The news in the Middle East keeps on rolling; however crude oil price didn’t change much yesterday, how will oil prices act at the rest of the week, remains to be seen.
Let’s examine the recent activity in the energy market and analyze the effects of the recent news from the Middle East on crude oil price:
The turmoil in Libya enters the month of March and continues to be one of the major news items that could affect crude oil price.
As the Libya turmoil continues, the UN Security Council decided to pose economic and commercial sanctions against Libya and also called for the immediate investigation of the crimes being committed in Libya mainly by Qaddafi and his people. Germany also seeks to block Libyan oil payments.
Currently there still reports of disruptions of gas activity that Libya provides to Europe (Italy’s 10% gas supply comes from Libya);
Despite the news for a significant reduction in oil and gas production in Libya, OPEC members, mainly Saudi Arabia, already stepped in and moved to compensate the loss in Libya’s oil production of nearly 0.8 mb/d by increasing its oil production.
Current crude oil price
Asia markets currently starts off with moderate rises and falls in major oil prices:
The Nymex crude oil price, short term futures (March 2011 delivery) is traded at 97.15 USD / barrel, a 0.18 USD/b rise or a 0.19%, as of 8.25 AM*.
The Dated Brent spot crude oil is at 111.17 USD / barrel – a 0.18 USD/ barrel decrease as of 8.35 AM.*
Crude Oil price Outlook and Analysis:
The effects of the Middle East turmoil subsided for now, even though the turmoil hasn’t; this might be because most of the risk in crude oil has already been incorporated into its price: Note that crude oil price soared last week: WTI oil spot price increased by 13.5%, and Brent oil rose by 9.7%, and in total WTI oil spot price rose by 8.3% during February, while Brent oil increased by 11.5%.
This recent slowdown in crude oil price doesn’t mean we shouldn’t except crude oil to (possibly) continue on rising; as long as there is high uncertainty in the Middle East there is still a chance of ongoing rises (and falls) in the short term, and as I have stated before the volatility will play a major role here; however, this adverse effect might evaporate as soon as the turmoil will be resolved (if and when) and will likely to pressure oil price to decline in mid and long term, even if there will be some residual effects (e.g. a continuous decline in Libya’s oil production in the future).
Here is a reminder of the top news that will be published today that might influence the markets (all times GMT):
10:00AM– Euro Area unemployment rate (January 2011)
10:00AM– Great Britain inflation reports (January 2011)
10:00AM– Euro area CPI estimate (January 2011)
10:00AM– Euro Area annual inflation (January 2011)
13:30PM– Canada GDP by industry
- Oil prices outlook – 28 February
- Crude oil price in 2010 and outlook for 2011
- Oil prices soared as Libyan riots continued – Weekly recap 21-25 February
- Weekly outlook for Crude oil, Natural gas and Gold 28 Feb – 4 Mar