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Trend:

Rotterdam: $ 1 higher
Singapore: $ 3 lower
US Gulf: $ 1 higher

Watch the trend, not just a single number (Brent: $109.1)

The U.S. job report (non-farm payroll) adding 162,000 jobs came out slightly below the the market expectations of 185,000. As we've discussed on numerous occations: Do not put too much into a single number, but be aware that the markets often overinterpret any given number. It's just plain silly to conclude anything ("US economy slowing down/racing ahead", or: "The FED will have to print more money to create more jobs") on the back of a single number. In an economy where approximately 4 million people change job every month, we continuosly and strongly advise not to chase the market when a job number is a couple of ten-thousands off in either direction. Taking advantage of market outliers following such a number is a completely different matter, and something we advocate should be considered. The trend in the U.S. job market, which is much more important than any single data point, has been improving since 2009.

Iran update

Newly elected Iranian president Rouhani is seeking dialogue with the U.S. to potentially curb sanctions on the country's oil exports. Exports have dropped more than 1 mbpd since the July 2012 sanctions were implemented. U.S. Congress went a bit in the other direction as it recently agreed on even tougher sanctions, to reduce exports with yet another million barrels per day. If dialogue is established, and conclusions can be reached (beyond that of yet another meeting), it would release a significant amount of oil to the global markets. We see this scenario as having a rather small chance of success.

Recommendation

We recommend clients to use any setback in prices to enter hedges, should it suit your budgets. In the current unstable geopolitical environment prices seem to be aiming higher. After the (brief) visit to just below $106 - we estimate $112 to be the next short term price target.