---

By Michael Poulson, A/S Global Risk Management

After the early March washout, there were plenty of reasons to get long on oil again as crude posted its third straight day of gains. More OPEC "will extend cuts" headlines got the market excited with Iraq and Russia keeping to their side of the bargain on production cuts while Kuwait said that it is currently coordinating with other countries so that there could be a consensus by 25 May. In addition, continued unrest in Libya have led to a reduction of output by 250,000 bpd earlier this week further supporting oil prices.

However, it is worth noting that the International Energy Agency (IEA) does not expect a significant rise in global oil prices, despite the ongoing supply cuts from OPEC and non-OPEC producers. "There is a tremendous amount of stock in the markets and to expect a major increase in the price is not very realistic," IEA executive director Fatih Birol told reporters on Thursday. "If we see the prices go up as a result of any push from the producers ... we will see more oil coming to the market, not just from the U.S.; we will also see Brazilian and Canadian oil coming to the market." The IEA estimates that global oil demand will grow by 1.4 mil bpd this year, with India possibly being the most important driver of global energy demand growth in the years to come. India's oil consumption is expected by the IEA to rise to about 10 mil bpd by 2040.

On the economic data front, we have US core PCE Price Index, Personal Spending and Personal Income followed by the Chicago PMI. FOMC members Dudley and Kashkari are also expected to speak later in the day to give us more clues on the Fed's interest rate policy ahead.

---

A/S Global Risk Management is a provider of customised hedging solutions for the management of price risk on fuel expenses. The company has offices in Denmark and Singapore. For further details about its risk management products and services, please call +45 88 38 00 00 or email hedging@global-riskmanagement.com.