Let’s examine the energy market and analyze the effects of the recent news from the Middle East on crude oil price:
Libya Turmoil update
The turmoil in Libya still occupies the news as there are confrontations between the rebels and Qaddafi’s people. According to Bloomberg:
“Anti-Qaddafi fighters in Brega, an oil hub, and Ajdabiya bolstered defenses after a two-day battle for control of the towns, which lie on the Gulf of Sidra in the rebel-held eastern half of the country, Al Jazeera television reported. “
The proposed seize fire offer by Venezuela’s president Hugo Chavez, and Qaddafi’s ally, was rejected by the leading opposition to Qaddafi. As a result the turmoil in the region continues.
The US has two of its warships with 2,000 Marines to the Mediterranean Sea for humanitarian assistance to the people of Libya. US president Obama says the U.S. military is ready to protect civilians that are caught up in the Libyan conflict.
Libya, a member in OPEC, holds the largest oil reserves in Africa with 44 billion barrels as of January 2010, is a major exporter of oil mainly to countries in Europe such as Italy, Germany and France.
The IEA claims that total crude production has dropped from 1.6 million barrels per day to 600,000. This is because almost all the international oil companies operating in Libya, which account for nearly 72% of Libya’s oil production, have reported partial or full shut-in of output.
OPEC members however, mainly Saudi Arabia, already stepped in and moved to compensate the loss in Libya’s oil production by increasing its oil production. In any case, there will be consequences to the oil market as analyzed by the EIA.
Current crude oil price
Asia markets currently start off with rises in major oil prices:
The Nymex crude oil price, short term futures (April 2011 delivery) is traded at 102.62 USD / barrel, a 0.71 USD/b rise or a 0.4%, as of 10.33 AM*.
The Dated Brent spot crude oil is at 115.29 USD / barrel – a 0.84 USD/ barrel increase as of 10.43 AM.*
Crude Oil price Outlook and Analysis:
The news from Libya continues to be one of the major contributors to the fluctuation in crude oil price.
After yesterday’s falls mainly in WTI spot and Brent oil prices, today the market start off with rises as the anxiety in the Middle East continues to rise; If the US will put its self in a more active role in this recent uprise in Libya it could go either way: either escalate the situation or bring the turmoil to quicker end.
Therefore, Crude oil price might continue to rise if the turmoil will further escalate in the Middle East. Also the recent news about the dry spell in Norway’s oil drills along with the decline in gas and oil reserves in Europe puts more pressure on Brent oil prices to increase as the tight market couldn’t hold on another decline in oil imports.
Here is a reminder of the top news that will be published today that might influence the markets (all times GMT):
13.30PM – Department of Labor report – US unemployment Rate
13.30PM – Department of Labor report – Non-Farm Employment Change
ALL DAY – EU Economic Summit
For further reading (in this site):
- WTI Oil prices passed the 100 mark – March 2
- 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