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Trend

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

Decreasing oil production in Libya (Brent: USD 107.6)

U.S. Oil inventories came out pretty much as expected and prices reacted very limited to the published figures. We note that distillates (and not just in the U.S.) are showing very scarce levels. Any unscheduled gasoil supply and/or production issues would have a significant impact on prices.

In Libya, workers are continuesly protesting. A scheduled decrease in production of 10,000bpd every day until a compromise on salary etc. has been reached with the government. For now the impact would be limited, but if the planned decreased per day (10 days = -100,000bpd, 20 days = -200,000bpd, etc.) continues, it will not be long before it has a bullish effect on prices.

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.