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Trends

Rotterdam: $ 4 higher
Singapore: $ 1 lower
US Gulf: $ 1 lower

Mixed news for oil prices (Brent: $105.0)

The failed talks regarding Iran’s nuclear program spurred - yet another- round of fear that the country will remain offline to supply the world with oil for an even longer period of time. For now the missing +1 mbpd is being mostly offset by the drastic increase in shale oil in the U.S.

In China, the inflation data came out a tad to the soft side, which sparked hopes of big money bazooka by the Peoples Bank of China (PBoC). The rationality of financial market should only be expected to exist in textbooks.

South Sudan expects to restart production on Saturday and start marketing crude by the end of May. In our view, it will still be a couple of months before the pre-war level of 350,000 bpd is reached. The fighting in the oil fields has caused damage to some technically advanced installations. This damage would need repair before any large-scale production can resume.

Recommendation:

We highly recommend consumers to keep an eye out for a sharp upwards move the coming weeks. With the recent drop in oil prices over the past days, the divergence has continued to increase. History tells us that the divergence in the financial markets should not be ignored! When the spread equities-Brent corrects it will be a major move in a short time span. The two geopolitical wildcards Venezuela an Iran could be the trigger for rising oil prices.