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Trend

Rotterdam: $ 2 lower
Singapore: $ 4 lower
US Gulf: $ 1 lower

Saudi Arabia: Oil market is well balanced (Brent: $111.5)

According to Saudi Arabia’s oil minister Ali al-Naimi, the oil market is well balanced and the country is ready to increase output if needed. Due to strikes and unrest, OPEC member Libya has decreased its oil output to approx. 150,000 barrels per day versus 1.6 mio. bpd. capacity.

The current oil price fluctuations are mainly news-driven – the reduced risk of U.S. military operations in Syria made oil prices decrease on reduced risk premium of supply disruptions from the surrounding countries.

On the economic data front, we saw unchanged German CPI and slightly improved unemployment rate from the U.K. (7.7% versus 7.8% previous) yesterday. This morning the Spanish CPI came out unchanged. This afternoon the U.S. jobless claims will be published – the numbers could cause some jitters as to market expectations of a soon-to-come QE tapering. This topic will also be discussed at FED meeting next week (17-18 September).

Recommendation

Much of the risk premium on prices have evaporated, and relieved consumers are yet again active hedgers. Should high-diplomacy in Syria experience setbacks, there is potential for a rapid rebound in prices. On the other hand, potential bearish factors like Libyan production restart and US tapering may further ease prices, if materialising. We therefore advise consumers and producers alike to avoid taking a gamble in the present market.