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Trend

Rotterdam: $7 lower
Singapore: $7 lower
US Gulf: trading unchanged

Oil prices down as military action against Syria seems postponed (Brent: $113.5)

Last week's oil price rally and fears of supply disruptions have eased somewhat as U.S. President Obama stated that he will wait for congressional authorization for military action against Syria. The conflict is still present and any new developments could affect oil prices.

The week is filled with key economic numbers around the world - this morning, China's manufacturing PMI’s showed signs of moderate recovery and improved to 51.0 and 50.2 respectively. The U.S. markets are closed today for Labor Day. We will see many PMIs especially from Euro Zone and on Thursday the Bank of Japan as well as the ECB will announce its interest rate decisions. U.S. Jobless claims on Thursday and unemployment rate on Friday will give indications on the continued growth pace of the U.S. economy. Volatility is expected around these numbers as they could affect the FED's decision on timing of the QE tapering start.

On the oil supply/demand side, we see mixed news; Iraq oil exports rose in August (2.57 mbpd); but Yemen’s main oil pipeline was attacked and blown up yesterday. Oil exports from Libya and Sudan are dwindling.

Recommendation

In the current environment prices seem to be aiming higher and we expect prices around $115 before the week ends. The week's many ecomomic key numbers, combined with the risk of escalation of the conflict in Syria, will give a lot of oil price volatility and we recommend our clients to use outliers in prices to secure hedges when it suits the budgets.