Today is probably one of the intense news days in recent history as there are many important news items that are affecting different part of the globe including a tsunami in Japan, Libyan turmoil and Day of rage in Saudi Arabia, all these are just part of the news affecting the financial markets.
Let’s review the main news items that are related to the oil market and might affect crude oil price as of March 11th:
Japan’s tsunami attack
There are reports of tsunami attacks on the shores of Japan that were caused by earthquakes registered at 8.8 on the Richter scale. It is still early to determine the estimate damage and the casualties, but there are estimated of additional earthquakes and tsunami attacks not only in Japan but also in Russia, Hawaii Chile and even some repots say the tsunami could reach the west coast of the US.
The earthquakes reached Tokyo and there are people who say that many buildings shook and oil refineries burned up as a result. This attack will occupy the news all day to figure out the casualties and damage caused by this tsunami.
The turmoil and damage this Tsunami attack caused Japan is still early to determine, however there are early reports of hundreds of casualties so far.
Libya Turmoil update
Qaddafi continues air strikes and seems determined to see this to the end as he doesn’t stop the assault on the rebels. The rebels retreated from their front lines in Ras Lanuf after Qaddafi’s air force bombed Oil pipeline leading to Es Sider town and storage tanks in Ras Lanuf oil terminal, the eastern part of Libya.
In the aftermath there will probably be damage that will take time to bring Libya’s oil output up to speed.
As a result there are reports that Libya’s oil output declined to one third, from 1.6 million barrels per day to nearly 500,000 barrels per day.
As gasoline prices in the US continue to soar and rose last week by 38 cent/g to reach over 3.52$ per gallon, Barack Obama is planned to set a speech today in regards to the Libyan turmoil and will also address the rising crude oil price.
France, UK talk out loud against Qaddafi
For the first time since the Libyan crisis had begun that are talks made by France president Sarkozy to actively respond against Qaddafi’s efforts to attack rebels. Recently, prime mister of Britain David Cameron also joined Sarkozy that the EU should take actions against the current bloodshed in Libya. This will probably occupy the upcoming Euro Summit planed today as seen below.
European Debt and Euro Summit
Today, March 11th, there is a Euro Summit regarding the bailout funds given to Greece and Ireland, and preparing the main issues to debate on the summit of all 27 Euro countries planed to be on March 24 and 25. Given the recent turmoil in Libya, this subject might also occupy the debate in today’s summit.
There are concerns regarding Portugal’s debt, as Portugal might require a bailout from the ECB if it won’t be able to replace its current government bonds. For more on this subject about Portugal’s debt concern see here.
“Day of Rage” in Saudi Arabia
Today is the Saudi Arabia “day of rage” on March 11th; another protest is planed for March 20th, as protests to rise and demand a political voice in Saudi Arabia. This news keeps the oil market on its toes to see if and how this protest will have any affect on the stability in Saudi Arabia. I think it’s premature to speculate how this news will affect the oil markets (if at all). On this very busy news item day, the news from Saudi Arabia might have a minor effect on the oil markets at its current level.
Current crude oil price
US markets currently start off with falls in major oil prices:
The Nymex crude oil price, short term futures (April 2011 delivery) is traded at 100.32 USD / barrel, a 2.38 USD/b decline or a 2.32%, as of 16.19 *.
The Dated Brent spot crude oil is at 113.89 USD / barrel – a 0.8 USD/ barrel decrease as of 16.29.*
Crude Oil price Outlook and Analysis:
If I would to speculate, the recent development in the Far East mainly the tsunami attack on the shores of Japan is probably the main news item that stirs up the financial markets in general and the oil markets in particular. On the other hand the effect of the Libyan turmoil has on crude oil prices continue to subside as other OPEC members pick up Libya’s oil production and increase theirs’, and by doing so reduce the pressure of oil prices to further increase.
Thus crude oil prices might continue to drop as the day will progress.
The Brent oil and WTI spread: as of yesterday, March 10th the spread between the two commodities’ prices inclined to 11.99$/b, this is the second straight rise in the spread after falling the previous days.
Here is a reminder of the top news that will be published today that might influence the markets (all times GMT):
12.00PM – Canada unemployment rate report
All day – EU Economic Summit
For further reading (in this site):
- Petroleum stocks keep on falling | EIA raise oil forecasts – March 10
- U.S Labor report didn’t show improvement in employment
- Weekly outlook for Crude oil, Natural gas and Gold 7-11 March