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Trends

Rotterdam: $ 5 higher
Singapore: $ 6 higher
US Gulf: $ 4 higher

Oil Inventories with mixed signals (Brent: $117.9)

Yesterday afternoons U.S. inventory report gave a mixed outlook. A build on crude, albeit smaller than expected, continued the trend of stockpiling in Cushing, Oklahoma, the benchmark for WTI. In terms of gasoline the total inventory is still at a multi-year high despite the draw of 0.8m barrels. Given the season, the levels are however not extraordinarily high. Distillates/Diesel is another story; the big draw yesterday has pushed the inventory level to multi-year lows, even for the season we are at very low levels. The story is the same all across the OECD-inventories; reasonable amounts of crude and gasoline, but very low levels of diesel/distillates.

Release: EIA oil data (Consensus)
Crude: 560,000 barrels (2,350,000)
Distillates: -3,680,000 barrels (-1,600,000)
Gasoline: -800,000 barrels (1,000,000)
Refinery utilization: -0.4%

Uranium centrifugues in Iran to be upgraded.

Iran has publically announced it will install new state-of-the-art centrifuges to speed of the process of uranium enrichment. The development will keep supporting prices, as no diplomatic solution to the nuclear program is expected shortly. The International Energy Agency said Iran’s oil export has dropped below 1mbpd for Jan13.

The Mar13 contract has expired and the first contract in Brent is now Apr13. The roll of contract meant a "technical drop" of approximately $1. Product prices where affected with a minimum of impact.

Recommendation:

Prices are generally bullish at the moment. The postponed U.S. debt ceiling debate to 19 May, the cut in OPEC supply, and the continued unrest in the Middle East are all supporting prices. Consumers are advised to use dips in the market to partly establish hedges.