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Trends

Rotterdam: $ 1 lower
Singapore: $ 1 lower
US Gulf: $ 1 higher

OPEC output slightly up (Brent: $109.50)

The Organization of the Petoleum Exporting Countries (OPEC) increased output slightly by 100,000 bpd in February. (Total output: 30.3 mbpd). Outoput increased mainly due to higher Saudi Arabian an Iraqi production. As OPEC estimates U.S. Shale oil production to increase by more than 0.5 mbpd this year, a number that will be more than offset by the estimated increase in demand by 0.8 mbpd.

Yesterday, prices raced towards 111, as chairman of the German Centralbank did not see an end to the financial crisis anytime soon. The odd price action (which logically should have been down) was spurred by hopes of more money printing by the ECB - something we currently think is unlikely, as the emergency cash (3 year LTRO’s) the ECB lend to the banks in 2010 is now being partly repaid in an orderly fashion. The next big central bank action to watch will be the FED’s statement on 20 March.

Recommendation

Consumers are advised to establish partly hedges at current levels. Improving macro figures; two geopolitical wildcards (Venezuela and Iran) and accommodating central banks are all supportive for oil prices. Debt issues seem to be the only factor pulling in the other direction. As the markets are well aware of the debt, it no longer works as surprising jack-in-the-box.