise in US crude oil stocks of 3.3 million barrels of crude oil, which is a 0.2%, increase compared to last week. Petroleum stocks reached 1,768 million barrels. (For the full petroleum report, see here).
In regards to the US oil stocks, there is a decline during 2011, compared to 2010 in the correlation between the weekly changes in the oil stocks and WTI crude oil prices: in 2010 the correlation was -24.3%, (If any, during January to March 2010 there was a 34.3% correlation) and in 2011 (Jan-Mar) so far the correlation was only -14.3%.
This is probably another indication of the strong affect the turmoil in the Middle East has on crude oil spot prices as it crowded out and diminished the effect the changes in US oil consumption had on oil spot prices.
Current crude oil prices
European markets currently show moderate rises in major oil prices:
The Nymex crude oil price, short term futures (April 2011 delivery) is traded at 105.35 USD / barrel, a 1.08 USD/b increase or 1.04%, as of 12.03*.
The Dated Brent spot crude oil is at 116.48 USD / barrel – a 1.31 USD/ barrel increase as of 12.13*.
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 Wednesday, March 30th the premium of Brent over WTI didn’t change much and reached 10.9$/b; the average premium during March 2011 was 11.95$/b. I still think that the premium will remain 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):
13.30 – Department of Labor report – US unemployment claims
13:30– Canada GDP by industry
15.30 – EIA report about Natural gas storage
6.30 – Australia Commodities Prices – Reserve Bank of Australia
10.00 – Euro zone unemployment rate
13.30 – US unemployment rate report & non-farm employment change
For further reading (in this site):