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Trends

Rotterdam: $ 2 lower
Singapore: $ 1 higher
US Gulf: $ 4 lower

China figures disappoint (Brent: $99.7)

The latest temperature on the Chinese economy (PMI) came out at 50.5 well below expectations of 51.5. It kicked off a minor setback in oil prices but, taking the big picture view, it's important to remember (i) the drop in PMI is pretty much a seasonal thing. China has been a lot stronger in the backend of the year for multiple years now (ii) the increase in GDP is still at 7.7%. To focus on a single number without taking the big picture into perspective is like watching a race between an Olympic sprinter and the average tortoise, only to complain that the sprinter missed a step. Instead one should focus on the fact that the Chinese economy is still doing rather well by any comparison.

Syrian update

In Syria, the rebel lead groups under the control of General Idriss have successfully obtained a waiver by the EU to start selling oil to fund operations. While the amount of oil being produced is likely to be in the very small range, it could tip the balance of power in the war-torn country of Syria even further. General Idriss estimated a sum of $40m per month would be a serious game changer. With the current Brent price it would be possible with 13-15,000 bpd, not an unlikely production at all.

Recommendation

Prices below $100 seem like very attractive buying levels in the current perspective. Given the multiple factors; Break-even price of OPEC and shale oil extractions - the big divergence between equities and oil - and the dark geopolitical horses of Iran and Venezuela, we recommend consumers to secure hedges should it suit your budget. A sudden rebound is likely to occur, if the price gap equities-oil starts to close.