The allied forces continue their assault on Qaddafi’s ground forces army. As the ongoing turmoil in the Middle East and North Africa progresses including protests in Yemen, Syria and Bahrain, yesterday crude oil prices didn’t react much to the news as WTI spot prices moderately increased and Brent oil moderately declined. Will this trend continue during the week?
Let’s review the main news items that are related to the oil market and might affect crude oil price as of March 24th:
Allies’ attack in Libya attack update
The allied forces led by the US continued their air attack on Qaddafi’s ground forces as reported by Bloomberg. As a result, Qaddafi’s army increased its assault on the Libyan rebels’ cities. There are reports of 16 people killed in recent attack in Misrata and Zentan – a city near the coast line. The uncertainty in the regions keeps on rising and there is still no sign of the conflict between Qaddafi and the rebels to subside. There is also a question as to when will the allied forces end their operation in Libya.
Japan’s turmoil aftermath – update
The recent update from the nuclear reactor in Fukushima is that there progress in containing the cores; however there are still high radiations levels in the vicinity of Fukushima reaching Tokyo including the tab water.
Japanese officials state that the number of dead has risen to over 9,300 and missing people are at over 16,500 so that the total is over 25,800 missing or dead.
The main speculation is around the aftermath of Japan, as Japan will eventually need to increase its demand for energy to rebuild the country followed all the tsunami and earthquake damage (see here for more on the affects of Libya and Japan on oil markets).
Unrest in Middle East – update
Syria: The protests against Bashar Assad – the ruler of Syria, continue, as there were reports that in Daraa, a city in the south of Syria, where 15 protestors were killed by the police forces in the last 24 hours, during a protest of over 3,000 people.
Yemen: following President Ali Abdullah Saleh statement that he will step down from his presidency at the end of the year didn’t ease the protests as the anti-government protestors against his regime continue to call for his immediate resignation.
Bahrain: there are still protests as well that bring uncertainty not only to the entire region, but also to the growing financial market in Bahrain.
Despite the turmoil in these countries it appears that these news items didn’t have any direct affect on the oil market so far, however if the instability in the Middle East will further escalate, it could quickly adversely affect the energy market.
Current crude oil price
European markets currently start off with moderate rises in major oil prices:
The Nymex crude oil price, short term futures (April 2011 delivery) is traded at 106.31 USD / barrel, a 0.56 USD/b incline or 0.53%, as of 9.55*.
The Dated Brent spot crude oil is at 115.44 USD / barrel – a 0.44 USD/ barrel increase as of 10.05*.
Crude Oil price Outlook and Analysis:
Since the tsunami attack in Japan, it seems that the “Libyan effect” on crude oil prices continue to subside. Nonetheless, crude oil price might continue to rise but at a much more moderate rate than before and price fluctuations will also be more moderate.
I speculate that crude oil prices won’t show any further rapid price hikes and will moderately change with no clear trend as the week will progress.
The Brent oil and WTI spread: as of yesterday, March 23rd the difference between Brent and WTI declined to 9.8$/b; I speculate that the spread will continue to range around 10-13$/b as it did in the last month and seen in the graph below.
Here is a reminder of the top news and reports that are planed for today and tomorrow that might influence the markets (all times GMT):
13.30 – Department of Labor report – US unemployment claims
13.30 – US Department of Commerce – Report on Durable Goods
15.30 – EIA report about Natural gas storage
10.00 – Monetary developments in the euro area
13:30– US GDP 4Q report
For further reading (in this site):
- Weekly outlook for 21-25 March
- The erratic behavior of oil prices – Weekly recap 14-18 March
- Japan’s turmoil aftermath – preliminary outlook