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Trend:

Rotterdam: $1 lower
Singapore: $9 higher
US Gulf: $1 lower

Buzzard and Iraqi rumours (Brent: $101.8)

Prices were testing the waters below 100, as rumors started circulating that an Iraqi pipeline had been blown up. Later it turned out it was instead the North Sea Buzzard field, which had run into problems (again). Buzzard is expected to be out of production until next week, leaving the world with 150-200,000 bpd less in supply - which can currently easily be replaced by OPEC.

Reporting showing delays of barges along the Rhine added further support to Brent yesterday.

In Iran floating storage has increased to 14 VLCC, each holding 2m barrels, to cope with the challenges to export due to sanctions. We continuosly anticipate difficulties to resume pre-sanction production levels, even if sanctions are lifted tomorrow. The rather mature Iranian oil fields will be highly difficult to restart after a shutdown in production. Iranian presidential elections are due 12 June.

Recommendation

Currently we are in the lower part of the overall 100-120 range. Many factors point to a strong support around the $100 level. Consumers are advised to partly hedge their exposure to mitigate any sudden spikes due to increase geopolitical unrest, or oil cathing up to equity markets.