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Trend:

Rotterdam: $ 1 higher
Singapore: $ 5 higher
US Gulf: $ 1 higher

Supply disruption in Libya

The new Libyan regime has been struggling with rebel groups that are now in possession of weapons left over from the 2011 war against Gaddafi. The latest protests were held at several oil fields over poor work conditions; this led to shutting down almost a third of their oil output - equalling almost 0.5 mbpd.

Continued turmoil in Egypt

Egypt’s armed forces set a 48 hours ultimatum on Monday for President Morsi to share his power and be more inclusive in his future plans. Egypt is far from being a major oil exporter, so there shouldn’t be any direct significance on oil prices. However there are fears that a prolonged instability could spread through the region like in 2011, which caused a huge upward pressure on oil prices.

Positive US data

US manufacturing activity grew in the month of June, signalling stronger production and demand for orders. This is a positive sign for a stronger economic growth in the second half. However, this will probably not be a primary factor the Fed will take into account in considering any unwinding of stimulus.

Recommendation

We advise consumers to secure hedges during market dips, should it suit your budgets. The break-even price for many OPEC countries, including Saudi Arabia, is just shy of $100. Furthermore shale oil break-even prices and rising geopolitical tensions in oil producing/transporting countries pose a medium term upward risk for oil prices. Spillover effect from the capital markets are currently weighing on prices